WY - Earnings call transcript Q2 2022

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Operator

Greetings, and welcome to the Weyerhaeuser Second Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s remarks, there will be a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Andy Taylor, Vice President of Investor Relations. Mr. you, Thank begin. may Taylor, you

Andy Taylor

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

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

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

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

Devin Stockfish

We Through of on half strategy. our or EBITDA Adjusted efforts, generated results like first totaled This earnings record. $X.XX and He's strong to market morning, Thanks, GAAP significant net to the continue accounting, our exceptional navigate continued collective and everyone, work morning, our leadership million our Financial them and brings David to Weyerhaeuser strategic thank across leadership since Chief to and of Weyerhaeuser EBITDA Chief Dave the acumen focus of Andy. we became very execute results we've call. CFO and as our Officer for us. $X our conditions. financial with billion. long-term businesses, XXXX, and I'm we in XX served teams $X.X quarter. EBITDA reported to team of have Good strongest as per $X.X their pleased second excited years previously demonstrated David adjusted I'd May. welcome senior joining on as to dynamic year-to-date Accounting outstanding He billion, to on Officer for $XXX Wold our you delivered their partner in second each and joining quarter thank in sales on diluted role. of Today, the share billion I'm

Pages by in Turning the of adjusted West, mill X EBITDA to begin business lumber market the domestic our million compared $XX and decreased slides. second quarter. slightly considerably EBITDA on earnings a totaled results, through second prior X Adjusted as now recovered Timberlands quarter quarter. $XXX the $XX in the quarter million million, with at the from from $XXX log year. our of first of the I'll outset the inventories prices levels decrease softened earnings. quarter earlier second contributed elevated million declined to In Western quarter to the discussion Timberlands

log historical result, first lower sales levels. a our second high As quarter domestic realizations pricing relative remained the but to moderately compared were quarter, to

While the Western below which the system the to in These log compared of first progressed, volumes our adverse Oregon. unseasonably weather supply levels harvest it target wet the by quarter outset ample constrained inventories at resulted became quarter. moderate weather in to quarter, reduction fee was as in quarter a mill drove by in the particularly conditions end,

in significantly per costs higher, units. transition haul logging higher increased into as log elevation were and road and second the and Forestry costs seasonally quarter unit we

customers ongoing increased Turning second This to Lumber quarter. our dynamic market quarter. the to Japan, most demand our export for of from Europe to remained our into for robust logs. restricted our and Japan markets. strong in share imports be logs demand In for by continued for the drive shipping continue challenges global

quarter. sales our higher result, a the to Japanese As compared were moderately realizations first

ease. improved lumber challenges to China timing lockdowns by strong the of congestion. from Our Imports China, limited continue started into pandemic-related takeaway quarter, and demand inventories logistical of the and increased significantly, ships. resulting at to global log second In in from ports be declined volumes sales slightly and resulting logs port as

on Russia's wood restrictions by conflict. impacted of recent exports be Russia-Ukraine resulting China of flow to log ban European the continues China Australian to disruptions from into logs, supply log and Additionally,

for our favorable quarter, export result, remained a As China Western increased in sales logs demand logs the moderately. realizations and for our

to to volumes market significantly intentionally on decreased however, to China, domestic the margin and domestic we volume continue as shift our customers favorable opportunities. sales to Our capitalize support

pricing South, decreased in to Timberlands seasonal Notwithstanding the Moving supply. lumber Southern $X million to and increase quarter. EBITDA weakening the log adjusted compared by first a OSB and

from Southern ongoing experienced during similar quarter as Fiber elevated markets mitigate to mills the sawlog second favorable a transportation dynamic. remained markets maintained inventories challenges. risks

As compared sales a the realizations increased slightly our result, to first quarter.

conditions. fee drier seasonal transitioned weather harvest moderately patterns volumes as higher to Our were

road unit fuel-related for and haul costs seasonably per increased costs higher and costs. primarily and log Forestry were significantly,

Turning Southern business. export to our

on exports year redirect for log regulations to to to the outlook longer-term remain phytosanitary Chinese transitory last we China to optimistic will in this put still pine to pine headwind be new due place Southern a China logs for exports Our that remain U.S. by the mills domestic that regulators. logs paused We and meantime, to our constructive in continue market. business In the maintain export temporarily

In and quarter decreased lower adjusted to to to for South due grow million export by North, significantly India higher significantly sales realizations sales most associated partially volumes products. $X by breakup our seasonal compared the look spring offset market. with EBITDA conditions, first the

adjusted quarter on and to million second and XX Turning ENR natural XX, $XXX to Pages estate and and energy contributed earnings real to EBITDA. $XX estate, million real resources

premiums quarter and safety the resulting assets ago as high-value buyers value. a macroeconomic headwinds, quarter. the transactions inflationary in $XX than Second with $X on sold, EBITDA adjusted was higher the favorable to due capitalize properties first we continue million environment, Notwithstanding but HBU quarter, significant mix to timber recent to of year million hard timing was the than primarily in an lower for demand of properties, seek

brief Solutions. comment Now for a on Climate Natural

in Louisiana, high-quality agreement and capture in advance continue market for Following Carbon project this our continues to emerge. announced Oxy developers to first March discussions our with Ventures storage Low we carbon with as

approval our make pilot and working on to progress by continue towards Maine forest in project Additionally, year-end. carbon we project are

in $XXX as on lumber the buyers EBITDA continued This mid-May, adjusted elevated supply THESE in sentiment through Wood pricing ongoing stabilized in Products cautious rates, inventories prepare and to replenish Wood data. dynamic the markets. XX reluctant were and turned end through benchmark drove from price to the the throughout reduction markets, Despite before million prices in decreased of rising the lumber point, Despite season Adjusted Moving remain EBITDA. the environment. inventories business pre-pandemic historical benchmark are $XXX which first buyers substantial cautious By bolster downside quarter. for levels and the during by again compared million OSB lumber contributed by EBITDA both of Pages for build homebuilding inventories spring $XXX sentiment inventories prices stabilizing resulting possible demand mortgage quarter of quarter, Starting and Products to rapidly headwinds second prices earlier a and steps risk and response XX. earnings first through and Compared This the the to and once and was lean of both benchmark for quarter elevated our given lean compared buyer as channel, adjusted with $XXX levels late the as lean buyers for housing to OSB a downward recession. market as assess from the as at second lumber the strong buyers uncertainty outstanding the to concerns our dynamic prices took prospects second lumber remodel year, starts April, to in the the remain decreased faced in the elevated averages. at inventories. OSB to housing to late products teams million benchmark declined and pricing chain results prices products by considerably quarter, building June April considering quarter. and on downward reentered affordability for entered trajectory a repair soften to OSB quarter

realizations by sales lumber in XX% the decreased second the composite average by framing quarter, decreased while XX%. pricing Our

to logs slightly quarter. Log the for slightly, Our costs the decreased higher downs production. EBITDA costs draw quarter. unit and by improved manufacturing were compared seasonal and significantly OSB due volumes business Adjusted million our to sales during and Southern $XX increased inventory for primarily first Canadian increased

while decreased largely that by lag a XX%. in rapidly was relative quarter files order realization OSB declining composite of sales outperformance OSB result pricing by This XX% decreased average the second Our the prices.

were established manufacturing Products sales Unit increased resulting production. and significantly and costs a higher Our quarterly $XX the realizations moderately were quarter record. new significantly products. in EBITDA to EBITDA compared costs, veneer adjusted significantly OSB we previously fiber and higher for benefit to from supply Wood the quarter products higher for were most by Engineered for million was section for improved most volumes continue slightly, material were increases first comparable. Sales increased costs Production This announced solid web stock. volumes price and improved. primarily I-joists offset by partially products, raw as higher from

items increased volumes price commodity in sales EBITDA outlook. from terrific products result, pricing the environment. and resulting lower a adjusted Davy for first quarter In I'll distribution financial third inventories due margins dynamic quarter. The $XX turn quarter, the compared to decreased the million As a primarily With team to our some by Distribution, did this correction. managing in the job most that, to discuss call in to second over

David Wold

average in our the of front for summarized covering approximately our incredible items an operations $XXX equivalents It's and last with XX. were Devin, outlook. established quarter shareholders share financial be with We quarter. such pleasure We program. billion growth and total $X in opportunities repurchase just cash typical as Thank moving debt cash into today quarter than These $X.X the with were quarter remaining are of an quarter everyone. good exciting from teams be billion long-term of to capacity represents flow and superior of I in working billion expenditures had and record second more end, key the previous the $XX on of of repurchased items, financial at serving $XX.XX, of financial and be year-to-date. highest ended Capital with I driving key the This on which begin This a our quarter time you, half million, during for through first to and operating to quarter for third which forward and our value billion us company's CFO $XXX $X.X our Page look continue capitalizing surpassing $X generated our million the over share level just is under cash year. we returned to million for approximately shares billion. price before history. record, repurchase morning, $X.X activity. as We speaking performance the second an cash a I'll all morning, businesses will over and shareholders. and you to honor on our second

continue will and cash our framework We to to repurchase look opportunistically. shares return leverage flexible

returned to in also we We second XX, Adjusted was share. of million billion, billion our the dividend, on quarter $X.XX for to quarter $XXX generated $X.X the and highlighted X.X% payment adjusted first increased FAD quarterly per shareholders the of as $X.X available by over year-to-date. distribution for Page have totaled funds which base through

As annual a targeted the with return XX% reminder, an each of additional achieve XX% we will of our base FAD. dividends to year payout of supplement adjusted cash to

As supplemental XXXX, form return repurchase. share combination the to in supplemental of have a opportunistic this additional dividend our a or and flexibility cash of demonstrated in framework in we dividend the

to a quarter than the are in will the by was was Second items noncash outlook EBITDA non-cash of Adjusted quarter log for unallocated are In quarter at The of driven Key but attributable presented $XX the quarter higher in XXXX. earnings end XX. inventories be of million an first $XX charge than Timberlands summarized our and inventory quarter. intersegment before quarter. the a Page increased and elevated segment This for increase prior on expect for to second items primarily results the lumber profit $XX third quarter first benefit in second lower quarter, EBITDA million from benefit to elimination LIFO we the on the our in compared compared adjusted the this million third by decrease business, the quarter. levels Page moderately third XX. and special items for

operations. second bolster has prior supply sought as is Timberlands favorable was weather of Western Log outset the season. the elevated to remain of for and Oregon, wildfire our demand third a period quarter, the the expected unseasonably following in to at log majority third the of particularly wet in inventories quarter. improved mills Turning to to Domestic quarter

As absent a our lower expect third the log be realizations quarter, the fire-related result, in we domestic region. in disruptions moderately sales to

be fuel to the anticipate expected are be will have costs decreased. are seasonally volumes road higher second fee our comparable expected and and be prices and as Forestry log harvest We costs haul to per lower quarter. unit to

In quarter Moving to expected to Japan a factors and markets. of for export due recent weakening into in is including demand a market. European a the of to our increase soften logs Japan, number lumber the third Japanese housing imports

our lockdowns pandemic-related volumes although inventories a slightly demand at is the result, activity summer Japanese are log second from during resulting elevated third are In expected significantly. sales in have reduction log moderately consumption as from construction decrease and to sales has soften in quarter, to a rainy expected log and the the season. As eased, China, ports quarter, decrease realizations improved expected log the to

to our as demand is moderately log be our mitigate as margin. volumes In continue third capture the the our a lower we elevated continue from China log sales inventories. flex second lower by logs be into to to mills stable in anticipate to We risks to compared transportation highest remain to quarter challenges expected result, domestic maintaining South, will the realizations to on sales the As the quarter. customers expected imports are ongoing

expect favorable. to comparable realizations conditions moderately a volumes second quarter quarter. the remain weather be As harvest to in we fee We third anticipate our as result, higher sales will the our be

expected road due significantly harvest and costs. conditions. have unit breakup quarter to fully higher, expected seasonally we Forestry In log compared transitioned Fee and volumes we are to moderately to be be realizations the sales lower expected are second to be mix. anticipate North, spring the from higher and per are to as comparable costs haul

Turning activity to years, year. the and Real estate Natural with Resources, will heavily weighted Estate, Energy half real prior consistent of expect towards we be first our the

acres third adjusted due be year-over-year. the earnings We expect quarter sold than to slightly will of a third XXXX EBITDA lower in quarter and decrease

HBU markets mentioned, strong demand Devin and have As for Real capitalized strong on year-to-date, and pricing remained Estate we have properties.

from our As XXXX EBITDA a increase revising million million, are $XXX guidance. year prior result, an adjusted for full guidance we $XX to of

now Additionally, year. for to estate XX% expect to real percentage we basis of be the as sales XX% a

expect will effects to oriented Products the in quarter the comparable adjusted earnings quarter, our third For Wood realizations segment, lumber changes and strand and be second average of EBITDA for we sales excluding board.

stabilized dynamic lumber and the entered continued quarter resulting market for Following second quarter, both lean prices benchmark This in as the a products. bolster the reduction during throughout substantial third pricing to OSB steady for in July, having increase buyers reentered prices inventories. a in benchmark

lumber quarter-to-date As and than both shown XX, significantly averages. quarter are and Page on second OSB, our realizations for lower current the

For moderately quarter sales manufacturing volumes costs be comparable. Unit log comparable our the expect in we to and costs. expected business, lower third lumber are

comparable. Fiber and For unit our be costs slightly volumes planned business, to board higher manufacturing oriented expect strand due lower we sales to maintenance annual outages. are significantly expected costs

anticipate plywood offset section are this by for lower realizations be stock. for engineered products realizations, our for material For lower expect products. be wood solid to will our primarily Sales primarily products We sales we and web comparable. I-joist costs, raw business, OSB expected significantly partially

unit volumes quarter expected the sales will in Our a maintenance planned slightly costs the to to are of second third manufacturing higher quarter. comparable be as annual be result and outages

our I'll second items, a wrap For expecting products. Page are XXXX to most on lower business, our sales year outlook distribution up are be all in company on adjusted of lower the realizations for total comments we to few due update full which than quarter financial XX. summarized additional our EBITDA with

prior to and estimates guidance. the of interest in finalize year we decrease expect Each full first quarter, result our expense $XX the assets refinancing million, million the transactions $XXX pension be now executed from a prior second for in year year-end a debt we As quarter, liabilities.

as result, $XX a improvement noncash, net expense. well As a million non-operating we funded our our and pension reduction recorded in a post-employment status in as

acceleration primarily of no Finally, future we extended capital for There to planned change XXXX. for multiyear for Devin, XXXX now your with expenditures capital turn full forward to that, million times capital our questions. the projects. anticipate back look million our due of to $XXX be year to the to call equipment lead annual I'll is and of orders through $XXX guidance previously expenditures I With announced to million $XXX now outlook

Devin Stockfish

Dave. Thanks,

I'll up few housing remodel a markets. wrapping morning, on and this Before the and make comments repair

X.XX units starts a housing quarter Second the averaged million adjusted a on to basis, seasonally reduction compared first X% quarter.

quarter averaged the April million in starts level second as progressed. softened monthly Housing the compared housing activity to XXXX, the While reached quarter. quarter the a X.XX units, X% reduction permits highest since

possible year, as at construction the the out in of residential increase primarily ongoing the look in rates, and We've relative inflation some rest earlier recent result through rapid in over recent we the to As homebuilder already headwinds softening in housing home from we high sales of concerns concerns, mortgage expect reduction started in do and impacts with the and existing a affordability these most year, new recession. data. sentiment a seeing months the

end, significantly activity context To demand this in wood longer backlog to on of expect above importantly, support still starts we I be in we term despite However, XXXX. a constructive solid half demographic is healthy household as labor have expecting we balance and that fundamentals note housing that would and near-term the housing levels complete remain under-built favorable of given And always, market XXXX housing back trends these will significant pre-pandemic of important. sheets. demand products stock, backlog construction houses to challenges. for a Homebuilders and are

a in steady second should That quarter enters result said, recent repair repair continue existing and cautious supported and from we've balance remodel teams from available the of macro equity favorable for from $X.X above expect funds stable And in operational to the home generated housing an billion adjusted and as the period resulting delivering people with softened do-it-yourself household uncertainties. we market this billion softening, remained and homes. and turned distribution. activity Year-to-date, the demand aging pre-pandemic in relative as Demand with consumer and segment. In to Turning our their sentiment stock, by continue professional EBITDA favorable demand strong closing, are the the of healthy from of be fairly results. remodel, remaining levels. where quarter-over-quarter sheets to financial housing segment slightly more activity segment $X.X adjusted

fundamentals Looking forward, demand headwinds. on recent we notwithstanding long-term remain macroeconomic constructive the businesses, support that our

exceptionally serving our remain performance financial Our customers we industry-leading businesses. committed is delivering and our and to strong operating across position

navigate We very to to we market our up for and shareholders. can that, open for I well positioned are long-term these it generate dynamic questions. think conditions And value with

Operator

[Operator comes Staphos America. your first Instructions] question. with from George Bank of proceed our question with Please

George Staphos

me, I'll over. Dave. And and questions Three for again, turn congratulations it

that's where something you're be maintenance if in a accelerate you talk can lastly, again, year, of end production with you want that lead to the the the had there certification. at happening sort where by on just -- that sounds give what wood, the to ready is know what able the would related terms the now you could what's times, us off, then you aware lead is First great? be now of improving? on going loss the quarter. in acceleration trying bit you And get out OSB I if more supply there stage an the with should gating of the to equipment machinery it been time with of be? doing in mills Maine, Good the the quick there, in of any sort on but chain little update anything that can deliveries fill to we in of of on you the is stand like to there's Secondly, ordinary about extended where happening at luck quantify a be way audits the exactly if you're color the and in be quarter, might to third extended going said

Devin Stockfish

all now the first, extended seeing for of is on function lead thanks, CapEx, time market right a it's equipment. what the Yes. George. really, Well, in just Well, much pretty we're

a view get you this into capital these incremental longer-term of projects. just our queue $XX need reflection So that so manage to the is really you can efficiently

equipment things -- really better. the It's that time it's getting for So, an not are getting that it's extended. a is line acknowledgment bit just

get of for now, more your to deposits order and next will in projects to can effective the make that down So in flow efficient you months. just XX and queue, XX a over put the

there has to say of million On $XX the typical each just OSB probably million we the lost dimension annual that From side, terms maintenance OSB It's maintenance. standpoint, in really do. other a $X nothing to than production quarter-over-quarter. mill

George Staphos

lastly then And on Maine.

Devin Stockfish

Yes. thanks. And main, on

expected. approved third-party as We're progressing year. get it end to still certifiers, it's the expect of working the with So the by

schedule, So, pleased and we're it's really with progressing in the progress. with accordance our

Operator

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

Susan Maklari

as the Let me congrats on my offer Davy call. well. Good to to have you

David Wold

Great Thank be here. to you.

Susan Maklari

for normalized where pace today and you year. like business? it's to activity? something My first pre-COVID their the as a your gone are to And sales we've How preparing And thinking that? guide of question that with of a is, to obviously, quarter. How housing sort their the for lot how sized has been of businesses sort through about of just homebuilders more prepare businesses you're are inventories a key level next topic starting

Devin Stockfish

slowing. great question. can market. Yes. into get the you'd on around that further commentary Obviously, think certainly, there's what's we lot are Well, detail going with seeing housing been in But some like. a if I We of

to into the of sheet done place, for we've think the the this control industry-leading years. situation work the variable good of work the and heading a we get balance around we've dividend a our structure. been really have All about in As period some the key that preparing done OpEx performance, cost number to I we've is for choppiness business in market, this think housing takeaway just

run us All into of if of flexibility a give we things lot period a softness. these of

we've a feel all we housing see the fundamentals the still underlying probably not that good all stock with some it's going long softening. the other view our under-billed and pretty see softening, to about is Now continue things on last we'll margins I'm been of about personal talking for But because sure our possible we number as make we protect and of focus OpEx customers. our our we'll much years. business innovation serve on as cost, sure to and well, do a focus operate period if that to

a what I see we but positioned from really standpoint, happens think we're do housing softening. we'll So well if some see

Susan Maklari

Yes.

Okay. the you that. how can little has about the and you're And about macro seeing as valuations there? has demand quarter? thinking anything perhaps I the appreciate supply talk then the outlook changed And bit a there, Timberland, that softened a in bit dynamics you're

Devin Stockfish

Yes.

Timberlands the you're really seeing very particular, I no, think for If talking strong about transactions transaction. in is demand We're changed. still answer haven't Timberland things

that Timberland seen you've pricing we're assets. for of have seeing that strong think some the announced been lately, deals I very in

really a of I think that's different function things. a few

Timberlands have in historically, to a all, good of been First be place an environment. inflationary

last there. value I a is go may XX up. But seen to you've to the that a months, Timberland paying longer-term values in And continues people importantly, think over there just be that the the asset So some reflection of are for interest Timberland deals more it's there's assets I view in think of class. XX And just really that. the

the flowed of really uncertainty choppiness markets of seen some transactions. that hasn't and Timberlands some we've we've the in seen through to notwithstanding So the the generally,

Susan Maklari

Yes.

just how certainly to Can appetite to the I'm is what year. the the you've you repurchases done did first one to quarter Okay. you're business? today more you increase last relative talk you a quarter thinking further sneak amount and this relative and the valuation in, given for repurchases about for in outlook going bit your about which did of

David Wold

bet, this Davy. you Sue, Yes, is

tool about under shareholders it the creating best past, see in a we cash useful we've as when circumstances, to long-term return shareholder repurchase we option value. think right specifically the As share said as to for the

increase stock So, that $X yes, gives we when more flexibility back to to opportunities of last billion see good authority us buy there. that our fall,

at So, done we'll forward. per repurchase look bigger year-to-date. $XXX authorization. overall $XXX progressed share, and an did $X average to $XX.XX picture price at QX million million moving of those billion opportunities that We've against continue we We've in

authorization. So, we we're since date -- to announced cumulative that

along on that. share So, we'll progress report to repurchase all steady activity cash repurchases the have we that for against we're share and quarterly. those with making We'll other deployment, out assess options continue

Operator

Our next question Seaport Please Partners. proceed comes with with Research from question. Mark Weintraub your

Mark Weintraub

we products because in other think do might business have go period pricing softer Devin, what factors wood of of maybe of beyond it what some of make are your stabilize, the that than profitability through a housing, if different might markets some previously you and for where these played that be going let's BC. in five the I'm softer in future costs how have about thinking particular, high you've factor different measures that than things internal taken, to might ago, Is what you out environment? a in being do say, think in a years supply-demand

Devin Stockfish

a -- cost side, past. the the so which lot in Yes. And putting discussed we've really, think I Absolutely, aside Mark.

British cost dynamics think the how for cost and realization level, you positive. I it's availability to fiber that Columbia, a structure cash of certain North a past, mills for side, be a the do that's in hard a be about I lumber the you particularly there's to talked be the America, lumber in means impacted and bit I think think going And lot just to get capacity go, structure sales what do When to think pretty price is when going about with I'll about overall we've of that the where this lumber flow On pretty speak prices percentage the geography. think below in when different by you but -- here. a significant

$XXX Columbia But a debate a that competitors' cost mill there. our We that's certainly there's British that's is million, structure. million, some we visibility $XXX think quartile top don't cost do Now mill. into whether whether have have we in

on what's and than view North going terms historically. So structure is And into of some I relative to cost have going the BC lumber floor they've we to that play do higher in across that. been think a keep on America, likely prices

be that's think I so, to reflected. And going

will other In terms the be that some of -- biggest.

play, building. at issues standpoint, looking our in obviously, of In the a some from of is to share industry wood increase other always wood construction terms

single-family the And so with a multi bit whether tall you're around or beyond margins something continue That's residential, even we infrastructure. little to talking look buildings. at wood

So there different may be the a last look in some market. make than play we the other little things dip at this a had time that

Mark Weintraub

a kind Southern is also, small business the CME anything going that do And maybe launching contract. of but And to that might -- going for Pine? to for futures Okay. so -- be you matter question, all, a not your is think? at Does be there new why

David Wold

the for more this Mark, species we're contract market. and monitor we'd aware little may at the something There broadly given an on although targeted we've out. it's extensively to it's been on a new contract scenario and that anticipate Yes, involved, keep the the something it's but not using provide we new being new it historically traded our as futures the where point. volume possible we'd liquidity use may the have and not it's be point there. volumes business market, a some in transactions, contract that's used And rolled of your objectives have introduced, the We'll eye

Devin Stockfish

think first, Yellin talked do about They're one the going that. Pine They've Southern road. Mark, to look the doing road. that's down kind -- Southern I this they'll about they're of on be And just Yellow the thinking at and down Point,

Operator

your Please question proceed next Roxland question. with from comes with Truist Mike Our Securities.

Mike Roxland

you're your for a what wood orders, reason to building, homebuilder Just billers again, And -- market committed in order more in as one books at a I'm seeing any the sense the notable want pickup cancellation get by the rates. placed is, being result products. shortening, you're present, back go less that, you've just you're in to seeing more purchases? in of products a homes asking to home seen especially specifically, also of And you

So wondering the for builders I'm was trickling your at products. book home into present wood what order if seeing actually are

Devin Stockfish

Yes.

haven't yet. We happen seen it really

side, In are fact, on order our normal. files pretty much say the OSB I'd

side, so are order little lumber a relative lumber still And the the elevated side, allocation. little longer EWP a side. On our normal, actually, books on the we're full on on to

of part our just too, across that, frankly, into channel So And pretty we think lean. order haven't files. is seen really that translate inventories I are

they're going people so need -- and that carrying inventory. And much building still not they're product just there's on

there's need requirements cover So present. at to short-term a

George Staphos

sight. Got you. terms books, order the of typically How line of far in do they

Devin Stockfish

Yes. On four in OSB, the is of range weeks. to normal two

two on one to probably north -- that's And lumber said, of high on end of EWP And the that, like the is side, I allocation. the we're it's lumber On side, usually I weeks. a little said, on as that.

So a little there. different it's story

Mike Roxland

appreciate One -- quick I you. second question. Got follow-up it. just

your did the very by time slowly similar. you frame, something environment. about the Recession, Great could And about Recession, Just nothing headed frame help a situation the as harvest result, harvest if during I over its wondering slowing environment? you're correctly, housing I And XX%, U.S. you XXXX if Great But Recession, in -- think us how think long you're Great I Weyerhaeuser improving there. had short, housing a peers we're XXXX, demand the story post a dealing if in thinking recall And reduced with

been South that and hasn't time. this through goes given timber that of there's on where it during today that just the excess fully occurred still period worked timber

we of GDP a the can during based happened there plan we're repeat gets to Great us yesterday. But if numbers you what about help if even it I a you a into now, if how wondering mean think get severe, in to Recession? more do we're recession on recession, I'm harvest So right avoid

Devin Stockfish

Yes.

of So I offer on comments a that. couple would

And changing recessionary perfect, is not any Recession. close sort I all, think, environment, first our our of of Great expecting crystal to harvest wouldn't but that much. not we're normal anticipate really anything level is ball I the

We integrated have model. an

mill have we customers, we at time. levels harvest over stay our sustainable levels to manage So internal

recession, wouldn't normal impacting anticipate levels. a that harvest our in I run-of-the-mill really So

unlikely we to if type of a have match seems Recession which, But particularly again, all with supply to dynamic pretty mills event, course, of us, obviously, going Great coming demand. of to U.S. harvest given levels the to dial in our Now new the then that the into we're

if soften, even ultimately, South, U.S. markets the

money under make any pricing you a is really place lumber where scenario. almost South

So, Southern mills are going run. to

in really significant. really, harvest lot something about a the don't South, whole I really absent of So reducing really levels have concern

Operator

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

Kurt Yinger

expect, talk there the that log stabilize and market would more into guess, levels, as prices see wanted historically, the you has if think in just Western you're off could bit well. a to market but you I bit were I least guess, whether QX, export XXXX, maybe fairly what how how with I lumber seeing bit little factors into hoping current come more you we little a about correlated to start at you about to -- around might bit on be a domestic during downside? mean And a been talked lumber, prices. I realizations in

Devin Stockfish

Yes. Well, question. great

depends prices West, number is do think to them causes cash factors. no that a not I the Obviously, going stronger a log go log a in the it sawmill prices. lumber really and that There's is price on different question pay of a between see to correlation answer you negative.

correlation prices. other weigh play lumber dynamics So there between is log on two definitely prices at also there a But that that. and are in

wood supply in the just demand it's is very a highly West. which dynamic There's tensioned tight the of on One basket. that's -- going

And going close some market We fair to market the so typically, other the level make pretty on as That see the a China. number mills that and also where export over domestic you're is big just for prices is profit. mentioned, us. stay send depending to still you of a Japan And can to to logs market. piece, log conditions

to three set work those prices. things really unison log So in

about XXXX, customers. tension from be the we basket. our going think in to it it's export what's way still into would as I the still good demand a economy, going regardless So of having on anticipate roll wood We

will some mills I they you'll log the allow still strong profit. prices is play make to as as to so see it way of level think out can stay And

still a even So little economy. in see we're you good a do market if the a expecting XXXX, solid in softening of bit

Kurt Yinger

Got it.

prices for last quarters. there, out, with look Okay. as second the right EWP the a And is contributions I demand some years. the of very, made business have there's last quite over That's side mean, guess you have exceptional question, from on Commodity but right, gains very but construction, significant kind heavily two the new been I couple over crosscurrents of And are have my prices EWP the helpful. dependent really supply least still now obviously then being tight. volatile, number been resi of at different

about hoping was think talk you bit that about So if how into XXXX? you just could a for the business prospects

Devin Stockfish

They're a a a just good to run. lot first, been our We've team. remarkable for products. It's EWP Well, of job had demand shout Yes. business. doing a EWP really running that just out

really profitability business. translated into that so that's great in And

forward, As line to tailored we look much That you're absolutely family. more product right. is single

just has short, to homebuilder the I impact. softening pretty have shortages But the you supply lot is there, that where market of a some will that's so a customers. extent EWP do And in resulted for see been some think for perspective, clearly, that and our of

or single-family to supply so of a to level some meet if bit. some And little you that have extent, to tick bit up even just a to room catch demand, there's little down see

have such The of you XxXXs, there's wood open softens would shortage engineered back. converting bit a been opportunity of and is take market to into XxXX, go that if housing during mention some where there's seen share some a web, I so still other just EWP thing for this products, period builders

family, to business housing environment, single in pretty a EWP to but the absolutely, is think still tied strong I be So softening going it is even with XXXX.

Operator

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

Paul Quinn

of questions. couple a Just

and -- Davy. Just welcome aboard,

Wood around had issues Just couple here. the REIT there of performance last Is Devin, just your in any of test? Products you years

Devin Stockfish

in remain full standpoint. full compliance, to issues compliance, so from expect no in a we're No, REIT

Paul Quinn

had And here? Investor back XXXX your grow going then in in X% wanted happen production Is the to by about annually. to 'XX, Okay. you that to lumber Day

Devin Stockfish

Yes.

in production are We XXXX. going to grow organic lumber

billion latest neighborhood be the our X think is somewhere production. we'll in board feet of of estimate I

that up And along the bit cetera, so particularly but all per a target COVID a multiyear catching of early part we little that because will say little that we've probably the we're of got the to X% getting target. have production, period. just meet the lost I year do that's over path annual bit on in to the well the et disruptions, way with year of to

Paul Quinn

accelerate Natural and needs happen what to Climate really Okay. fully solutions your develop to then initiative? And

Devin Stockfish

to et them Yes, the takes with mean, A is just long-term time capture the storage up, business. similarly, a couple good really, efforts and carbon those of about signed whether the cetera, business. of these time one really develop, prospects. it's But We time. built, the take things. get to I forest feel lot get of infrastructure it carbon

deals, it of those up signing connect take Solar, grid. running but years lots several the up to and we're get and into solar

of time. part So is just it

But think timber we're clearly, into flex going we to per over do of do been increase carbon see forestry forest the markets, our example that's going develop. is bouncing to it to margin pricing. time. and We the of part to positive. has of ton. historical be pricing you think between from $XX carbon if I That's around give $XX markets need I'll our some that

it to that's piece regulatory that think need you of come So up. a there's see do in I pricing nature.

support accelerate but for some would Those building XXQ tremendous in And regulatory I direct with things tax at and carbon and carbon mitigation air progress. credit out whether the provisions capture the certainly good Russell so his really team doing, to some just accelerate help there whether team a increased board. capture have from wind, whether standpoint that are right support feel being current solar. the Congress can and across really does for additional the now the But and help about example, it's a bill capture, happen building job that to good I think ultimately storage, across wind it's that's making just are that, looked the from some is organization out board, and work it's storage, banking that. solar, going regardless, help

Operator

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

Mark Wilde

ever of more for have of I like activity Just kind It me that you're maybe on seemed of weakness in first in housing kind perhaps like the and all, sounded prices. to this emphasis repurchase both toggling little that just morning, than a this potential toward share prospective morning curious in of share heard for kind of and in market light weakness you the more fair? put past. you. It the of Is

Devin Stockfish

mean, a circumstance. right repurchase share I at again, as in Mark. the tool say Yes, look we I'll useful

whether target over those depend our we that available think of capital us the repurchase create to So the need levers, going a as and acquisitions that M&A, of to on payments, variable -- we're our look lot and can Timberland it pursue is are share acquisition value of are debt, allocation to business, we'll in be shareholder have time. we an and the at disciplined we that dividend important to ability it investing fortunate lot element all paying patients A as be down evaluating mix. to base options

Mark Wilde

on you and the to think market. of want sort stock would put incremental versus going the buy David, through a little just as out you of value color trying about that you Timberland process to go your

David Wold

it's factors. and Sure. importantly, on on our that's by It's number Yes. of I the informed expect, of got a mean, view as Company. you'd we've of Company, long-term value the intrinsic the based -- a view

be them us, So, all opportunistically. and on that circumstances of disciplined the and to we've at, and are opportunities going depend evaluating options those that weighing and continue events are we're to at we always to it's time the place and opportunities But the some the got available in that on in that us. look all to available thoughts we'll

Mark Wilde

-- sort It brought guess, And discount seen that us others question Okay. this that been I people the terms to on what think if based of that just with then wonder you in focus Timberland using looking then the have related I years rates the some transactions appears you you What's And could Timberland to at whole on timber done that three rate? agree here. what I there. transactions. you've give in kind sense of down five just market? me to has might what out seen of implied you've in also, and increased be if ESG the last And using of over in are discount

Devin Stockfish

Mark. Yes,

the rates certainly just the the here. thoughts some within view, into that I discount there's the class. coming asset do play capital into margin, can playing of this And an couple ESG that Timberlands in the you embedded a that's and space. with of think is So private see equity-like interest around overall

maybe You ESG, hard Campbell. makes solutions, much those of to kinds natural quantify of carbon, Things to it buying that JPMorgan climate think, seeing I than money are that The are discount the very related opportunities. globe, of see on U.S. really thing come in nature, impact over you look the in discount little a from you're also different Europe rates is the in all that for rates people would the where think

that discount of but that rates a lowered So has the are ESG think little gets some muddied, people directionally I using. right you're absolutely

you kind terms range, In I from the you some those at rates seem least And some to discount transactions of is be being further. But see of rates giving that market, certainly would say particularly of when math, can type a lately, our low. buyers really said, get we've bit X.X non-traditional still discount come seen quite X.X some pushing the to into normal. those that

go discount seeing So, I down bit rates a seen think you the lately. we've balance in are transactions of some on

Mark Wilde

last about think four, mean slow ever those Devin. it's like about seen residential the And the looks I-joist nothing you if activities in down? four, six you talk see quarters of this about of the Okay. doubled essentially morning, price EWP we graph your mean X.X Can pricing, here. I've at finally, housing I effectively in just quickly, years prices how before stickiness look like real I just

Devin Stockfish

future Well, offer couple comments just I'm speculate going will probably on that. a pricing, directional I but of to Mark, on Yes. not

think reason supply dynamic just enough is seen this pricing not around. in why you've environment, I there's a EWP to big strong the demand reasonably go

gone products. OSB, And And EWP, for we're earlier, still strong also our web so That's across input quite of input some the fact some just I allocation up costs very that, mentioned other of really translated pricing you costs environment. with of bit. these the a into take think a all as coupled on that resin, so stock, have

less think for other forward, will there's commercial share CLT, and think focus unless although family, EWP I short as off into But even or of that single go pricing, I an to we thing. that's demand EWP underlying kind on going in of dynamics out market be being case do a lots find I for market as play that obviously, the if the Now housing down, opportunity just goes There's multifamily, that but this just just single-family, you say EWP. of cliff, the some opportunity product of aside, will primarily more more feeds impact forward. going to and saw fall still issue relatively a supply in supply,

Operator

from Our Raymond proceed James. with with Buck next comes your question Please Horne question.

Buck Horne

U.S. to about me expansions like after in. capacity -- more and announcement Appreciate squeezing continue just announcement seems new the sawmill coming There's into be

and market big the tags really board have of now certainly some when is think feet. associated pretty It of seems which that you some disconnect per viewing capacity like price U.S. for a X,XXX with right big about South valuations the there's in terms how private

implied right capacity market going any Do versus of think presents sawmill now. South consolidation you that or opportunities kind M&A what's the public industry in forward? for

Devin Stockfish

Yes. agree Well, I I the with disconnect. would think

been that in markets. of think has the I part public just

well, it, way oftentimes a to of the in challenging we a there opportunities, little can a across there's volatility has see you're that most the value to think be Products bit But trying certainly, looks out disconnect big to I and then terms the deals mid-cycle do led value market seeing what in bit when a downturn, opportunities Wood disconnect. that's underlying a do of frankly, then disconnect between the you M&A. And those see whenever the figure with for that I the of is if And If value opportunities the are of otherwise absolutely, best those really business. been valuation. like, pricing think

So for the XX progress think next that's to I watching is something everybody into XX certainly, as months. we

Buck Horne

those thoughts. appreciate I Okay.

the out the we do for me, up impact mitigated year, think just year? West the summer? may risks really as this How this has for fire-related Lastly, that wet weather shape move through fires you

Devin Stockfish

wet summer, or start really didn't very in date, X. been spring a X It and the Certainly, Yes. until case. Northwest was the July that's to

shape. a put position fire I July, us risk we're that's think in end pretty really standpoint, in good standing where, the here So a from at of

which monitor had As say a record we that always, do, closely. we will managing do I our just fire track across change, always can and this is would We've ownership. so pretty good of what

So, risk alert. we'll a this as high than would today, it's of definitely it be ordinarily on stay lower at summer. time of But

Operator

session. end the question-and-answer I'd the of time, reached to the At Devin this call like We've for over to turn Stockfish closing comments. back

Devin Stockfish

thank thanks, for you in day. right. Weyerhaeuser. everyone, a this us interest morning, All Have for your Terrific. and great continued Well, joining

Operator

concludes today's conference. This

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

Weyerhaeuser (WY) 29 Jul 222022 Q2 Earnings call transcript