WY - Earnings call 3 2023 | Weyerhaeuser Company

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Operator

Greetings, and welcome to Weyerhaeuser Third Quarter 2023 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded. It is now my pleasure to introduce Andy Taylor, Vice President of Investor Relations. Thank you, Mr. begin. may you Taylor,

Andy Taylor

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

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

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

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

Devin Stockfish

GAAP morning, you or our Yesterday, results, Thanks, million increase the joining and I'm $XXX on Andy. $X.XX These by per thank of and second during diluted performance X% a solid everyone, totaled sales from Adjusted Good EBITDA of the quarter. delivered billion. teams earnings quarter. the of share million, $X $XXX third for quarter net us. Weyerhaeuser proud reported are

second million third $XX EBITDA realizations Western by business export a million for Turning $XX our the slides. quarter, decrease sales to volumes West, operations sales average contributed EBITDA in on to by decreased earnings. the of largely to lower our quarter through million, second Southern to volumes. In driven lower our Western results, and earnings and Timberlands compared adjusted quarter. Timberlands starting million quarter the third Pages was now $XXX X Adjusted with X compared $XX

logs third potential of fairly early market. mitigate seasonal the balanced log in owners log peak season. in and market, domestic Lumber takeaway higher demand and inventories mills mills to typical risks of ample dynamic, by from the of log Despite wildfire supply domestic in building remain as this quarter driven nontraditional pricing the the as steady to markets maintained timber the Turning to came influx quarter was Western supply

domestic realizations the to were average Our sales comparable prior quarter.

drier to operations. months, productivity expected, the As we and elevation and lower higher warmer transitioned during harvest

activity dry Pacific wildfire was harvest Northwest areas. although Additionally, on across our restrictions conditions in resulted the limited certain in timberlands,

moderately the domestic quarter. As a sales were our second harvest compared to fee and volumes lower result,

seasonally forestry road costs unit and per and Our costs were were and higher haul log lower.

business. stable and sales Moving Japan to average reduced imports Western weigh domestic to were log market. of the log largely our the lumber export quarter, volumes export in Japanese elevated Japan, for consumption pricing the to by second In continued comparable driven European said, on Western That inventories our realizations to market.

volumes This Our customer its sawmills Japanese due partially the damage a that during quarter. decreased fire to to at sales X sustained in reduced quarter. shipments of third the was

adding the of shifts from damaged the is the While production rebuilt, to and customer of customer different operations. our is in likely process additional facilities will being in ramp up this several lost to quarters expects production the take for It most production. at recover mill the

next to lower As quarters. a Japan result, over expecting the shipments we're several

other to by in continued shift the Chinese the supply, in we inventories the log customers ports domestic decreases During this market China, the steady be and reduction log quarter. consumption a volume market. In period, at expect to and log to third impacted in Western despite Japan in reduced

moderately decreased realizations quarter. average our sales result, for volumes compared second to a the export As to China

opportunities. be lower our volumes intentionally continues sales for to capture were the as to higher-margin logs our to logs steady, domestic market we While flex demand significantly

Adjusted EBITDA Timberlands Turning decreased the to compared million by South. for Southern $X the quarter. to second

elevated pulp largely and mill markets log seasonal fiber for for reduced products. goods, in to markets third Southern the in continued supply finished response demand increase slightly particularly sawlog soften, moderated a and inventories, quarter to and in paper

realizations to sales remained programs Despite average the the steady, our our market second region. logs demand compared delivered slightly these across for given As quarter. a our dynamics, decreased result,

higher. experience seasonally to the haul forestry second were the harvest unit third In sales to harvest the is at in fee North, did due were seasonal and quarter. Per resulting log significantly second the adjusted geographies quarter moderately to slightly certain the and wetter-than-normal costs outset activity However, higher conditions that road comparable increased of quarter, typical and EBITDA quarter. compared a in in costs volumes from volumes compared the increase resulting lower

to Our sales due realizations were mix. moderately lower

I initial the XXX,XXX completing to our scale foundation few and our per Maine. decreased transactions generate acre and HBU remains from as work of healthy quarter, we value. I'll a timber price EBITDA comments this XX-year high-value compared carbon approval report levels, a and mature. to the to thank ACR second business to real to sold. for now Adjusted timing significant and continues to credits benefit project Average continue covers has and to The elevated credits natural with the an XX. increase approximately resources project driven a quarter, but now Real third quarter $XX from is an $XX Pages market estate, exceptional on for to the building we nearly XX,XXX properties, estate and third in quarter million over in make team received energy million, second largely by compared $XX Climate mix pleased our business. period. properties XX contributed on resulting million Turning to to of for was earnings. want ENR Solutions credits achievement to the that this to and in compared initial the in issuance premiums diligence expected I'm demand XX,XXX exciting historical forest acres crediting Natural as first

is bring commitment measurable Our only Weyerhaeuser to to and important credits. forest demonstrates develop meaningful generate milestone additionality highest carbon market and quality offering our goal an carbon climate projects project is that benefits. This to initial the with for

XXXX. including in X U.S. the slated in Looking forward, our approval for timberlands, of additional we first forest are within carbon half developing several South projects the

And as our established grow EBITDA develop, to to our climate is scale business, uniquely expertise Solutions towards demonstrated there from the or this this markets continue opportunity beyond we is positioned made carbon natural date by our like business Climate Weyerhaeuser upside perspective, year-end from asset we've to in this target since to Timberlands creation Natural XXXX, lead value in and million XXXX, target. space Weyerhaeuser. that other solutions $XXX in renewables of company to a capabilities deliver And this at base see the on As particularly progress portfolio. space we've solid given with unmatched and significant and businesses. to launching We've no

Pages Wood million generated quarter Products of of million XX. earnings Wood Products in the on XX EBITDA. $XXX to third adjusted through Moving and $XXX

driven quarter from by increase Third sales EBITDA realizations. second quarter, an the improvement a largely in OSB was XX%

segment Wood to innovation teams our Through business Products of their diving capital Wood to in results, that ongoing commitment Before delivery businesses. the Products industry-leading done our excellence EBITDA improvements we our business of first Wood several performance illustrate of performance. we've investments. of like operational all margins the proud the the our unwavering work years. deliver would our to I across strategic half we've take into operating our for peer-leading To the delivered made the the Products past moment a highlight initiatives, successful and have I'm these efforts, over positioned for and XXXX, to incredibly point, that

through this several well our for the business our market of conditions of And value over of positioned and that amounts supports a a range to to of a to will as demonstrated remains our last meaningful time. we've enhance product competitive moderation late, pricing Wood As to our significant over shareholders cash generate enhancing to allowed years, Weyerhaeuser. commitment advantage cash returning business despite company, navigate has Products portfolio in this flow and one continue the

for concerns EBITDA following entered Turning the improving to million $XX a Lumber has prior prices Benchmark the quarter, upward softened benchmark XX% inventories, lower. in and trended and of more as to supply necessity to July, sentiment an over and buyer early limited now the the quarter By third were is late inventories trajectory, Canada. throughout results. the lean relatively cautious prospect season quarter. lean start supply uncertainty. Despite supported macroeconomic pricing however, wildfire an Adjusted largely in the to disruption third dissipated by was ongoing lumber demand, on quarter, increase orders demand purchases due turned

sales were to average realizations quarter. the comparable our quarter the second For

quarter, Our and were were lower unit driven Log sales second slightly costs partially several compared resulting volumes were from production mills, reduced manufacturing disruptions. by operating the to lower comparable. moderately at temporary costs

construction activity, quarter OSB Adjusted resulting million, pricing primarily of due the inventories quarter, compared from supply EBITDA the demand and Benchmark commodity supported OSB $XX fall. to increased resilient increased in buyer sentiment general about then the outset that market. mid-September, pricing. additional weaker-than-expected third Pricing to at home the sharply new to as supply the by elevated well for second remained turned in the for increase concerns for as lean response August decrease are coming annual prospect to starts maintenance in and cautious as economy outages typical until of concerns end the through housing in quarter and by

For the quarter, our XX% compared increased the second to by average quarter. sales realizations

lower building products, applications, adjusted were quarter. maintenance. which million, annual demand are to most slightly kept of decrease the during costs manufacturing EBITDA for compared products third Unit due million Fiber extended quarter. Engineered $XXX our Wood slightly Strong home quarter. primarily $XX used to moderately on was costs were in of Products the lead EWP for volumes single-family entire planned the the second times EWP in quarter. sales downtime Our improved for a higher

to As products. a compared primarily the for volumes increased quarter, section result, slightly second our sales solid

to adjusted certain worth stock. In pre-pandemic quarter, OSB Our decreased EBITDA higher that, the most quarter material raw remain call realizations David products. current average quarter, fourth compared demand to sales driven were slightly in EWP the Unit over a volumes financial some to prices I'll markets. costs products outlook. manufacturing the costs the and and for above increased in our EWP to as decrease web primarily quarter, turn our in second was $X in third markets With for continue items that million million sales noting certain lower It's and and realizations Distribution, levels. supply some lower slightly by discuss for rebalance $XX

David Wold

approximately was issuance investments, track for billion, financial to debt $X.X growing fourth and period Capital by cash $X.X portion quarter morning, invest and million the through approximately end performance I'll dividend which we prefunded XXXX. in of proceeds December. short-term items the $XXX Total with the of and from begin XXXX is million debt on with a good notes quarter of covering to $XX before at raised $XXX Page be Thanks, committed equivalents at and the million debt annually cash, year. and that cash repay majority key billion key full in for third our quarterly shareholders the I'll a operations for in the of quarter We financial the used typical which million matures approximately third Expenditures quarter issuance to the million which May including maturity. includes were $XXX $XXX Devin, million, of amounts quarter level our of remain ended remain to capital returned on maturities. In everyone. items, XX. of July, our through summarized $XXX base payment our outlook. this third X% that and we moving generated We are into quarter financial

of repurchased in at shareholders were under of authorization. returned end, of In These billion quarter we completed and million repurchase an we $XX.XX million activity quarter. had share through our $X $XXX repurchase addition, the $XX price shares to average third as

our Looking will repurchase forward, we create to it look opportunistically and leverage will value. return cash flexible shares continue when to we shareholder believe framework

XX, Page year-to-date. have the million, totaled on adjusted third we generated for $XXX of for highlighted adjusted As distribution and quarter million available funds $XXX FAD

on for LIFO. Third primarily decrease Page profit to the million items this segment $XX is by elimination EBITDA second results for our decreased quarter summarized changes quarter. and This attributable are compared Adjusted to unallocated intersegment XX. in

adjusted and comparable are outlook on presented Timberlands the of In to XXXX. quarter key to forward, XX. expect our items fourth we quarter fourth business, EBITDA Page quarter earnings be third the Looking for

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starting Moving to Japan. the export markets, with

experienced As in Devin expecting region. one over by are several operational in export Japanese the into quarters next response mentioned, the we fewer disruption the to customers of market shipments the our

be third quarter a to lower As result, expect to we compared volumes quarter. the moderately fourth sales

Japanese into expected the the be trending to log market slightly more higher. In adjusted region to China, log is sales state. and has consumption are a Our balanced realizations levels lower supply toward

pricing As for fairly anticipate we into year. China for a result, our shipments the stable the of log balance

our sales quarter, are quarter to realizations slightly lower the average compared to average. third the For be expected

domestic maintain Given with in our winter for coupled are healthy to in steady conditions fourth western in weather South, the expect the market, into the volumes demand of increase our sales inventories ahead quarter fourth moderating logs log China log conditions expect typical stable we the as mills months. markets we quarter. In the in that

comparable quarter. As to a the third to result, realizations we expect our be sales

quarter. to expected and fourth Our be and fee haul volumes road anticipate log-in comparable, forestry costs lower we also are and the per harvest in seasonally unit costs

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and Turning remained and real markets properties. estate, solid steady demand for we've on real HBU to year-to-date, energy estate resources; natural and pricing capitalized have

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

as basis XX% sales percentage expect real estate to the to to year. XX% continue of a We be for

the For timing of third XXXX the we estate adjusted earnings EBITDA than to expect the be quarter, to quarter and due real and of mix sales. lower fourth

of quarter Wood activity macroeconomic average buyer EBITDA excluding compared changes headwinds. we fourth and OSB. third our expect construction sales effects Lumber quarter of For from fourth adjusted Lumber a in the be cautious and downward to earnings realizations on trajectory, and XXXX prices moderately response segment, lower for entered the and a the for quarter will seasonal OSB in to resulting in Benchmark sentiment ongoing housing reduction Products

OSB have couple prices the weeks. benchmark of for in However, last stabilized

lumber and average realizations current shown quarter sales our As on OSB third Page averages. quarter-to-date lower the XX, are for and than

comparable higher moderately lumber the business, quarter are our be fourth Log we costs. the quarter. For third to and costs unit in slightly lower expect sales to volumes manufacturing expected

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products Turning to year-to-date. given Products we Wood continue single-family see Devin construction activity Engineered for business, resilient to mentioned, as our demand strong EWP

is fourth our As well a year-end. files and fairly expected stable extended quarter, be order to result, through are the into product pricing

our quarter, to realizations the expected compared prior average quarter For lower be sales the are to average.

for in annual Our sales increase volumes section are expected to an be slightly from fourth products downtime for maintenance the lower, solid planned primarily in resulting quarter.

However, volumes I-joist products. an increase in we for anticipate sales

are the OSB to stock. Raw for quarter, be compared to costs higher web material primarily slightly third expected

look in the driven adjusted For be third that, to our distribution decrease and to EBITDA business, lower primarily With quarter, expect compared now Devin the by a back turn to I'll your commodity questions. forward we realizations. to call

Devin Stockfish

Thanks, Davie.

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

housing the recent segment, Our unchanged, response we to rates. multifamily largely in although some macro increasing headwinds is view market have on interest seen in the

resilient the Importantly, single-family remained year-to-date. however, segment has

In rate fact, quarter-over-quarter and September. X% sales mortgage new home starts single-family despite up were elevated environment, the increased in

about reasonably rates, single-family solid. a important higher continue we of interest we prices, a existing mortgage demand the multifamily. In believe for of limited is influenced rates overall by said, sentiment homebuilders our demand buydowns as elevated affordability to other construction Even term, As rate the as challenges up to be housing is and market single-family underlying well economy. the more reminder, well the buyer home business increased combined mortgage the the hold the state on driver homes demand that near ability brought at inventory relative by to and continue with much to to incentives. That will expect offer given

to housing housing housing we a fundamentals As supported note, on term choppier last market and the view favorable, a result, strong very continues be continue trends near of a vastly demographic I couple to stock. the however, long-term relative in to our by years. underbuilt anticipate will

delivered And a mortgage an in stock. In results held lieu and believe environment. key likely our we levels aging Turning fundamentals remodel although beyond and underlying XXXX, steady closing, new remain in the solid, of supported home businesses are year-to-date, remains well winter quarter purchasing reduction home remodel favorable over rate repair to looking in and the months, repair equity homebuyers remodel choosing prospective higher market. third demand including and most in the by across a and the of remodel third housing quarter. has activity a up supporting to repair see in healthy we demand solid seasonal the drivers intact to we're Activity

We with that have carbon our first on our in moderated, Natural the businesses. milestone market forest remain the we demand support near-term conditions And approval credits. looking longer-term important program an growth although also Climate achieved constructive Solutions fundamentals ahead, our of

exceptionally maintaining long-term we is sheet shareholders. for remain open for think our focused up balance our superior With value questions. Our returns delivering can our performance that, operating and and and and serving customers industry-leading strong, ahead on we it go I

Operator

My [Operator first question from George comes Bank America. Staphos Instructions] with of

George Staphos

Good I one wood. couple of could. if the the the you wanted morning, to questions Thanks on on EWP, everybody. for first spend Devin, And details. first

say, your there turn EWP EWP. to helpful. distribution you been the heard developments Has there well is in you. for EWP you the at extended color times? have into led in times that or as in has share, been to Weyerhaeuser pick same Any able to up be think Do in been Have lead demand that would industry So on specific you're that's we'd that operating extended any lead unique fed stance.

on mill bottom and EBITDA of think if there's terrific. across we lot a are in Do less cost other again, second structure, there's the trends last question, inflation at years, done have -- been to a more that at businesses, you'd your with still the manufacturing contend light the have basis of that's that that you been across you maybe fact the step if number but your we downturn. in certainly fiber, in what a has Weyerhaeuser The areas the black not system or of deeper a can back look take occurred

about So how have points? think you two those would us

Devin Stockfish

not EWP take necessarily of respect things, the in I'll X speaking a participants combination George. Weyerhaeuser Well, Really, Sure. with it's other I'm and primarily market. and first, to

For little to the of back housing the beginning curve bit the us, mortgage Remember, behind candidly our to XXXX, we earlier in going single-family was higher a a environment. in was year. a little got view that struggle rate

And posture was somewhat to be what case to going turned environment. remarkably up was well. so adjust single-family thought we a housing did to what our be softer held reflect operating the we Well, out

And activity year, to try the at bit ramped we higher us get on back to bit. our But up construction that combined of some production of little so first little put to a a behind back it dialing us level single-family with have extent, track. the

it. we've been through managing so And

we're times, I I up. do though say, I but at still against progress that. have even lead this making fairly we extended think catching point, good will think we're

of I just I around In our though, black degree no assume up, underlying still seen there's high for would a that I the at for industry. the bottom bottom, but the confidence terms over us, approach. not in several is that in has entire the inflationary structure the the say, at gone last cost years And environment of question black question we've the would have what

in business continue low-cost all of my across the be, to producer lines. our We view,

more us weather we a much than at of industry, each the bottom and of across downturn, we to stay will And would so see I if black expect I better our rest even think the that businesses. do the material do

can to that if the few it our just mills be material across we I'll will downturn, British Northwest said, struggle Now are being positive there where be will of Columbia, Pacific entirety presumably to highlight see cash markets a X there and the flow challenging. going a the year. that be stay

Lumber Just how than can slower come primarily move. because prices log is dynamic how costs in quickly the down oftentimes

feel you've seen log Lumber -- a in typically so that little challenged a markets, the particularly make come down economics more move the seen time. But And times a can which prices we've brief we down few at slowly, moment the confident in quickly, bottom. do in still for prices black those when bit

costs driving Our points our overall structure. whether organization think improving that good And are well every across more is cost keeping market, of out will the efficiency serve all and a business, focused times day down little I us or challenged. the times are on in

George Staphos

the your But it's has new in turn what look we've And over. reason West? reversing we in back single to the left-hand the been go we X I look My in out when erosion over we realizations occurring. And development, in not corner next fourth go that we is, quarters. steady if why last what guess obviously, upper good be X West. X If been luck the would at it and the for a view, it's realizations one, view the this to I'll XQ'XX, if in quarter. And to Slide question had to the seen the trend your factor biggest I

Devin Stockfish

really cover not In all enough frankly, the is question. there market just and are comes logs it Great I Yes. Northwest, down to very demand. the Pacific to tensioned, lumber mean prices. the

So really with what lumber prices. governed the to is Northwest going Pacific in pricing for by be logs happens the

largely so mills the to costs that's still will to the up set, can log really where point support pay going And mill the across and margin they what they some do. drive

correlation program obviously and is export the Japan a nuance They're is in There Asia, what log happens one our tied. the that and Now realizations. we domestic market China. supplement can to between there in have an

it lumber in can the of we we're built prices in that that trending its on what's up, work the you've just extent Japanese market to system. which had the through up going European see think comes that a because Japan direction ultimately lumber get with way that back in lot back But to I to Northwest. so the And started

Operator

Davidson. Yinger from is D.A. question Next with Kurt

Kurt Yinger

guys off obviously, the is, wide Great, you with currently NAV allocation. M&A And timberland my stock on and of how to part at But least capital just in to trading view, here. you important deals at where an start strategy. the are on do discount a competitiveness it wanted pretty your remains were of think continue about and acquisitions. NAV would somewhat that repurchases aggressive kind willing then above And to to the to framework you why -- discount, attractiveness versus share see to more then if what permit, are relatedly, repurchases so the beyond with of returns variable you how be maybe speak.

David Wold

Yes.

This out You just a Davie. is look, as we're position bet, Kurt. referenced. I'd fortunate start very by in saying, you

a lot We levers. have of

that the in the among all So allocation. dividend our into are evaluating on we're and paying business, investing includes debt, M&A, go But factors capital views dynamic. down that payments, constantly that others,

repurchase. as said, be So with via share that to supplemental to allocation XX% commitment our we it's of But need framework watching. to and shareholders we've base something always adjusted return XX% to the FAD capital starts our back

to beyond portion that our can debt. the the with reducing and XX% that acquisitions, piece repurchase share cash for i.e., shareholders. is earmarked And really that, we between or returning So XX%, allocate above remaining to

billion our we acquisitions target Timberland over have So the do years. next here do to few $X of

to against as we a we're being yes, that something something intending capital look, that useful to of repurchase, tool share you certain we disciplined referenced. But over that's that's at amount quite space. we as our certainly that shareholders we've navigate We've towards said. when that It's look at been are certainly, allocate market a billion So we're discount. our circumstances. meaningful in X a right in active a our $X the years And We've specifically, done little announced shares that authorization ago. to cash $XXX return trading million

attractive in we're be ultimately continue way cash lever and value while continue options So that's summary, allocate those long-term weigh going that shareholders. creates to to in most the now, to all there. But for really we'll right an opportunistic the our

Kurt Yinger

Got sure understand. guess just I it. just I a of kind follow-up, And making

got be of if go So of kind repurchases, kind to share that year widening kind of are. to kind levels some XXX% FAD you given was recognizing go cognizant that felt discount above in of willing XXX% be you you would to that where of specifically of But threshold a adjusted with us? you would willing be above debt like

David Wold

Yes.

So that. do capital the flexibility for have our we allocation framework within

to So XX% available share repurchase. that's or above beyond to debt growth, cash paydown the committed returned for be shareholders, any XX% and that's to incremental

So ultimately opportunities. also allocate options the value, of as we're all I'll going most Those and in that our add way a creates might provide in are evaluate choppiness. we always, but creation some that value to cash long-term periods those significant mindful

So we evaluate avenues all we'll and be disciplined thoughtful forward. moving as those

Kurt Yinger

it. Got

one, export Okay. regards to next Japanese you at facility. impact in to on And Japanese what a of fire second my to just your kind kind expect of going then the quantify volumes over customers there have Is of way that's the couple quarters?

Devin Stockfish

of typically moves on, quarters. so do reallocate get down in note, move those shrink domestic would that neighborhood I -- to of a XX% some we'll over XX% see we're couple Sure. XXXX as through can high-quality for we And moves customers, market around the Yes, we're facilities. But in then XX% thinking it's as they probably volume impact be next then the to going probably to other that of have logs. premium just production to the other nice you working Japanese and to Japanese the

we've domestic we customers that got can to. so obviously that plenty volume move And of

margins to wouldn't a our this. material we net-net, anticipate impact from So

Kurt Yinger

QX. good appreciate Okay. the Well, in color, luck here guys, and

Operator

question Our from with next Citi. Anthony is Pettinari

Anthony Pettinari

any impact I there? you're Or of guess, -- there in is just question, like-for-like South. is mix XQ flattish pricing. And I'm quarter-over-quarter realizations So first sort the expecting that in

in past hard quarters. curve it then too the Are prices visibility kind bottoming Or make you there lower support? is confidence end And seeing into make call second, for for market that give rates and southern you a demand it X, the logs kind there? been X does of any drifting or of cost in just have signs maybe the stabilization to

Devin Stockfish

In typically The South, easier some doesn't comparable markets. on a happen the it dramatically to going really, the it's to mix in than realizations change Yes. is other bit little predict what's quarter-over-quarter.

customer on lumber the and demand for has made mix to our still we delivered that think pretty us. margin stayed be side. There's model the stable have, the I

we're remained of which markets. know demand year down the anticipating a near has and going the fiber in pulp pretty into the of that get necessarily end strong term, hear over has a optimism quite we the pulp the their that sawlogs side, rebuilding our know its will winter. the to paper So they're for I course inventory a and the paper lot course for the to as but and certainly as even run in has some markets little on many seen some here don't first deeper customers we're in starting in softness destocking time upturn I for start of drifted time bit some strong. And of we've the

So, may demand terms of there. some in bottomed have we

are there differences. some Now regional

markets because see down, closed I little QX. are we're coastal of think all in I portions the balance, But that that recover. on there realizations have may considered going take some think, comfortable longer a Southeast that to to just of comparable we're mills things

Anthony Pettinari

to South specific and to that Weyerhaeuser. that some a wondering seen shut impact helpful. very it in something Is just you, competitors. craft I to potential the regards with a impact what mean like is of number I impact guess, guess your Washington Okay. have it any? sounds may that if the State. of has I'm -- have have just I gotten to And those That's then we down X liner in mills

Devin Stockfish

wood Yes. of level. both market. some proactively time go to a down, you try to side. impact logs That out see residuals long-term But Timberland the on the does agreements, on for generally have take products great mill not for the pretty that's overall ultimately demand Obviously, the on pull side, the any we have or business customer work a

So a nothing that to of me it's happened going date to cause would that's lot us a have to specifically. whole concern impact material

nevertheless, But still residuals for those pulp find we need logs. do homes to and

customers it's to long sure so And interest in term. that make are these healthy everybody's

Anthony Pettinari

cost seeing were gears a then response of Got on shifting to it. for do around random some are question And any Wood maybe supply cash maybe you maybe lengths Got With it. higher-cost kind similar of the just [indiscernible], lumber. or anticipate you below and producers? Products

year that of And a you market. And if them supply this hesitant heard lumber has they have back are. be we've not they real I able X like kind know just prices get of they if don't of let feel that some thing labor are kind that Has then let with to I mills supply? like in may you to about is of because kind comments dynamic this guess more impacted go, labor they them where go broad that been think any

Devin Stockfish

are ordinarily any so regions, point certain do, supply it's And of amount in I going that estimation sort always a Yes. other supply that is prices for necessarily underwater of can't of go lumber to to to decent when a speak Sure. just than I costs others some say time, what we've out the there ongoing response. to below period mean probably hard cash historically, from that is our cash is seen standpoint.

ultimately concern improve a so to that labor give I ordinarily, certainly we losing versus certainly earlier a going you think somewhat run that's producers before that said, taking downtime. long, this year. little something and But would seen And decisions. pause labor, that's great, been to going of say, The probably has material before being money those have make bit although the issue market I only you're not with

will because same we tight. But been I get in better or continue QX QX of you think if forward. so this having that that were market think discussion as year, the have even more would probably move was to hopefully, I we reluctant

Operator

our from next Goldman comes question with Maklari Our Sachs. Susan

Susan Maklari

is is the that contrast the of season. the products move you builders shared of in outlook question saw over that staying think, this those especially, outlook gave in have starts and for the lot of the quarter, that over the seems Wood the like volumes earnings course commentary the in Products. you first to a course with housing I and MY I

early setup As to XXXX, to suggest industry together? your it share you you could even think into operate do and this think ability come for what the within year the And that, end segment? will about gain of and for how into that that maybe going the

Devin Stockfish

the obviously they're just our I variables I what's housing very play, continue rates. But we lot to to build there's they're of rate incentives we driver when period larger they're demand up going get and require people would XXXX. with suspect national happen at existing talk to at of Yes. but ongoing slightly to with what going is little going the and and the build. continue inventory It's big difficult a such particularly builders, start into that, caveat build. that to to builders, here these weather to going a helping ordinarily view I homebuilders, mean downs to continue relative to to market. that But when on view think talk to kinds I'll is with buy market, other be on my to I'll mortgage the that's a going it

think of and market some other financing think them higher these builders necessarily the expenses, help some I of rates, into smaller is challenged terms getting those the that the same more of homebuyers they and on all have a home. new that to particularly some into the interest puts pressure medium I their land tools with available in don't of

grow. So net-net, I but big think will I be market builders national year single-family might continue share the up slightly, for the to think next

have And for the us, Obviously, builders. we business base. all big customer do we diverse with a

expect grow We they would have I as with grow. I business good them. our to with continue to relationships -- would to continue us them

and medium as business small the builders We with also do well.

product just be market to so and whichever have allocate growing their And builders share. our to nimble we'll to are

available. home all gloom are underbuilt. are of homes of be early them buyers the in want There But the people and XXs do that out notwithstanding their about a not massively that doom were ready lot are homeowners. that home hear a housing, A to and I go people want you think lot and

They've And to things expect so next remarkable we navigate continue would being to somebody a of the credit all to year. And demand. And that job. I have give a builders this to lot done equal, going is environment. to that meet

Susan Maklari

And just go channel building there anything call out out inventories on we that very into quickly, Devin. Is there? How do as or the would you there the you highlight think fall? are that about

Devin Stockfish

On Yes. pretty lean. it's lumber, still

is seen a in get into we we've lot building there's of what just winter press. the beat on really commentary a these direction has as just of nobody good months, negative think the I and

to fairly build inventory. So I are think people reluctant

the people keeping year, . I'd it's pretty of at So to slightly say normal. probably on this are inventories side. time lumber their maybe light on below or OSB relative

So AWP, from we're least lean then certainly point, order now. said, at not maybe vantage pretty but either. on right inventories And our extended like not files big as as I lumber,

And EWP so our from not extra the a whole system lot of in standpoint.

Susan Maklari

$XXX carbon Okay. and you're milestone? And getting XXXX, you the the to extent on congratulations there as this which on in? about then that the that approved. -- end these That's Or squeeze you by think Maine on pricing When made volume? and in, $XXX And does for it is is credits out want based I hit the color. EBITDA million target helpful you've based that where project thoughts that of is updated any on million as making to just -- in forest X more the you've progress some set come that this can

Devin Stockfish

a pleased not and credit to number really first mean the carbon of big I but lot It's I Sure. scale we're we're foundation a and building learned project. this with itself, this. in we Yes. think

X half pipeline We more year. remember, we've got the X next for to the more in south these approval behind just continue so And got of And slated build. first that. in the in

So annual each of releases. credit will have these projects

we're how then a mitigation get and carbon. of renewables, storage going million different of part the we've is forest to and $XXX lot conservation, banking, to levers the and carbon capture got So that's

a but certainly time, and existing So something more make the opening we of optimism we than us of I as more market, the our trajectory it this business talk meaningful carbon people bit we businesses capture to think we into And size remarks, be million. that a to will percentage heavily carbon, storage think ultimately for more little of growing that. the probably renewables said to, I weighted will and set, outset, a learn going have up the the this more scale opportunity is of I think in up over at about the $XXX lot the

Susan Maklari

color all luck. the Thank Okay. and good you for

Operator

Our Mike next question Securities. Roxland with is from Truist

Michael Roxland

Devin, and Davie, Andy.

just of one, a pricing. EWP point on clarification First

lower, a stable versus made mentioned be the think should price terms that of then moderately think you comment I was but trajectory XQ I in year-end. realization product should that XQ there pricing be through

that's it is bit the I'm discrepancy is all stable? not XQ to much should mean, reconcile XQ, product I relative trying pricing of comments. that and just done why to a to it? that reconcile be will be little really I do going X therefore, really move it slightly how So between a

Devin Stockfish

that's Yes, right.

EWP, remember, go mean And talk I there. a products so that when there of we about are in number

MDF got you've solid and Trust section, So flow We Choice. EWP. got plywood through all

are majority we talk what and is we're which Trust about about solid, products. solid So section, when primarily the talking Choice

have bit quarters, of kind are Those a to QX. had we've little last see usually lag, a bit We couple into are targeted adjustments. price of some which make to the of flowing going a little of time

demand slight wood across down pricing seeing balance, products what quarter-over-quarter. But So on that we're and engineered our really drives that's stable pretty business.

Michael Roxland

last One, Got you on even in making competitive. that sorry. think order price, some remain products some the also you're quarter, I adjustments, that you.Thank concessions to targeted price on you price mentioned

So is in volume? because how with to for to to that something decided lower did in think in do that XQ that to prices you you be -- adjust -- more operating operate you slow to maybe as make less XQ, were you aggressively order make to your you competitive peers maybe so about up more up more your posture your or

Devin Stockfish

opposite order just dynamic dynamic. And products, been and targeted it's is do think down it depending up, little probably But pressure particular effect the a I market, very the we've with approaching like region. extended with by frankly, and its files supply-demand had just Actually, has way we pricing that took or probably either very market like Yes. prices own been looks all every that in what market on a adjust we off.

supply-demand in I to very of So local wouldn't material QX. It targeted dynamic? and it the adjusted kind moves say was was all any

Michael Roxland

one And question it. just Appreciate last on you. Got it. Got EWP.

operating where XQ. was comment in rate you can Just your

rate the XQ in had in think about in mentioned mid-XX have and a that you then low you XX% I last you operating XQ. call, type

in XQ? will Where So XQ? where you do was in think it it be

Devin Stockfish

Yes.

of was demand. But be in annual puts or it for we we're scheduled to presses the on kind same thinking high maintenance of some more adding have to kind less with are the and XXs across QX, that keep for rate number range a the QX. of operating EWP, in There and up We're comparable takes. So an token, downtime.

will an operating standpoint. net-net, more from rate So it be less comparable or

Operator

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

Paul Quinn

but of got question the the of coming end year. in at the additional quarter, we've strong volume [indiscernible] a on was pretty some Just

in QX wondering as opposed to why you the were and Just took why volumes maintenance typically QX lower? shipment

Devin Stockfish

Yes.

going OSB very to standpoint, So try with maintenance on But we to the extent, out adjustments as a schedule it's minor them couple a we what's may schedule hard markets. to some year. of general From on matter, prices quarter-to-quarter. a To depending things. in make what's over predict happen going

across And so out the kind and get year. you year sequence mills them schedule largely, to of done each the you them have to

less absent or and we material stick in that. to we advance some set change, to the try So maintenance more schedule,

just In the that's X a where big really driver had the was volumes, downtime. annual sales the little The pretty of the production of a was quarter-over-quarter. terms mills we our there, and comparable sales of maintenance volume down reflection bit,

We most of our at really have facilities. contracted volume

we of in maintenance to had up little build bit downtime to And sell-through extra that so QX a October. inventory in during

between system downtime. so volume most now difference the we've the that And volumes. through really We've out the moved was of and already sales of production come as that

Paul Quinn

over just on side. then credit And Congratulations the project. on carbon Okay. the

about lower the terms to $XXX modeling over out of XX initials. the comes XX,XXX in years, that should think we than obviously, how wondering million Just that

a decline? that about And when you line straight do is think credits? monetizing So those then

Devin Stockfish

Yes.

now, carbon us out as very in I monetizing, order. right we credits we're think be a standpoint. The really the call, short we're marketing to said, sequestration And priced We're having, trajectory those on relatively that. going tied the of I just range expect mid- in market to In to think, XX in I through some years. would the initial somewhere be that to XXs that's productive discussions and annual during growth terms is high selling last pricing anticipating the the over credits trajectory carbon

straight It's forest. will that line It on be a it across the particular not So little direction. either just in profile can a necessarily lumpy. depend growth

Operator

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

Mark Weintraub

drivers single-family your next thoughts out your I kind might repair of Would how year. you for play behind rundown appreciated on of share remodel view? key Devin, you think the and view that

Devin Stockfish

Sure.

I think and of Mark. it's puts -- there there, are kind takes

have of drivers are been lot People for going around been would and equity On hand, in repair their people still remodel there. and spurring still I refinanced the having otherwise have their lot a an stock. have a have in that the moved. that have homes. seeing do a keep at number this that think low X rates, homes with to of years we're that everyone it's aging lock-in effect housing We more

probably . that's some to repair demand. going so And of and level spur remodel

houses, coin, of repair going flip the remodel. also and there. interest fewer that be headwind extent, new to for of are headwind. On house when little that's And and some a a their people into that's a a people obviously, side move, buying to selling can be catalyst And bit if higher rates

takes. some puts So and

seen by here of equal. as we of to we the always whether winter going on Our certainly any we our always slightly And see the is as that. few think solid. flat view the down we're seasonality is, things growth probably going kind bit to up overall, I slowdown it's slightly, We'll into be There's that some to this, think all see views we're it's don't being I during look But the XXXX, up rates months expecting to heat or that of saw a market view next in slightly little year, to do. remain a pandemic you've out different means.

or adds headwind expect probably prepandemic levels the to that's we've additional returned absent material case to other some next of think going an I of recession and be there. I year growth, kind event that

Mark Weintraub

stock questions to prior are mean, at wood maybe just I it X the aren't situation values. repurchase underlying doing to And probably the that makes maybe discount following is share sell about there up where Okay. of scenarios and enough, your on to you're your asking businesses trading we're well. if products be that given discount in wide sense especially so Timberlands going when that Timberland

generating So as cash. you're much not

your discount? buy those And to there plans back you stock Timberlands have then what are proceeds so use be at a might and sell wide scenarios where to

David Wold

over I we active We're ensure we're maximizing levers the This of those I couple like allocate having and But is of number to ways the generate always Mark. we've said capital to we're Davie. in fortunate a earlier, of and there. been looking components and how separately, shares, very have years. that done shareholder repurchasing value cash at million really, last each $XXX if take market Sure,

us we for deploy So that to certainly view as attractive an capital. opportunity

the X on then only with we're that only selling is that of and And is value demonstrate certainly going the up viewpoint. of transactions recent timberlands, time our view the over not timberland

to why net we timberlands And over expect years so that's got of ultimately why and we've to of over timberlands time. $X the that next be a buyer billion several acquire target

for how to example we with deploy a But to purposes. of use real better portfolio past. make been The the capital our monetize adjustments generate is haven't can program afraid to on course, we other estate great we properties in that a

over balance I'm significant sure strong we of the and that to position divest the time, So views looking as amounts about value not of our now, of timberland. given sheet we're that timberlands have

Mark Weintraub

spreads the line, toolkit. that to the the the part But thing be significant of arbitraging type of there? that -- just kind think you at Is [indiscernible] of a Okay. is not kind sufficiently bottom it's is of

David Wold

mean we're divesting us, amount that significant don't levers a available future. I but us the in timberlands know to I all Yes. looking I near of always see at the

Mark Weintraub

just maybe And X detail. Okay. small

In third just prices -- they is where difference X going the And directions? between lag? you though, are a down Or obviously indicating was you're those were from So costs quarter. EWP, the had about OSB you in the up? talked what that

David Wold

Mark. Yes,

is average rolling XX-week on we a transfers internal those do we way that the have pricing. So

we that based on went over expect up little do prices the quarter, OSB where so the a of to bit And quarter-over-quarter. trajectory be

Mark Weintraub

are Okay. what you Great. particular, reviewing thinking should May? about different? And -- they differences much that how think about you in the you're maybe financial that might of then way if them? be you in lastly, difference the is how any explain we there be we the in carbon And projects in versus as did And ramification up in South could

Devin Stockfish

we not think to Yes. where initial At at a range. South. in high level, to threshold getting that North than we're really, Mark. a sell mid- credits Obviously, ready margin the high main you these little different the is overcome a the to XXs have But

that of would about different thinking are of be the we're sufficient rate for et in trees, the cetera. There projects in think the well. South I growth dynamics as terms

in up really And so Northeast. high ones thinking the biometrician work is little material in those projects difference the the a we're different. the way there's versus a from a But level, not about

Operator

Ketan from BMO Capital is with question Markets. next Our Mamtora

Ketan Mamtora

of you along Maybe seeing to has Europe? then of little down? Devin, to the start a sitting it see is U.S. start in with, year, European from what ports sense bit Lumber talk of can do you are about the but know terms And you the from trend Seaboard? the import at continuing what that your I Eastern eased those inventory

Devin Stockfish

certainly Europe, at. on to imports we saw question in that's coming spike earlier challenges the get undoubtedly in a is answering coming real-time significant as X those that the mean, with a usually down. European of year say, I pretty you There's data in specificity Yes. from been lag. is tough

statements to team. do based sales from continuing So it's it's down. on largely anecdotal our come I think

time. to market given have some for I all over pretty them in, cover they supply challenging Europe to European important and it's coming I at that the That right lower grow prices lumber producers probably transportation said, an being supply are lumber level hope and of keep continue now, end the an make economics even think these to coming going chain in because to from of do it's to costs anticipate work are. the where you prices

Now you Europe say, I economy lumber take have, some from at that when when consideration they coming European I deficit a Russia still Ukraine. think, and the in the will not in is into point, improves,

to not But expect probably little Currently, coming obviously. shape. European we over have supply to that's seen the improve and case, would economy in domestic think their a would produced the but your come time, in question, I markets I less were if European better not stay domestic. direct lumber do I that it little away of down expect in more answer seen But have go come in Europe bit to it more, down. a completely. to we

Ketan Mamtora

Got you of through helpful. And of worked from have the That's that all it. Devin, part year inventory spike.

Devin Stockfish

I think yes. so,

Ketan Mamtora

Got how specific early on to it. just you not CapEx? looking XXXX for just maybe read are higher, thinking number, similar directionally, a Perfect. And any it XXXX about is I'm lower?

Devin Stockfish

Ketan. Yes, Sure.

We do of point, given that year. So our typically haven't beginning this XXXX we at the guidance. the at

I that So from given XXXX $XXX that million. guidance changing quarter. point, this can substantially our But I our we've don't next forward look that. just At to guidance of multiyear million say to $XXX see

Ketan Mamtora

Perfect.

turn I'll Now very that's good helpful. over luck. it

Operator

over at this questions back turn further to Stockfish closing no the Devin time. are like for There I'd to comments. floor

Devin Stockfish

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

Operator

today's This teleconference. concludes

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

Weyerhaeuser (WY) 27 Oct 232023 Q3 Earnings call transcript