Q1 2025 Weyerhaeuser Co Earnings Call

Unknown Executive: Unknown Speaker, you may be Thank you, Rob.

Thank you Rob and good morning, everyone. Thank you for joining us today to discuss Weyerhaeuser's first quarter 2025 earnings. This call is being webcast at www Dot Weyerhaeuser Dot com our earnings release and presentation materials can also be found on our website. Please review the warning statements in our earnings release and on the presentation.

Andy Taylor: Good morning, everyone. Thank you for joining us today to discuss Weyerhaeuser's first quarter 2025 earnings. This call is being webcast at www.weyerhaeuser.com. Our earnings release and presentation materials can also be found on our website.

Andy Taylor: Please review the warning statements in our earnings release and on the presentation slides, considering the risks associated with forward-looking statements, as forward-looking statements will be made during this conference call. We will discuss non-GAAP financial measures, and a reconciliation of GAAP can be found in the earnings materials on our website.

<unk> considering the concerning the risks associated with forward looking statements as forward looking statements will be made during this conference call. We will discuss non-GAAP financial measures and a reconciliation of GAAP can be found in the earnings materials on our website on the call. This morning are Devin Stockfish, Chief Executive Officer, and Debbie will Chief Financial Officer, I will now turn the.

Andy Taylor: On the call this morning are Devin Stockfish, Chief Executive Officer, and David Wold, Chief Financial Officer.

Devin Stockfish: I will now turn the call over to Devin Stockfish. Thanks, Andy. Good morning, everyone, and thank you for joining us. Yesterday, Weyerhaeuser reported first quarter gap earnings of $83 million or $0.11 per diluted share on net sales of $1.8 billion. Adjusted EBITDA totaled $328 million, a 12% increase over the fourth quarter of 2024. These are solid results considering elevated macro economic uncertainty in the first quarter. And I'm pleased with the operational performance delivered by our team.

Devin Stockfish: Over to Devin stockfish.

Devin Stockfish: Thanks, Andy Good morning, everyone and thank you for joining us yes.

Devin Stockfish: Yesterday, Weyerhaeuser reported first quarter GAAP earnings of $83 million or 11 cents per diluted share on net sales of $1 $8 billion.

Devin Stockfish: Adjusted EBITDA totaled $328 million, a 12% increase over the fourth quarter of 'twenty 'twenty four.

Devin Stockfish: These are solid results considering elevated macroeconomic uncertainty in the first quarter and I'm pleased with the operational performance delivered by our teams.

Devin Stockfish: Turning now to our first quarter business I'll begin with Timberlands on pages 5 through 8 of our earnings slide. Timberlands contributed $102 million to first quarter earnings. Adjusted EBITDA was $167 million, a $41 million increase compared to the fourth quarter, largely driven by stronger domestic sales realizations in the West. turning to the domestic market in the Log demand was healthy in the first quarter as mills responded to strengthening lumber prices and seasonally lower log supply. As a result, pricing for our grade logs increased, and our average domestic sales realizations were significantly higher compared to the fourth quarter.

Devin Stockfish: Turning now to our first quarter business results.

Devin Stockfish: Begin with timberlands on pages five through eight of our earnings slides.

Devin Stockfish: Timberlands contributed $102 million to first quarter earnings.

Devin Stockfish: Adjusted EBITDA was $167 million, a $41 million increase compared to the fourth quarter, largely driven by stronger domestic sales realizations in the west.

Devin Stockfish: Turning to the domestic market in the west log demand was healthy in the first quarter as mills responded to strengthening lumber prices and seasonally lower log supply.

Devin Stockfish: As a result pricing for our grade logs increased and our average domestic sales realizations were significantly higher compared to the fourth quarter.

Devin Stockfish: Our domestic sales volumes increased moderately as we strategically shifted logs to domestic customer and PAWS shipments to China given the recent ban on U.S. log Fee harvest volumes were moderately higher and per unit log and haul costs decreased as we made the seasonal transition to lower elevation and lower cost harvest operations. Forestry and road costs were seasonally lower.

Devin Stockfish: Our domestic sales volumes increased moderately as we strategically shifted logs to domestic customers and pause shipments to China given the recent ban on U S log imports b.

Devin Stockfish: Harvest volumes were moderately higher and per unit log and haul costs decreased as we made the seasonal transition to lower elevation and lower cost harvest operations Forestry and road costs were seasonally lower.

Devin Stockfish: Moving to our western export. In Japan, demand for our logs improved in the first This was largely driven by a recent decrease in shipments and inventories of imported European lumber, which has allowed our customers to increase market share. As a result, our sales volumes for export logs to Japan were significantly higher compared to the fourth quarter, and average sales realizations were slightly higher. In China, log demand moderated in the first quarter in response to reduced consumption during the Lunar New Year holiday. Given this dynamic, coupled with improving Western domestic market conditions, we elected to significantly reduce volumes into China during the quarter.

Devin Stockfish: Moving to our western export business.

Devin Stockfish: In Japan demand for our logs improved in the first quarter. This was largely driven by a recent decrease in shipments and inventories of imported European lumber, which has allowed our customers to increase market share.

Devin Stockfish: As a result, our sales volumes for export logs to Japan were significantly higher compared to the fourth quarter and average sales realizations were slightly higher.

Devin Stockfish: In China log demand moderated in the first quarter in response to reduced consumption during the lunar new year holiday.

Devin Stockfish: Given this dynamic coupled with improving western domestic market conditions, we elected to significantly reduced volumes into China during the quarter.

Devin Stockfish: In early March, we paused all shipments in response to Chinese regulators announcing an immediate ban on log imports from the U.S. As a result, our sales volumes decreased significantly compared to the fourth quarter, and average realizations were moderately lower. It's worth noting that the log ban had a minimal impact on our first quarter results. And we don't anticipate this being a material headwind to our Western business in the near term. Given our diverse customer base, we were able to shift volumes to other buyers for our Western logs. I'll also note that we had reduced our China export program in the quarters leading up to the log ban, primarily due to ongoing consumption headwinds in the region and improving Western domestic market conditions.

Devin Stockfish: In early March we paused all shipments in response to Chinese regulators announcing an immediate ban on log imports from the U S.

Devin Stockfish: As a result, our sales volumes decreased significantly compared to the fourth quarter and average realizations were moderately lower.

Devin Stockfish: It's worth noting that the law ban had a minimal impact on our first quarter results and we don't anticipate this being a material headwind to our western business in the near term.

Devin Stockfish: Given our diverse customer base, we were able to shift volumes to other buyers for our western logs. I'll also note that we had reduced our China export program in the quarters, leading up to the log ban primarily due to ongoing consumption headwinds in the region and improving western domestic market conditions.

Devin Stockfish: Turning to the south. Adjusted EBITDA for Southern Timberlands decreased by $3 million as log markets were largely stable compared to the fourth quarter. Southern Saw Log Demand remained muted in response to ample log supply and mills continuing to align capacity with lower takeaway of finished goods. In contrast, southern fiber markets were generally balanced. In general, takeaway for our logs remain steady in the first quarter, given our delivered programs across the region. As a result, our average sales realizations were comparable to the fourth quarter.

Devin Stockfish: Turning to the south.

Devin Stockfish: Adjusted EBITDA for southern Timberlands decreased by $3 million as log markets were largely stable compared to the fourth quarter.

Devin Stockfish: Southern saw log demand remained muted in response to ample log supply and mills continuing to align capacity with lower takeaway of finished goods.

Devin Stockfish: In contrast, southern fiber markets were generally balanced in general takeaway for our logs remained steady in the first quarter given our delivered programs across the region.

Devin Stockfish: As a result, our average sales realizations were comparable to the fourth quarter.

Devin Stockfish: Our fee harvest volumes and per unit login haul costs were also Forestry and road costs were slightly higher.

Devin Stockfish: Our fee harvest volumes and per unit log and haul costs were also comparable forestry and road costs were slightly higher.

Devin Stockfish: In the north, adjusted EBITDA increased slightly compared to the fourth quarter due to slightly higher sales realizations in volume.

Devin Stockfish: In the north adjusted EBITDA increased slightly compared to the fourth quarter due to slightly higher sales realizations and volumes.

Devin Stockfish: Turning now to real estate, energy and natural resources on pages 9 and 10. Real Estate and E&R contributed $56 million to first quarter earnings and $82 million to adjusted EBITDA. First quarter EVA DA was $6 million higher than the fourth quarter, largely driven by the timing and mix of real estate sales. Real estate markets have remained solid year to date, we continue to capitalize on steady demand and pricing for HBU properties with significant premiums to timber value.

Devin Stockfish: Turning now to real estate energy and natural resources on pages nine and 10.

Devin Stockfish: Real estate and Ian are contributed $56 million to first quarter earnings and $82 million to adjusted EBITDA.

Devin Stockfish: First quarter, EBITDA was $6 million higher than the fourth quarter, largely driven by the timing and mix of real estate sales.

Devin Stockfish: Real estate markets have remained solid year to date, we continue to capitalize on steady demand and pricing for HBU properties with significant premiums to timber value.

Devin Stockfish: I'll now turn to our natural climate solutions business and cover some exciting news on one of our previously announced carbon capture and sequestration Earlier this month, Occidental Petroleum announced an important milestone associated with our CCS project in Livingston Parish, Louisiana. They've signed a 25 year offtake agreement for approximately 2.3 million metric tons of CO2 per year from a third party facility that's being constructed in the region. The emitting facility is expected to be operational in 2029, and subsurface injection of CO2 should commence around that time. This is an important step for our CCS project with Oxy and represents tangible progress in advancing Weyerhaeuser's growth in the CCS space.

Devin Stockfish: I'll now turn to our natural climate solutions business and cover some exciting news on one of our previously announced carbon capture and sequestration agreement.

Devin Stockfish: Earlier, this month Occidental petroleum announced an important milestone associated with our Ccs project and Livingston parish, Louisiana.

Devin Stockfish: They've signed a 25 year off take agreement for approximately $2 3 million metric tons of C. O two per year from a third party facility, that's being constructed in the region.

Devin Stockfish: The emitting facility is expected to be operational in 2029, and subsurface injection of C. O two should commence around that time.

Devin Stockfish: This is an important step for our Ccs project with Oxy and represents tangible progress in advancing weyerhaeuser's growth in the Ccs space.

Devin Stockfish: In addition, this underscores the importance of selecting sophisticated counterparties with strong technical, commercial and project development expertise.

Devin Stockfish: In addition, this underscores the importance of selecting sophisticated counterparties with strong technical commercial and project development expertise.

Devin Stockfish: Now moving on to wood products on pages 11 through 13. Wood Products contributed $106 million to first quarter earnings. Adjusted EBITDA was $161 million, which was comparable to our fourth quarter results. Starting with lumber, first quarter adjusted EBITDA was $40 million, a $19 million improvement compared to the fourth quarter. Although buyer sentiment remained cautious, the framing lumber composite increased moderately in the first quarter, largely driven by supply constraints from previously enacted curtailments and closures across the North American market, combined with a slight seasonal improvement in building activity into the spring month. Pricing was further supported by concerns and speculation around tariffs on Canadian supply, particularly SPF lumber products.

Devin Stockfish: Now moving on to wood products on pages 11 through 13.

Devin Stockfish: Wood products contributed $106 million to first quarter earnings adjusted EBITDA was $161 million, which was comparable to our fourth quarter results.

Devin Stockfish: Charting with lumber first quarter, adjusted EBITDA was $40 million of $19 million improvement compared to the fourth quarter.

Devin Stockfish: Although buyer sentiment remains cautious the framing lumber composite increased moderately in the first quarter largely driven by supply constraints from previously enacted curtailments and closures across the North American market.

Devin Stockfish: Combined with a slight seasonal improvement in building activity into the spring months.

Devin Stockfish: Pricing was further supported by concerns and speculation around tariffs on Canadian supply, particularly SPF lumber products.

Devin Stockfish: I'll also note that we've seen a steady increase in southern yellow pine lumber prices since January. For our lumber business average sales realizations increased by 5% in the first quarter, largely in line with the framing lumber composite. Our sales volumes increased slightly compared to the fourth quarter, and unit manufacturing costs were slightly lower as production levels increased. It is worth noting that both sales volumes and unit manufacturing costs were slightly unfavorable to our initial outlook for the quarter. This was primarily driven by temporary operational impacts from winter weather in January, and a somewhat softer demand environment in the more uncertain macro backdrop.

Devin Stockfish: I'll also note that we've seen a steady increase in southern yellow pine lumber prices since January.

Devin Stockfish: For our lumber business average sales realizations increased by 5% in the first quarter largely in line with the framing lumber composite or.

Devin Stockfish: Our sales volumes increased slightly compared to the fourth quarter and unit manufacturing costs were slightly lower as production levels increased.

Devin Stockfish: It is worth noting that both sales volumes and unit manufacturing costs were slightly unfavorable to our initial outlook for the quarter.

Devin Stockfish: This was primarily driven by temporary operational impacts from winter weather in January and is somewhat softer demand environment and the more uncertain macro backdrop.

Devin Stockfish: Our log costs were moderately higher, primarily for Western law.

Devin Stockfish: Our log costs were moderately higher primarily for western logs.

Devin Stockfish: Turning to OSB. First quarter adjusted EBITDA was $59 million, a $4 million decrease compared to the fourth quarter. Benchmark pricing for OSB entered the first quarter on a downward trajectory, largely in response to elevated channel inventories and slower building activity in the winter months. As the quarter progressed, demand and pricing improved slightly in anticipation of the spring building season. The later reversed as buyers weighed the potential impacts of tariffs on the economy and housing demand. This dynamic has persisted into April For our OSB business, average sales realizations decreased by 1% in the first quarter, which was favorable to the OSB composite.

Devin Stockfish: Turning to OSP.

Devin Stockfish: First quarter, adjusted EBITDA was $59 million or $4 million decrease compared to the fourth quarter.

Devin Stockfish: Benchmark pricing for OSB entered the first quarter on a downward trajectory largely in response to elevated channel inventories and slower building activity in the winter months as.

Devin Stockfish: As the quarter progressed demand and pricing improved slightly in anticipation of the spring building season. The later reversed as buyers weighed the potential impacts of tariffs on the economy and housing demand. This.

Devin Stockfish: This dynamic has persisted into April.

Devin Stockfish: For our OSB business average sales realizations decreased by 1% in the first quarter, which was favorable to the OSB composite.

Devin Stockfish: This is largely due to the length of our order files, which results in a lag effect for OSB realization. Given the softer demand environment, our sales volumes were comparable to the fourth quarter. Unit manufacturing costs and fiber costs were slightly higher. engineered wood products adjusted EBITDA was $53 million, a $16 million decrease compared to the prior quarter.

Devin Stockfish: This is largely due to the length of our order files, which results in a lag effect for OSB realizations.

Devin Stockfish: Given the softer demand environment, our sales volumes were comparable to the fourth quarter unit manufacturing cost and fiber costs were slightly higher.

Devin Stockfish: Engineered wood products, adjusted EBITDA was $53 million or $16 million decrease compared to the prior quarter.

Devin Stockfish: I'll note that we experienced a multi week outage at our MDF facility in Montana, as a result of a fire event in February. This impacted our first quarter EWP results by approximately $11 million. The facility resumed partial production in mid-March and is now back to a more normal operating posture. We plan to make up most of the lost volume over the course of 2025. Moving to our full EWP segment, average sales realizations for most products were comparable to slightly higher than fourth quarter average. Our sales volumes decreased in the first quarter, primarily for MDF and solid section products, whereas iJoyce volumes were compromised.

Devin Stockfish: I'll note that we experienced a multi week outage at our MDF facility in Montana as a result of a fire event in February.

Devin Stockfish: This impacted our first quarter AWP results by approximately $11 million the.

Devin Stockfish: The facility resumed partial production in mid March and is now back to a more normal operating posture.

Devin Stockfish: We plan to make up most of the lost volume over the course of 2025.

Devin Stockfish: Moving to our full AWP segment.

Devin Stockfish: Average sales realizations for most products were comparable to slightly higher than fourth quarter averages. Our sales volumes decreased in the first quarter, primarily for M. D F and solid section products, whereas I joist volumes were comparable.

Devin Stockfish: unit manufacturing costs were lower for most product categories, excluding MDF, and raw material costs were higher. Turning to the overall demand environment, although our EWP sales volumes and pricing held up reasonably well in the first quarter, demand was softer than our initial expectation. That said, we have seen a slight uptick in our order files over the last several weeks, and we do expect our sales volumes to increase seasonally in the second quarter.

Devin Stockfish: Unit manufacturing costs were lower for most product categories, excluding M D F and raw material costs were higher.

Devin Stockfish: Turning to the overall demand environment, although our AWP sales volumes and pricing held up reasonably well in the first quarter demand was softer than our initial expectations.

Devin Stockfish: That said, we have seen a slight uptick in our order files over the last several weeks and we do expect our sales volumes to increase seasonally in the second quarter.

Devin Stockfish: Moving forward, demand for EWP products will remain closely aligned with new home construction activity, particularly in the single family In distribution, adjusted EBITDA decreased by $4 million compared to the fourth quarter, largely driven by lower sales volume.

Devin Stockfish: Moving forward demand for AWP products will remain closely aligned with new home construction activity, particularly in the single family segment.

Devin Stockfish: In distribution adjusted EBITDA decreased by $4 million compared to the fourth quarter, largely driven by lower sales volumes with that I'll turn the call over to David to discuss some financial items and our second quarter outlook.

David Wold: With that, I'll turn the call over to Davey to discuss some financial items and our second quarter outlook.

David Wold: Thanks, Devin.

David: Thanks, Devin and good morning, everyone I'll begin with key financial items, which are summarized on page 15.

David Wold: And good morning, everyone. I'll begin with key financial items which are summarized on page 15. We ended the first quarter with $560 million of cash and total debt of just under $5.2 billion. First quarter share repurchase activity totaled approximately $25 million. And as of quarter end, we had completed approximately $925 million of repurchase under our $1 billion authorization. We returned $152 million to shareholders through the payment of our quarterly base dividend, which we increased by 5% to $0.21 per share during the quarter. This marked the fourth consecutive year of increasing our sustainable base dividend by 5% or more.

David: We ended the first quarter with $560 million of cash and total debt of just under $5 $2 billion.

David: First quarter share repurchase activity totaled approximately $25 million and as of quarter end, we had completed approximately $925 million of repurchase under our $1 billion authorization.

David: We returned $152 million to shareholders through the payment of our quarterly base dividend, which we increased by 5% to 21 cents per share during the quarter. This marked the fourth consecutive year of increasing our sustainable base dividend by 5% or more.

David Wold: We continue to believe that our dividend framework, combined with opportunistic share repurchase, enhances our ability to drive long-term value by returning meaningful and appropriate amounts of cash back to shareholders across market cycles. Capital expenditures for the quarter were $93 million, which includes $16 million related to the construction of our EWP facility in Arkansas. As we previously communicated, CapEx associated with this project will be excluded for purposes of calculating adjusted FAD as used in our flexible cash return framework. In the first quarter, we generated $70 million of cash from operations.

David: We continue to believe that our dividend framework combined with opportunistic share repurchase enhances our ability to drive long term value by returning meaningful and appropriate amounts of cash back to shareholders across market cycles.

David: Capital expenditures for the quarter were $93 million, which includes $16 million related to the construction of our AWP facility in Arkansas.

David: As we previously communicated capex associated with this project will be excluded for purposes of calculating adjusted F. A D as used in our flexible cash return framework.

David: In the first quarter, we generated $70 million of cash from operations, it's worth noting that the first quarter is usually our lowest operating cash flow quarter due to seasonal inventory and other working capital build.

David Wold: It's worth noting that the first quarter is usually our lowest operating cash flow quarter due to seasonal inventory and other working capital bills. During the quarter, we refinanced $210 million of high coupon debt at maturity by issuing a $300 million variable rate term loan. We have no additional debt maturing in 2025.

David: During the quarter, we refinanced $210 million of high coupon debt at maturity by issuing a $300 million variable rate term loan we have no additional debt maturing in 2025, our balance sheet liquidity position and financial flexibility remains strong and we are well positioned to navigate a range of market conditions.

David Wold: Our balance sheet, liquidity position, and financial flexibility remain strong, and we are well positioned to navigate a range of market conditions.

David: <unk>.

David Wold: Unallocated items are summarized on page 14.

David: Unallocated items are summarized on page 14 adjusted.

David Wold: Adjusted EBITDA for unallocated decreased by $13 million compared to the fourth quarter, primarily attributable to changes in intersegment profit elimination and life Looking forward, key Outlook items for the second quarter are presented on page 17. In our timberlands business, we expect second quarter earnings and adjusted EBITDA to be approximately $15 million lower compared to the first quarter of 2025, primarily due to the seasonal increase in forestry and road costs in our western operations. Turning to the West, we anticipate steady log demand in the domestic market in the second quarter as mills respond to improving lumber takeaway as we get deeper into the spring building season.

David: Adjusted EBITDA for unallocated decreased by $13 million compared to the fourth quarter, primarily attributable to changes in intersegment profit elimination and LIFO.

David: Looking forward key outlook items for the second quarter are presented on page 17.

In our timberlands business, we expect second quarter earnings and adjusted EBITDA to be approximately $15 million lower compared to the first quarter of 2025, primarily due to the seasonal increase in forestry and road costs in our western operations.

David: Turning to the West we anticipate steady log demand in the domestic market in the second quarter as mills respond to improving lumber takeaway as we get deeper into the spring building season.

David Wold: At the same time, log supply is expected to increase as weather conditions improve seasonally. Given these dynamics, we expect a fairly balanced domestic log market and stable pricing for Douglas fir log. That said, we anticipate our average domestic sales realizations will be slightly lower compared to the first quarter, largely due to mix. We expect our feed harvest volumes to be slightly higher given seasonally favorable operating conditions. Forestry and road costs are expected to be higher as we enter the spring and summer months, and per unit log and haul costs are expected to increase slightly as we move to higher elevation sites.

David: At the same time log supply is expected to increase as weather conditions improve seasonally.

David: Given these dynamics, we expect a fairly balanced domestic log market and stable pricing for Douglas fir logs.

David: That said, we anticipate our average domestic sales realizations will be slightly lower compared to the first quarter largely due to mix.

David: We expect our fee harvest volumes to be slightly higher given seasonally favorable operating conditions for.

David: Forestry and road costs are expected to be higher as we enter the spring and summer months and per unit log and haul costs are expected to increase slightly as we move to higher elevation sites.

David Wold: Briefly on our log export program to Japan. As Devin mentioned, shipments and inventories of imported European lumber have decreased, which has allowed our customers to take market share. As a result, we expect steady demand for our logs in the second quarter. That said, we anticipate lower sales volumes compared to the first quarter due to the timing of vessels. Our average sales realizations are expected to increase moderately.

David: Briefly on our log export program to Japan, as Devin mentioned shipments in inventories of imported European lumber have decreased which has allowed our customers to take market share.

David: As a result, we expect steady demand for our logs in the second quarter.

David: That said, we anticipate lower sales volumes compared to the first quarter due to the timing of vessels.

David: Our average sales realizations are expected to increase moderately.

David Wold: Turning to the south. On balance, we're expecting southern log prices to be relatively stable during the quarter and our average sales realizations to be comparable to the first quarter. Log inventories were ample at the outset of the second quarter, but we expect a slight improvement in saw log demand as mills respond to the recent uptick in pricing and takeaway of lumber. In addition, we anticipate improving fiber demand through the quarter as mills transition from spring maintenance outages. Our feed harvest volumes and forestry and road costs are expected to be higher due to drier weather conditions that are typical in the second quarter, and we anticipate moderately higher per unit log-in haul.

David: Turning to the south on balance, we're expecting southern log prices to be relatively stable during the quarter and our average sales realizations to be comparable to the first quarter.

David: Log inventories were ample at the outset of the second quarter, but we expect a slight improvement in saw log demand as mills respond to the recent uptick in pricing and takeaway of lumber.

David: In addition, we anticipate improving fiber demand through the quarter as mills transition from spring maintenance outages.

David: Our fee harvest volumes, and forestry and road costs are expected to be higher due to drier weather conditions that are typical in the second quarter.

David: And we anticipate moderately higher per unit log and haul costs.

David Wold: In the north, our sales realizations are expected to be moderately higher compared to the first quarter, and fee harvest volumes are expected to be significantly lower given spring breakup conditions.

David: In the north our sales realizations are expected to be moderately higher compared to the first quarter and fee harvest volumes are expected to be significantly lower given spring breakup conditions.

David Wold: Moving to our real estate, energy and natural resources segment. We continue to see solid demand for real estate properties and expect a consistent flow of HBU transactions with significant premiums to timber value. For the second quarter, we expect adjusted EBITDA will be approximately $50 million higher, and earnings will be approximately $40 million higher than the first quarter of 2025 due to the timing and mix of real estate sales. For the full year, we maintain our adjusted EBITDA guidance of approximately $350 million for the segment, which includes our target to reach $100 million of EBITDA in our natural climate solutions business.

David: Moving to our real estate energy and natural resources segment, we continue to see solid demand for real estate properties and expect a consistent flow of HBU transactions with significant premiums to timber value for.

David: For the second quarter, we expect adjusted EBITDA will be approximately $50 million higher and earnings will be approximately $40 million higher than the first quarter of 2025 due to the timing and mix of real estate sales.

David: For the full year, we maintain our adjusted EBITDA guidance of approximately $350 million for this segment, which includes our target to reach $100 million of EBITDA and our natural climate solutions business we.

David Wold: We now expect basis as a percentage of real estate sales to be 30 to 40% for the full year.

David: We now expect basis as a percentage of real estate sales to be 30% to 40% for the full year.

David Wold: In our wood product segment, we expect second quarter earnings and adjusted EBITDA to be slightly higher than the first quarter of 2025, excluding the effect of changes in average sales realizations for lumber and OSB, as sales volumes increase seasonally across our wood products business After a slower than expected start to the spring building season, I'll note that we are seeing signs of improving demand in certain end markets, particularly from the treater segment in the U.S. South. In addition, order files for our EWP products have improved over the last several weeks. As shown on page 18, our current and quarter to date average sales realizations for lumber are moderately higher than the first quarter average.

David: In our wood products segment, we expect second quarter earnings and adjusted EBITDA to be slightly higher than the first quarter of 2025, excluding the effect of changes in average sales realizations for lumber and OSB as sales volumes increased seasonally across our wood products businesses.

After a slower than expected start to the spring building season I will note that we are seeing signs of improving demand in certain end markets, particularly from the treater segment in the U S South.

David: In addition order files for our AWP products have improved over the last several weeks.

David: As shown on page 18, our current in quarter to date average sales realizations for lumber are moderately higher than the first quarter average.

David Wold: This is largely in response to the steady increase in pricing for Southern Yellow Pine lumber products. Conversely, for OSB, our current and quarter-to-date realizations are moderately lower compared to the first quarter average. For our lumber business, we expect slightly higher sales volumes and log costs compared to the first quarter. Unit manufacturing costs are expected to be comparable. For our oriented strand board business, we anticipate slightly higher sales volumes and fiber costs. unit manufacturing costs are expected to increase due to more downtime for planned annual maintenance compared to the first quarter Turning to our engineered wood products business, we anticipate slightly higher sales volumes for all products in the second quarter and comparable average sales realization.

David: This is largely in response to the steady increase in pricing for southern yellow pine lumber products.

David: Conversely for OSB are current in quarter to date realizations or moderately lower compared to the first quarter average.

David: For our lumber business, we expect slightly higher sales volumes and log costs compared to the first quarter.

David: Unit manufacturing costs are expected to be comparable.

David: For oriented Strand Board business, we anticipate slightly higher sales volumes and fiber costs.

David: Unit manufacturing costs are expected to increase due to more downtime for planned annual maintenance compared to the first quarter.

David: Turning to our engineered wood products business, we anticipate slightly higher sales volumes for all products in the second quarter and comparable average sales realizations.

David Wold: unit manufacturing costs are expected to be lower, primarily driven by increased production at our MDF facility in Montana, which has returned to more normal operating levels, and raw material costs are expected to be moderately lower.

David: Unit manufacturing costs are expected to be lower primarily driven by increased production at our MDF facility in Montana, which has returned to more normal operating levels and raw material costs are expected to be moderately lower.

David Wold: For our distribution business, we expect adjusted EBITDA to be slightly higher compared to the first quarter as sales volumes increase season With that, I'll now turn the call back to Devin and look forward to your question.

David: For our distribution business, we expect adjusted EBITDA to be slightly higher compared to the first quarter as sales volumes increased seasonally.

Devin Stockfish: With that I'll now turn the call back to Devin and look forward to your questions.

Devin Stockfish: Thanks, Davey.

Devin Stockfish: Thanks, David.

Devin Stockfish: Before wrapping up this morning, I'll make a few comments on the housing and repair and remodel markets, starting with housing. For the first quarter, housing held up reasonably well with total starts averaging nearly 1.4 million units on a seasonally adjusted basis and single family starts averaging around 1 million units. However, homebuilder sentiment waned somewhat as the quarter progressed, and prospective buyers turned more cautious in response to elevated uncertainty surrounding tariffs in the broader economy. This cautious sentiment continued into April as trade policy actions accelerated and markets experienced elevated volatility. Given these dynamics, the spring building season has gotten off to a softer start than we were expecting at the outset of 2025.

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

Speaker Change: For the first quarter housing held up reasonably well with total starts averaging nearly 1.4 million units on a seasonally adjusted basis in single family starts averaging around 1 million units in the quarter.

Speaker Change: However, homebuilder sentiment waned somewhat as the quarter progressed and prospective buyers turned more cautious in response to elevated uncertainty surrounding tariffs and the broader economy.

Speaker Change: This cautious sentiment continued into April as trade policy actions accelerated end markets experienced elevated volatility.

Speaker Change: Given these dynamics the spring building season has gotten off to a softer start than we were expecting at the outset of 2025.

Devin Stockfish: Moving forward, the housing market will ultimately be determined by the state of the economy, and whether the employment picture remains healthy. If the US economy and employment hold up reasonably well, there is no reason we cannot still experience a solid housing market in 2025. Further, if mortgage rates move down over the course of the year, we could even see some upside in housing activity. In the near term, however, I suspect we'll see some choppiness in the housing activity as trade negotiations continue and the economy adjusts to these policies. But putting the current environment aside, we remain bullish on housing over the long term, supported by strong demographic tailwinds, a vastly underbuilt housing stock and historically low existing home.

Speaker Change: Moving forward the housing market will ultimately be determined by the state of the economy and whether the employment picture remains healthy if the U S economy and employment hold up reasonably well. There is no reason, we cannot still experience a solid housing market in 2025 further if mortgage rates move down over the course of the year we could.

Speaker Change: Even see some upside in housing activity.

Speaker Change: In the near term however, I suspect we will see some choppiness in the housing activity as trade negotiations continue and the economy adjusts to these policies.

Speaker Change: But putting the current environment aside we remain bullish on housing over the long term supported by strong demographic tailwind a vastly under built housing stock and historically low existing home inventories.

Devin Stockfish: Turning to the repair and remodel Despite the seasonal decrease in activity that's typical in the winter months, R&R activity held up reasonably well in the first quarter. Underlying demand fundamentals remain solid and we're seeing the typical pickup and activity as the weather improves. That said, we are still experiencing some headwinds in this market, namely higher interest rates and fewer existing home transactions due to the lock-in effect, and more recently, weakening consumer confidence. As we look forward, while repair and remodel activity may experience a little turbulence here in the near term as the economy adjusts to tariff actions, we do expect demand to pick up as the year progresses.

Speaker Change: Turning to the repair and remodel market. Despite the seasonal decrease in activity. That's typical in the winter months R&R activity held up reasonably well in the first quarter.

Speaker Change: Underlying demand fundamentals remain solid and we're seeing the typical pickup in activity as the weather improves.

Speaker Change: That said, we are still experiencing some headwinds in this market, namely higher interest rates and fewer existing home transactions due to the lock in effect and more recently weakening consumer confidence as.

Speaker Change: As we look forward, while repair and remodel activity may experience, a little turbulence here in the near term as the economy adjusts to tariff actions, we do expect demand to pick up as the year progresses and as we look out over the medium to long term many of the drivers for R&R activity are still very much in place, including significantly increased <unk>.

Devin Stockfish: And as we look out over the medium to long term, many of the drivers for R&R activity are still very much in place, including significantly increased levels of home equity and an aging housing In addition, we've largely worked through the pull forward of projects that occurred during the pandemic, and in fact are now seeing project referrals for R&R projects. So this should be a tailwind for repair and remodel activity is the macro environment.

Speaker Change: Level of home equity and an aging housing stock. In addition, we've largely worked through the pull forward of projects that occurred during the pandemic and in fact are now seeing project deferrals for R&R projects. So this should be a tailwind for repair and remodel activity as the macro environment improves.

Devin Stockfish: In closing, we delivered solid results across our businesses in the first quarter. In addition, we increased our quarterly base dividend for the fourth consecutive year, and recently reached an important milestone in our CCS agreement with Occidental in Louisiana. Looking forward, we're well positioned to navigate a range of market conditions in the near term. And we remain confident in the longer term demand fundamentals that support our business. Our balance sheet is strong, and we continue to focus on driving operational excellence, serving customers, capitalizing on strategic opportunities, and creating long-term value for our shareholders through our disciplined and flexible capital allocation framework.

Speaker Change: In closing, we delivered solid results across our businesses in the first quarter. In addition, we increased our quarterly based dividend for the fourth consecutive year and recently reached an important milestone in our Ccs agreement with Occidental in Louisiana.

Speaker Change: Looking forward, we're well positioned to navigate a range of market conditions in the near term and we remain confident in the longer term demand fundamentals that support our businesses.

Speaker Change: Our balance sheet is strong and we continue to focus on driving operational excellence, serving customers capitalizing on strategic opportunities and creating long term value for our shareholders through our disciplined and flexible capital allocation framework with that I think we can go ahead and open it up for questions.

Devin Stockfish: With that, I think we can go ahead and open it up for questions. Thank you.

Speaker Change: Thank you we will now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.

Unknown Executive: We will now be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone. A confirmation tone will indicate your line is in the question. You may press star 2 if you'd like to withdraw your...

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Unknown Executive: For participants using speaker equipment, it may be necessary to pick up your Before I press One moment, please.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

Susan Maklari: Our first question comes from Susan Maklari with Goldman Sachs. Please proceed with Good morning, everyone.

Speaker Change: Our first question comes from Susan Mcclary with Goldman Sachs. Please proceed with your question.

Charles Brennan: Good morning, everyone. This is Charles Brennan for Susan Thanks for taking my question.

Charles Buran: This is Charles Buran in for Susan. Thanks for taking my question. Morning. Good morning, General. Good morning.

Speaker Change: Good morning Charles.

Speaker Change: Good morning Jess.

Charles Buran: Just first, I want to talk a bit about what you're hearing on demand for lumber as we enter the building season. I think, you know, we've heard from the builders taking down their closings guide for the year, and you know, the choppy DIY demand and your prepared remarks. But what are you hearing from retailer demand, you know, through the spring and their willingness to ramp inventory given the demand uncertainty against, you know, the expectations for higher tariffs later this summer? And specifically, given the risks of tariffs on Canadian lumber, do you see any shift in order patterns between SPF and sodium neopine that could sustain?

Speaker Change: First I wanted to talk a bit about what you're hearing on demand for lumber as we went through the building season I think we've heard from the builders start taking down their closings guide for the year and the choppy.

Speaker Change: Choppy DIY demand in your prepared remarks, but what are you hearing from retailer demand through the spring and their willingness to ramp inventory given the demand uncertainty I guess your expectation for high tariffs, leaving summer and specifically given the risks of tariffs on Canadian lumber do you see any shift in order patterns between SPF in southern Europe.

Speaker Change: That could sustain over time.

Devin Stockfish: Sure. Yeah, let me unpack there. A few questions in there. You know, just in terms of overall lumber demand, you know, I would say it's steady right now. You noted there has been a little bit of pullback and you've seen that in the builder confidence levels here recently. And so, you know, I would say it's not maybe as strong as we had anticipated heading into the year. But the flip side of that is, you know, we saw somewhere in the neighborhood of four billion board feet of capacity come out of the system last year. And so, you know, that did balance the supply demand a little bit.

Speaker Change: Sure Yeah, let me unpack there are few questions in there just in terms of overall lumber demand.

Speaker Change: I'd say its steady right now you noted there has been a little bit of pullback and you've seen that in the builder confidence levels here recently.

Speaker Change: And so you know I would say, it's not maybe as strong as we had anticipated heading into the year, but the flip side of that is you know we saw somewhere in the neighborhood of 4 billion board feet of capacity come out of the system last year and so you know that did balance the supply demand a little bit and we're seeing that in today's environment, even with a little bit more muted.

Devin Stockfish: And we're seeing that in today's environment, even with a little bit more muted demand overall. But that being said, as we roll into spring, we're seeing the typical increase in demand. And, you know, we're starting to see the R&R market move up a little bit. As Davey noted, we've seen a little bit more interest from the treater environment here of late. So, you know, as we think about this in the broader sense, you know, I do think with just the lack of clarity around where housing is going to go, we've seen this in lumber, OSB, to some extent, EWP.

Speaker Change: Demand overall, but that being said as we roll into spring, we're seeing the typical increase in demand and we're starting to see the R&R market move up a little bit as Dave noted, we've seen a little bit more interest from the treater environment here of late so you know as we think about this in the broader sense you know I do think.

Speaker Change: With just the lack of clarity around warehousing is going to go we've seen this in lumber OSB to some extent AWP were not seen people build inventories to the same level you ordinarily would see heading into the spring and so you know I think that's partially uncertainty just around what's what's going to play out over the next several months.

Devin Stockfish: We're not seeing people build inventories to the same level you ordinarily would see heading into the spring. And so, you know, I think that's partially uncertainty just around what's going to play out over the next several. Right now, there is sufficient supply to meet that demand, so it's not causing any significant disruptions in the supply chain.

Speaker Change: Right now there is sufficient supply to meet that demand. So it's not causing any significant disruptions in the supply chain I will just note and we've seen this many times in the past to the extent that you don't have meaningful inventories heading into this time of year and we do see in <unk>.

Devin Stockfish: I will just note, and we've seen this many times in the past, to the extent that you don't have meaningful inventories heading into this time of year, and we do see an uptick in building activity, that typically will cause some short-term supply shocks that'll cause pricing to go up. So that's something that we're watching. There's a lot going on with tariffs and duties. Obviously, that's certainly on the mind of a lot of the buyers. I think we're in this period of, I think we're going to wait and see here for a little bit. The softwood lumber duties increase will not come until a little bit later this summer, and so I don't know that that's necessarily driving a lot of buying activity today.

Speaker Change: Uptick in building activity that typically will cause some short term supply shocks that will cause pricing to go up so that's something that we're watching there's a lot going on with tariffs and duties. Obviously, that's certainly on the mind of a lot of the buyers I think there's we're in this period of <unk>.

We're going to wait and see here for a little bit the softwood lumber duties increase will not come until little bit later this summer and so I don't know that that's necessarily driving a lot of buying activity. Today, obviously, there's a lot going on besides the softwood lumber duties with tariffs, including the 232 investigation.

Devin Stockfish: Obviously, there's a lot going on besides the softwood lumber duties with tariffs, including the 232 investigation, but I'm not sure that's driving a lot of activity today. That probably will more so be the case as you get toward the end of the quarter. I will say, just the whole dynamic with duties, but also just with the amount of southern yellow pine production that's been put in place all across the South over the last several years. Southern yellow pine is a bigger percentage of the overall pie these days, and so you are to see more inquiries around transitioning from SPF to southern yellow pine.

Speaker Change: But I'm not sure that's driving a lot of activity today that probably will more so be the case as you get toward the end of the quarter.

Speaker Change: I will say you know just the whole dynamic with with duties, but also just with the amount of southern yellow pine production. That's been put in place all across the south over the last several years southern yellow pine is a bigger percentage of the overall pie. These days and so you are starting to see more inquiries around transitioning from S.

Speaker Change: P F to southern yellow pine still early days I would say there, but we are getting somewhat more inquiries around that just in anticipation of what's to come.

Devin Stockfish: Still early days, I would say there, but we are getting somewhat more inquiries around that just in anticipation. Got it, that's helpful Devin.

Speaker Change: Got it Thats helpful.

Devin Stockfish: And then second, I want to talk a bit about EWP. It was encouraging to see that, you know, you were able to get a little bit of pricing lift sequentially across both SolidSection and iGeorge this quarter, you know, despite the builders, you know, trying to, you know, cut costs and find savings wherever they can, given the affordability issues. How do you see, you know, the outlook for your realization for EWP going forward?

Speaker Change: And then second I'll, let you talk a bit about AWP. It was encouraging to see that you were able to get a little bit of pricing lift sequentially across both.

Speaker Change: Would section and I joist this quarter despite the builders.

Speaker Change: Going to cut costs and find savings, we're doing great Ken given the affordability issues. How do you see you know the outlook for realization for <unk> going forward I know I think you guided for comparable for the second quarter, but considering the dynamics with the builders looking for savings against rising inflation in.

Devin Stockfish: I know, I think you guys were comparable for the second quarter, but considering the dynamics with the builders looking for savings against, you know, rising inflation in, you know, some of the raws and overall the, you know, the market, what do you see, you know, the impact for realization and, you know, the expectations for volume for those products going forward? Yeah, I mean, as we said, you know, our view here in the near term is that, you know, pricing is more or less going to be comparable here in the near term, we are expecting to see volumes go up somewhat in the second quarter, just primarily as a function of just the pickup and building activity as you get into the warmer months.

Speaker Change: Some of the raws and overall the market what do you see.

Speaker Change: The impact for for realization and the expectations for volume for those products going forward as well.

Speaker Change: Yeah, I mean, as we said you know our our view here in the near term is that pricing is more or less going to be comparable here in the near term. We are expecting to see volumes go up somewhat in the second quarter, just primarily as a function of just the pickup in building activity as you get into the warmer months as you look out over time.

Devin Stockfish: As you look out over time, I mean, you know, it all comes down to the value proposition for the home builders. And, you know, we do provide a lot of around our product, we have a very high quality product, that's typically in pretty high demand. And so that's a conversation that's ongoing. You know, at all times with our customers, you have to create value, ultimately, if you're going to be satisfying your customer base. So to the extent that that housing holds up reasonably well and or improves, you know, that will be a tailwind for pricing.

Speaker Change: You know it all comes down to the value proposition for for the homebuilders and we do provide a lot of support around our product we have a very high quality product that's typically in pretty high demand and so that's a conversation that's ongoing at.

Speaker Change: At all times with their customers you you have to create value ultimately a if youre going to be satisfying your customer base. So to the extent that that housing holds up reasonably well and or improves that will be a tailwind for pricing and you know the converse is also true, but that'll be an ongoing discussion and ultimately it's about providing value in supporting.

Devin Stockfish: And, you know, the converse is also true. But that'll be an ongoing discussion. Ultimately, it's about providing value and supporting your customers. And that's what we're focused on.

Speaker Change: And your customers and that's what we're focused on every day.

George Staphos: Our next question comes from George Staphos with Bank of America, please proceed. Hi, everyone. Good morning. Thanks for the detail. How are you, Devin? So I guess the first question I had for you, given what's been a softer pickup to the summer building... Microsoft, just given the uncertainties that you mentioned, have you adjusted your harvest profile at all? Or should we still be expecting a $35.5 million? In terms of the profile, what you're going to do relative... Yeah, you know, George, really outside of a very meaningful recession type environment, our harvest levels are what they are.

Speaker Change: Our next question comes from George Staphos with Bank of America. Please proceed with your question.

George Staphos: Hi, everyone. Good morning, Thanks for the details.

George Staphos: How are you Devin so I guess the first question I had for you given what's been the softer pick up to the summer building season.

George Staphos: Demand being a little bit soft just given the uncertainties that you mentioned have you adjusted your harvest profile at all or should we still be expecting a $35 5 million tons and can you give us a bit more color in terms of what youre, saying.

George Staphos: So the profile of what Youre going to do relative to what you might've been looking at two or three months ago.

Speaker Change: Yeah, you know George really outside of a very meaningful recession type environment. Our harvest levels are what they are.

Devin Stockfish: We set those to really be within sustainable harvest levels over time. So I wouldn't anticipate any change to our full year harvest level. You know, we don't typically have an issue moving volume, you know, sometimes around the margins, there can be some pricing dynamics, given given what's going on in our end markets, whether that's lumber, pulp and paper. But generally, you know, we set our harvest plan. that are pretty stable. Okay, fair enough. Appreciate that.

Speaker Change: We set those two to really be within sustainable harvest levels over time, so I wouldn't anticipate any change to our full year harvest levels.

Speaker Change: You know, we don't typically have an issue moving volume.

Speaker Change: Sometimes around the margins there can be some pricing dynamics, giving given what's going on in our end markets, whether that's lumber pulp and paper.

Speaker Change: But generally we send our harvest plans are there that are pretty stable over time.

Speaker Change: Okay Fair enough I appreciate that and then you mentioned the Occidental Petroleum agreement.

George Staphos: And then you mentioned the Occidental Petroleum Can you give us a bit more color relative to what we should be expecting? of, you know, cash flows, milestones.

Speaker Change: Can you give us a bit more color relative to what we should be expecting in terms of cash flows milestones timing in that regard and I'll turn it over with that thank you.

Devin Stockfish: in that regard, and I'll turn it over with that. Yeah, yeah, thanks for the question. You know, we're really excited about this. You know, as we've said, for a number of years, I think CCS is going to be a very big opportunity for us over time. It's progressed more slowly than we had originally anticipated. I think just as the industry is trying to figure out, you know, what are the economics behind some of these offtake agreements, the permitting process has been much more extended, I think, than anyone had expected. This is a I think this is a concrete data point that this is going to happen.

Speaker Change: Yeah, Yeah. Thanks for the question. We're really excited about this you know as we've said for a number of years I think Ccs is going to be a very big opportunity for us over time. It has progressed more slowly than we had originally anticipated I think just as the the industry is trying to figure out you know what are the economics behind some of these.

Speaker Change: These offtake agreements the permitting process has been much more extended I think than anyone had expected. This is a I think this is a concrete data point that this is going to happen. We're really excited about this project I believe this is one of the largest if not the largest offtake agreement and the Ccs space in north.

Devin Stockfish: We're really excited about this project. I believe this is one of the largest, if not the largest offtake agreement in the CCS space in North America. So really excited about that. Again, I just reiterate, that's why you pick partners like Oxy, because they're very sophisticated, and they know how to do it.

Speaker Change: Erika so really excited about that again I'd just reiterate that's why you pick partners like oxy, because they are very sophisticated and they know how to do this.

Devin Stockfish: We're not providing the specific economics on a deal by deal basis, George, and really the rationale there is we're out trying to sign more CCS agreements. And we want to make sure we're getting the best economics that we can. We will obviously provide more detail about that as these things start coming online. From a timing standpoint, you know, I think they're in the process of getting their permits through the process. I think it's making its way through the process is what we understand. And, you know, I expect they will start building out the infrastructure here over the next couple years to be ready for first injection in 2020.

Speaker Change: We're not providing the specific economics on a deal by deal basis, George and really the rationale. There is we're out trying to sign more Ccs agreements and we want to make sure. We're getting the best economics that we can we will obviously provide more detail about that as these things start coming online from a timing standpoint, I think they're in the price.

Speaker Change: Yes of getting their permits.

Speaker Change: Through the process I think it's making its way through the process is what we understand and I expect they will start building out the infrastructure here over the next couple of years to be ready first injection in 2029.

Devin Stockfish: Okay Devin, so in terms of just the cash flows, recognize you're not going to quantify, we're looking at sort of 29 and then next decade. Yeah, I mean, I would expect it to start showing up in the P&L in 2029. Once you have first injection.

Speaker Change: Okay. So in terms of just the cash flows recognize you're not going to quantify we're looking at sort of 29, and then next decade in terms of when we will start seeing it actually show up in the P&L and.

Speaker Change: Yeah, I mean, I would expect it to start showing up in the P&L in 2029 once you have first injection.

George Staphos: Okay, thanks. I'll turn it over.

Speaker Change: Okay. Thanks, I'll turn it over.

Matthew Mckellar: Yep. Our next question comes from Matthew McKellar with RBC Capital Markets. Please proceed with your question.

Speaker Change: Yep.

Speaker Change: Our next question comes from Matthew Mckellar with RBC capital markets. Please proceed with your question.

Matthew Mckellar: Hi, good morning. Thanks for taking my questions.

Matthew Mckellar: Hi, good morning, Thanks for taking my questions.

Matthew Mckellar: It'd be first If we do see some meaningful section 232 tariffs on wood products and now How do you think about the likely impact to Timberland valuations over the medium term? Yeah, I mean, that's a great question. You know, first, what I would say is just with respect to the 232 investigation, you know, really not a whole lot of clarity on how that's going to shake out what products that's going to cover what level of tariffs they would cover if that does end up being the result. So you know, hard to make any sort of real definitive determinations around that until we get more information.

Speaker Change: Let me first.

Speaker Change: If we do see some meaningful section 232 tariffs on wood products announced.

Speaker Change: How long do you think about the likely impact to Tim.

Speaker Change: Timberland valuations over the medium term.

Speaker Change: Yeah, I mean, that's a great question.

Speaker Change: First what I would say is just with respect to the 232 investigation.

Speaker Change: Really not a whole lot of clarity on how that's going to shake out what products that is going to cover what level of tariffs. They would cover if that does end up being the result, so hard to make any sort of real definitive determinations around that until we get more information.

Devin Stockfish: That being said, in terms of Timberland valuations, I don't expect that would have a meaningful impact in the near term. And that's just primarily because unless and until you have good clarity on how long those kinds of tariffs would be in place, I suspect people are not going to be building that meaningfully into the valuation of Timberlands. Because again, it's just a very long term asset class and people tend to look out over the course of decades rather than, you know, in two and three year increments.

Speaker Change: That being said you know in terms of you know.

Speaker Change: Timberland valuations I don't expect that would have a meaningful impact in the near term and that's just primarily because unless and until you have good clarity on how long those kinds of tariffs would be in place I suspect people are not going to be building that meaningfully into the valuation of timberlands because <unk>.

Speaker Change: Again, it's just a very long term asset class and people tend to look out over the course of decades, rather than two and three year increments. So I don't know that it would necessarily have an impact on timberland values or at least not anything material.

Matthew Mckellar: So I don't know that it would necessarily have an impact on Timberlands values or Okay, thanks for that color.

Speaker Change: Okay. Thanks for that color.

Devin Stockfish: And last for me, just in the OSB business, you mentioned some planned annual maintenance in the quarter. I recognize this is planned maintenance, but have you been intending to perform this maintenance in Q2 for some time? Or are you pulling forward any maintenance, maybe based on what you're seeing in the market? No, I mean, this was part of our annual plan. As a general matter, you know, we plan the the annual maintenance work. Well in advance, if you have to order equipment, you have to schedule outside contractors. And so we typically come up with a plan to cover the year and absent something really meaningful changing in the environment, we typically stick with those plans.

Speaker Change: Last for me just in the OSB business you mentioned some planned annual maintenance in the quarter I recognize this is planned maintenance, but have you been intending to perform this maintenance in Q2 for some time or are you pulling forward any maintenance steady based on what youre seeing in the market.

Speaker Change: No I mean this was part of our annual plan as a general matter you know we plan the annual maintenance.

Speaker Change: Work.

Speaker Change: Well in advance if you have to order equipment, you have to schedule outside contractors and so we typically come up with a plan to cover the year and absent something really meaningful changing in the environment. We typically stick with those plans. It's just you you typically incur some extra costs, if you start moving that around latency.

Devin Stockfish: It's just you typically incur some extra costs if you start moving that around. Okay, thanks very much.

Speaker Change: Season.

Speaker Change: Okay. Thanks, very much I'll turn it back.

Devin Stockfish: I'll turn it back.

Mark Weintraub: All right, thank Our next question comes from Mark Weintraub with Seaport Research Partners. Please proceed with your question. Thank you. A few quick thoughts. One on on that OSB annual plan maintenance adage, order magnitude, how much impact would you expect that to have in 2Q? Yeah, Mark, not a not a meaningful impact. I mean, I think we're still expecting that that operating rates would be in the kind of the low to mid 90s, which is consistent with where we were in the first quarter. So maybe 10 million or something or less? No, no, no, no.

Speaker Change: Alright, thank you.

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

Speaker Change: You few quick thoughts one on on that OSB annual plant maintenance outage, a order of magnitude how much impact would you expect that to have an <unk>.

Speaker Change: Yeah, Mark not a not a meaningful impact I mean, I think we're we're still expecting that that operating rates would be in the kind of the low to mid ninety's, which is consistent with where we were in the first quarter.

So maybe 10 million or something or were left no no no less than that less than that okay, and then not to use them.

Mark Weintraub: Less than that. Okay. Okay, and then in terms of the EWP, the fire impact, so that was 11 million in the first quarter. So does that 11 million disappear in the second quarter? And then you actually hope to recoup some of it with stronger volumes in the back half of the year, all else equal? Yeah, Mark, so the 11 million was the impact to the first quarter. We have largely returned to more normal operating levels at this point, there's going to be a small impact on the second quarter. But as we said, we do expect to get most of that volume back over the course of the year.

Speaker Change: And then in terms of the E. W. P. The fire impact so that was $11 million in the first quarter. So does that 11 million disappear in the second quarter.

Speaker Change: And then you actually you hope to recoup some of it with stronger volumes in the back half of the year all else equal.

Speaker Change: Yeah, Mark so so the $11 million was the impact to the first quarter. We have largely returned to more normal operating levels at this point theres going to be a small impact on the second quarter, but as we said we do expect to get most of that volume back over the course of the year. So some of that will come back in in Q2 potentially but.

Mark Weintraub: So some of that will come back in in Q2 potentially, but likely over the second half of the Okay, and then lastly, just so you have a 16% tax rate in the first quarter, which I assume means that you are expecting, you know, a healthy share of your income to come from your TRS this year, which presumably would mean that you're still pretty optimistic on how the wood products business is going to turn out for the rest of the year. Is that fair? And if it ends up being a little bit weaker, does that just the tax rate go down for the balance in the years that how it would play out?

Speaker Change: Likely over the second half of the year.

Speaker Change: Okay, and then lastly, just so you have a 16% tax rate in the first quarter.

Speaker Change: Which I assume means that you are expecting you know a healthy share of your income to come from your Trs This year.

Speaker Change: Which presumably would mean that you're still pretty optimistic on how the wood products business is going to turn out for the rest of the year is that fair and if it ends up being a little bit weaker does that just the tax rates go down for the balance of the year is that how it would.

Speaker Change: Play out.

Mark Weintraub: Yeah, Mark, I think you're right on the mechanics, the full year projected tax rate that's primarily driven by the mix between REIT and TRS earnings with the TRS earnings being most significantly driven by the wood products business. Though, of course, there's other items that go into that from time to time, whether that be regional mix of earnings in Timberlands or real estate, energy and natural resources. Of course, always challenging to predict where commodity prices are going to move over the course of the year. In an environment like this, it gets even more challenging. So that's why we're not giving full year guidance there.

Speaker Change: Yeah, Mark I think you're right on the mechanics are the full year projected tax rate, that's primarily driven by the mix between REIT in Trs earnings with the Trs earnings being most significantly driven by the wood products business, though of course, there's other items that go into that from time to time, whether that be regional mix of earnings in timberlands or real estate energy and <unk>.

Speaker Change: Actual resources of course always challenging to predict where commodity prices are going to move over the course of the year in an environment like this it gets even more challenging and so that's that's why we're not giving full year guidance, there, but yeah I mean to your point given the strength of lumber prices. We've seen to date prospect of increased duties later in the year all the things that Devin.

Mark Weintraub: But yeah, I mean, to your point, given the strength of lumber prices we've seen to date, prospect of increased duties later in the year, all the things that Devin walked through earlier, if the employment and broader macro environment holds on, there's no reason this can't be a solid year in wood product. Gotcha. Thanks a lot.

Speaker Change: Walk through earlier, if the employment and broader macro environment holds on Theres. No reason this can't be a solid year in wood products got.

Speaker Change: Got you thanks a lot.

Ketan Mamtora: Our next question comes from Ketan Mamtora with BMO Capital Markets. Good morning, and thanks for taking my question.

Speaker Change: Our next question comes from Keith <unk> with BMO capital markets. Please proceed with your question.

Keith: Good morning, and thanks for taking my question.

Ketan Mamtora: First question, can you talk a little bit about, you know, the channel inventories as you guys see it in lumber, OSP, and EWP, in the context of what we've discussed today, you know, with slower sort of, you know, start of the spring season, homebuilders sounding a little more cautious, how would you characterize inventories, lean, more balanced, or probably a little bit, you know, kind of more than balanced at this point? Yeah, I mean, so relative to what you would normally see this time of year, I would say the inventories are a little lighter than you would expect.

Speaker Change: Last question.

Speaker Change: Can you talk a little bit about the.

Speaker Change: Channel inventories as you guys see it in lumbar OS won't AWP in the context of what we've discussed today with slower start up you know.

Speaker Change: The spring season, homebuilders sounding a little more cautious how would you characterize inventories only.

Speaker Change: <unk> mobile and so probably a little bit more than balance at this point.

Speaker Change: Okay.

Speaker Change: Yeah, I mean, so relative to what you would normally see this time of year I would say the inventories are a little lighter than you would expect now that being said you know it's currently by and large the supply is meeting the demand so there's not a tremendous.

Devin Stockfish: Now, that being said, you know, it's currently by and large, the supply is meeting the demand. So there's not a tremendous urgency on the part of the buyer community to build meaningful inventories on balance right now. And so, again, you know, I think things are fine, as long as building activity continues along the current path. If things were to pick up, as I mentioned earlier, I think what that typically results in is you'd see a little bit of a spike in pricing as people try to get out from under lean inventory. Got it. That's helpful.

Speaker Change: Urgent C on the part of the buyer community to build meaningful inventories on balance right now and so again you know I think things are fine as long as building activity continues along the current path if things were to pick up as I mentioned earlier I think what that typically results in as you would see a little bit of a <unk>.

Speaker Change: Spike in pricing as people tried to get out from under lean inventories.

Speaker Change: Got it that's helpful and then second question.

Devin Stockfish: And then second question. Good to see, you know, the progress on the CCS side. I'm just curious on forest carbon, Devin. Last quarter, you talked about a pretty meaningful jump over 2024. Is that still on track for 2025? It is, yep. So we've got two projects that have already been approved. We've got seven more in the pipeline and various stages of review by either the third party auditors or several of those are in for final approval with ACR. So everything is progressing. You know, I mean, it's always hard to, to predict exactly when these things come through the process, but we're still looking forward to a pretty meaningful increase in forest carbon this year, somewhere in the 5X to 10X, depending on how, how quickly we can get these things through the audits.

Speaker Change: Good to see.

Devin Stockfish: The progress on the Ccs side I'm, just curious on Forest Park, and Devin last quarter, you talked about a pretty meaningful jump over 'twenty 'twenty four is that still on track for 2025.

Speaker Change: It is yep, so we've got two.

Devin Stockfish: Jack said have already been approved.

Devin Stockfish: We've got seven more in the pipeline in various stages of review by either the third party auditors or several of those are in for final approval with ACR. So everything is progressing.

Devin Stockfish: I mean, it's always hard to to predict exactly when these things come through the process, but we're still looking forward to a pretty meaningful increase in forest carbon this year somewhere in the five X 10 X depending on how how quickly we can get these things through the audits, but I think we're heading in the right direction seems to.

Devin Stockfish: But I think we're heading in the right direction. Seems to be good demand from the customers that we're talking to. So should be a nice pickup in forest carbon this year.

Devin Stockfish: Good demand from the customers that we're talking to you so should be a nice pickup in forests carbon this year.

Ketan Mamtora: Perfect. That's very helpful. I'll jump back in the queue. Good luck. All right, thanks.

Devin Stockfish: That's very helpful I'll jump back in the queue. Good luck.

Devin Stockfish: Alright. Thanks.

Devin Stockfish: Okay.

Hong Hang: Our next question comes from Hong Hang with J.P. Morgan. Please proceed. Yeah, hey, thanks for taking my questions. I guess my first question, you've talked to you've talked a little bit about the supply and demand dynamics that are causing weakness in OSB pricing, I guess, in the near term, what do you think needs to change for us to see stabilization in Yeah, I mean, I would say it's by and large pretty stable right now. It's obviously a little lower price than we saw, you know, a little while ago. But you know, I think right now the supply demand dynamic is pretty balanced.

Our next question comes from Hong Hang with Jpmorgan. Please proceed with your question.

Hong Hang: Yeah, Hey, thanks for taking my questions I guess my first question.

Speaker Change: You've talked a little bit about the supply and demand dynamics that are causing weakness in OSB pricing I guess in the near term what do you think needs to change for us to see stabilization prices.

Speaker Change: Yeah, I mean, I would say, it's by and large pretty stable right now, it's obviously, a little lower price than we saw you know a little while ago, but I think right now the supply demand dynamic is pretty balanced.

Devin Stockfish: You know, we started the year in OSB with pretty light buying activity, particularly from the home improvement warehouse segment. And so that kept it pretty light. You back down here over the last several weeks, feels like it's sort of stabilizing right now from a pricing standpoint. You know, I would expect as we get deeper into the building season, you know, remember, even though we had 1.4 million starts in Q1, that is on a seasonally adjusted basis. So in terms of the actual number of units that are going to get built, it will be higher as we get into Q2 and summer months.

Speaker Change: Started the year in OSB with pretty light buying activity, particularly from the home improvement warehouse segment, and so that kept it pretty light you saw that pick up a little bit over the course of of Q1, but it's come back down here over the last several weeks it feels like it's sort of <unk>.

Speaker Change: Stabilizing right now from a pricing standpoint.

Speaker Change: I would expect as we did deeper into the building season, you know remember even though we had 1.4 million starts in Q1 that is on a seasonally adjusted basis. So in terms of the actual number of units that are going to get built it will be higher as we get into Q2 and in the summer months and so you'll see that that activity.

Devin Stockfish: And so you'll see that activity pick up here. And I think all things being equal, even on the current path, things are probably in a pretty stable range right now. Obviously, if you saw, you know, interest rates go down to have buying activity pick up, then you know, obviously, that would have some some tailwind effect for pricing. But overall, it feels pretty stable.

Speaker Change: Pick up here and I think all things being equal even on the current path things are probably in a pretty stable range right. Now obviously, if you saw.

Speaker Change: Interest rates go down to have buying activity pick up then obviously that would have some some tailwind effect for pricing, but overall it feels pretty stable right now.

Hong Hang: Got it.

Speaker Change: Got it and I guess my second question. The administration signed a lot of executive actions trying to increase timber production has recently opened up.

Devin Stockfish: And I guess my second question, the administration signed a lot of executive actions trying to increase timber production as recently opened up, I guess, parkland for public land for timber harvests. How do you expect that to kind of play out in the in the timber market? Well, yeah, so you know, first, just a reminder here. We don't do any logging on federal lands with the exception of a very, very small amount of wood in Montana. We don't buy timber off federal lands, we procure logs from our own timberlands and other private landowners. So that's not an area that we really participate in.

Speaker Change: Parkland or public land for timber harvest and how do you expect that to kind of play out in the in the timber market.

Speaker Change: Well yeah. So first just a reminder, here we don't do any logging on federal lands with the exception of a very very small amount of wood in Montana, we don't buy timber on federal lands, we procure logs from our own timberlands and other private landowners. So that's not an area that we really participate in.

Devin Stockfish: In terms of how this plays out, I think it's a little hard to I will say, you know, at the outset, and I think most people agree with There is an opportunity to make the federal forest more resilient to fire risk by doing some active management. And so, you know, to the extent that through these executive orders, that helps the Forest Service be a little bit more proactive on some of these things to make sure that we don't see the number of acres burned every year. That's a positive for everyone, including Weyerhaeuser. Now, beyond that, I'm not sure you're going to see a dramatic increase in logging activity on federal lands, at least not in the West, because the mill infrastructure really isn't built for those larger logs.

Speaker Change: In terms of how this plays out.

Speaker Change: It's a little hard to say.

Speaker Change: I will say you know at the outset and I think most people agree with this there is an opportunity to make the federal for is more resilient to fire risk by doing some active management and so.

To the extent that through these executive orders that helps the forest service B, a little bit more proactive on some of these things to make sure that we don't see the number of acres burned every year that that's a positive for everyone, including Weyerhaeuser now beyond that I'm not sure you're going to see a dramatic increase.

Speaker Change: <unk> and logging activity on federal lands at least not in the west.

Speaker Change: Because the mill infrastructure really isn't built for those larger logs I think there are some other practical challenges that could limit a meaningful increase just logging capacity trucking capacity et cetera. So I'm not sure that's going to have a big impact here in the near term. Obviously the administration is focused on manufacturing jobs in the U S and so.

Devin Stockfish: I think there's some other practical challenges that could limit a meaningful increase, just logging capacity, trucking capacity, etc. So I'm not sure that's going to have a big impact here in the near term. Obviously, the administration is focused on manufacturing jobs in the U.S. And so, you know, that's that's a positive overall. And we certainly agree with the administration on that front. But whether the opening up federal forest means meaningfully more logs coming out in the near term, I'm not sure about that. But we'll watch it.

That's a that's a positive overall and we certainly agree with the administration on that front.

Speaker Change: But whether that opening up federal forest means meaningfully more logs coming out in the near term.

Speaker Change: I'm not sure about that but we'll watch it and others that are deeper in the space of.

Devin Stockfish: And, you know, others that are deeper in the space of. Logging on federal lands may have more insight there.

Speaker Change: Logging on federal lands May have more insight there that's just not something we typically do.

Hamir Patel: That's just not Thank you.

Speaker Change: Got it thank you.

Hamir Patel: Our next question comes from Hamir Patel with CIBC Capital. Please proceed with Hi, good morning. Devin, you mentioned more inquiries around transitioning to customers looking to transition to Southern Yellow Pine from SBF. Can you speak more to, you know, perhaps where are you seeing that interest? Is that more larger public builders versus the privates and any maybe, you know, differences across regions? Yeah, I mean, I would say regionally, it's kind of those Midwest regions where, you know, they've traditionally been SPF markets, and you've had a little bit of Southern Yellow Pine moving in there, but primarily an SPF market.

Speaker Change: Our next question comes from <unk> Patel with CIBC capital markets. Please proceed with your question.

Speaker Change: Good morning.

Devin you mentioned more inquiries around transitioning.

Speaker Change: Who are customers looking to transition to southern yellow pine from from Sps can you speak more to you know, perhaps where you're seeing that interest is up more larger public builders versus privates and any.

Any maybe differences across our across regions.

Speaker Change: Yeah, I mean, I would say regionally, it's kind of those mid west regions, where they've traditionally been S. P F markets and you've had a little bit of southern yellow pine moving in there, but primarily in SPF market. So regionally, that's kind of where youre seeing its across the board, though you know.

Devin Stockfish: So regionally, that's kind of where you're seeing it's across the board, though, you know, from from dealers, to even the home improvement, warehouse customers, you know, as you look forward, it's clear that, you know, there is going to be less SPF on the market, whether that's because of beetle infestations, fires, government policy, trade issues, etc. You know, that seems to be the case. And obviously, there's been a lot of Southern Yellow Pine lumber capacity that's been coming into the market. So, you know, ultimately, that is going to happen. And I think people are seeing the future and realizing that, you know, this may be the time to start dipping your toe in the water and getting your arms around Southern Yellow Pine.

Speaker Change: From dealers to even the home improvement.

Speaker Change: Warehouse customers you know as you look forward, it's clear that you know there is going to be less.

Speaker Change: S. P F on the market, whether that's because of beetle infestation spires government policy trade issues et cetera.

Speaker Change: That seems to be the case, and obviously theres been a lot of southern yellow pine lumber capacity, that's been coming into the market. So ultimately that is going to happen and I think people are seeing the future and realizing that this.

Speaker Change: This may be the time to start dipping your toe in the water and getting your arms around southern yellow pine again, its not I Wouldnt say were all that far down that road, but we're in the early innings, I think and you're starting to see more inquiries on that.

Devin Stockfish: Again, it's not, I wouldn't say we're all that far down that road, but we're in the early innings, I think, and you're starting to see more.

Devin Stockfish: Thanks, that's helpful. And you also indicated your expected R&R activity to pick up later this year. Do you think that end market for wood products experiences growth this year, just given the sluggish pace year to date? Yeah, I mean, it's puts and takes right? Because, you know, from a housing standpoint, obviously, you know, it's hard to know we're still early in the year, but just given the general commentary that we've heard from some of the builders, you know, whereas we were thinking initially, maybe housing was, you know, up slightly, maybe that's perhaps down to flat or even slightly down overall.

Okay. Thanks, that's helpful. And then you also indicated you expected R&R activity to pick up later this year.

Speaker Change: Do you think that end market Ford products experienced growth. This year, just given the sluggish pace a year to date.

Speaker Change: Yeah, I mean, it's puts and takes right because you know from a housing standpoint, obviously, it's hard to know we're still early in the year, but just given the general commentary that we've heard from some of the builders you know, whereas we were thinking initially maybe housing was up slightly maybe that's.

Speaker Change: <unk> down to flat or even slightly down overall.

Devin Stockfish: From an R&R standpoint, you know, I think Where we're coming from is we've got massive amounts of home equity out there. I do think, you know, we've seen a little bit of a headwind from activity during the pandemic that was a little bit of a drag, but I think we've worked through that, that pull forward. And so that should open up a little bit more and as interest rates, particularly on the short end, open up a little bit more financing activity. I think that could be another tailwind as well. And so, you know, we are expecting things to pick up, all things being equal.

Speaker Change: From an R&R standpoint, you know I think.

Speaker Change: Where we're coming from is we've got massive amounts of home equity out there I do think we've seen a little bit of a headwind from activity. During the pandemic there was a little bit of a drag but I think we've worked through that.

Speaker Change: That pull forward and so that should open up a little bit more.

Speaker Change: And as interest rates, particularly on the short end open up a little bit more financing activity I think that could be another tailwind as well and so you know we are expecting things to pick up all things being equal obviously, if we're in a recession or theres. Some other meaningful impact to the economy, then of course that would impact.

Devin Stockfish: Obviously, if we're, you know, in a recession or there's some other, you know, meaningful impact to the economy, then of course that would impact our view. But if things stay relatively stable, then I think that can be some upside over the course of the year. And, you know, just whether that balances out slightly softer housing, I think it's hard to say. It really depends on how much uptick you get on. But again, we're you know, there's a lot of negativity out in the market right now. I understand that there's there's uncertainty clearly. But sitting here today, I mean, we're still looking at having a good year this year.

Speaker Change: Our view.

Speaker Change: But if things stay relatively stable then I think that can be some upside over the course of the year.

Speaker Change: Just whether that balances out slightly softer housing I think it's hard to say it really depends on how much uptick you get on R&R.

Speaker Change: But again, we're you know theres a lot of negativity out in the market right now I understand that there's there's uncertainty clearly, but sitting here today I mean, we're still looking at having a good year. This year and so are our views on that haven't really changed there may be some bumps in the road along the way, but the businesses are operating well the pricing environment is still reasonably.

Devin Stockfish: And so our views on that haven't really changed. There may be some bumps in the road along the way, but businesses are operating well, the pricing environment still reasonably good.

Devin Stockfish: And so We're not maybe as pessimistic as.

Speaker Change: Good and so.

Speaker Change: We're not maybe as pessimistic as some other folks.

Devin Stockfish: Okay, fair enough.

Speaker Change: Okay. That's fair enough, that's all I had I'll turn it over thanks.

Devin Stockfish: That's all I had.

Mike Roxland: I'll turn it over.

Mike Roxland: Thanks. Our next question comes from Mike Roxland with Truist Securities. Please proceed with your question. Yeah, thank you. Thank you, Devin, Davey and Andy for taking my questions. Devin, I just wanted to follow up on the sense of what's driving the slight uptick in order files in EWP the last several weeks. You mentioned seasonality. I mean, have you seen a pickup in building activity? Because it certainly doesn't sound for your comments that there's been a much in the way of restocking. So is it seasonality of pickup and building activity that's led to better order files in EWP?

Thank you.

Speaker Change: Our next question comes from Mike <unk> with Truest Securities. Please proceed with your question.

Devin David: Thank thank you Devin David Indeed, taking my questions.

Devin David: Kevin I just wanted to follow up on the sense of what's driving the slight uptick in order files in AWP the last several weeks.

Devin David: You mentioned seasonality I mean have you seen a pickup in building activity conservatism for your comments.

Devin David: Theres been much in the way of restocking so that seasonality will pick up in drilling activity that has led to better order files in AWP and can you remind us.

Devin Stockfish: And can you remind us the operating rate you ran at in EWP in one queue and what you expect to keep? Yeah, I mean, I think it's largely seasonality, right? And it's what are you comparing it to? So Q1 is always the slowest season of the year, just because of the weather. And as the weather improves, you see a pickup and building activity. And so maybe it's not, you know, as strong as we had thought it would be coming into the year, but it's still stronger than Q1. And so that's, I think that's really what's driving the uptick right now.

Devin David: The operating rate you ran at in AWP, and <unk> and what you expect for Q2.

Speaker Change: Yeah, I mean, I think it's largely seasonality right and it's what are you comparing it to you. So Q1 is always the slowest season of the year, just because of the weather and as the weather improves you see a pickup in building activity and so maybe it's not as strong as we had thought it would be coming into the year, but its still stronger than Q1 and so that's.

Speaker Change: I think that's really what's driving the uptick right now from an operating rate standpoint on AWP, we were sort of in that low seventies, 70% range, we do expect that to improve.

Devin Stockfish: From an operating rate standpoint on EWP, we were sort of in that low 70s, 70% range, we do expect that to improve as we go. Got it. Okay.

Speaker Change: As we go into Q2.

Speaker Change: Got it Okay, and then just congrats on the Occidental progress.

Devin Stockfish: And then just, you know, congrats on the accidental progress and the progress overall for CCS. Just, you know, at a recent conference, you mentioned that, and you said it again today here, that CCS is a big opportunity, but not as big as you originally planned. Can you give us a sense of the scale of the opportunity as you now see it and how that compares to your original outlook? And why the change in expectations? Is that solely due to the permitting process? Unknown Speaker. Yeah, so just- Unknown Speaker. Oh, sorry, I got that. Just to be clear, I do not view it as less overall opportunity.

Speaker Change: Probably I hope you all sorts of Ccs.

Speaker Change: At a recent conference you mentioned that you said it again today here.

Speaker Change: <unk> is a big opportunity, but not as big as you originally planned.

Give us a sense of the scale of the opportunity as you now see it and how that compares to your original outlook and why the change in expectations is that solely due to the permitting process.

Speaker Change: Yeah, So just losses I'm, sorry got it.

Speaker Change: Just to be clear I do not view it as less overall opportunity in fact, I think the opportunity set for Ccs is fairly significant so our views on the magnitude of the opportunity hasn't changed the only thing that's really changed is just the timeline. We had originally thought we would start seeing.

Devin Stockfish: In fact, I think the opportunity set for CCS is fairly significant. So our views on the magnitude of the opportunity haven't changed. The only thing that's really changed is just the timeline. We had originally thought we would start seeing injections and kind of 26-27 timeframe. And that's been pushed back by a few years. So, you know, the timeline to get these things up and running is a brand new business for everybody involved. And it's just taken longer to come to fruition. But the magnitude of the opportunity we still think is fairly significant. Any heavy manufacturer, is going to need CCS if you're going to reduce your greenhouse gas emissions.

Speaker Change: <unk> and kind of 'twenty six 'twenty seven timeframe and that's been pushed back by a few years. So you know the timeline to get these things up and running as a brand new business.

Speaker Change: For everybody involved and it's just taken longer to come to fruition, but the magnitude of the opportunity. We still think is fairly significant any any heavy manufacturing.

Speaker Change: Is going to need Ccs, if youre going to reduce your see your greenhouse gas emissions. There's just really no other way to do this cost effectively. So I think this is going to happen, it's going to happen in a big way, it's just going to come to fruition over a little bit longer timeline.

Devin Stockfish: There's just really no other way to do this cost effectively. So I think this is going to happen. It's going to happen in a big way. It's just going to come to fruition over a little bit longer.

Devin Stockfish: Got it, and I appreciate the clarity there. And just one last thing, in terms of CCS, does it tend to be higher margin relevant to wind, solar and carbon credits, mitigation banking? Is CCS typically the highest margin product you have in natural climate solutions? Yeah, I mean, the margin is incredible, right? Because you're leasing subsurface space, we're not, we're not putting any of our own money into building out the infrastructure, we're not really managing it, there are very little in terms of costs from our standpoint around employees, we've got, you know, we've got people managing the program, but it's a really, really low cost.

Speaker Change: Got it and I appreciate the clarity there and then just one.

Speaker Change: One last thing is in terms of Ccs does it tend to be higher margin relative to wind solar.

Speaker Change: It may create some mitigation banking CCF typically the highest margin product that you have individual conversations.

Speaker Change: Yeah, I mean, the margin is incredible right because youre leasing subsurface space, we're not we're not putting any of our own money into building out the infrastructure, we're not really managing it there very little in terms of costs from our standpoint around employees. It got you know we've got people managing the program, but it's a really really low.

Speaker Change: Oh cost it's.

Devin Stockfish: virtually all upside because it's on top of the Timberlands, you know, above above ground.

Speaker Change: Virtually all upside because it's on top of the timberlands you know above above ground. So it is it's like wind in the sense that this is just pure upside to managing the land base.

Devin Stockfish: So it is it's like wind in the sense that, you know, this is just pure upside to managing Yeah, thank you very much.

Speaker Change: Got it thank you very much.

Speaker Change: Yep great.

Buck Horne: Our next question comes from Buck Horne with Raymond James, please proceed. Hey, thanks. Good morning, guys. I just wanted to maybe zoom out a little bit. Just take stock of where we're at in terms of the stock price performance. And obviously, the discount to NAV here, probably one of the widest discounts since the pandemic.

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

Buck Horne: Hey, Thanks, good morning, guys.

Buck Horne: I just wanted to maybe zoom out a little bit just take stock of where we're at in terms of the stock price performance.

Buck Horne: Obviously that the discount to NAV here.

Buck Horne: Probably one of the widest discounts since the pandemic.

Devin Stockfish: Does that We'll strategically give you any thoughts about, you know, are there any maybe non-core timber positions you would think about monetizing or could monetize in the near term and maybe accelerate some share purchase activity to maybe close this NAV gap or take advantage of the dislocation. Yeah, Buck, I mean, look, we're always looking at levers to create shareholder value. We've been balanced in our capital allocation approach. So for us, it's not really a matter of having to choose between the various outcomes. We're not in a position where we've got to get to an appropriate leverage place or meet dividend requirements.

Buck Horne: Does that mean.

Buck Horne: Strategically give you any thoughts about are there any maybe non core timber position that you would think about monetizing or could monetize in.

Buck Horne: In the near term and maybe accelerate some share repurchase activity to.

Buck Horne: Maybe close that NAV gap or take advantage of the dislocation.

Speaker Change: Yeah, Buck I mean look we're always looking at levers to create shareholder value we've been balanced in our capital allocation approach. So it's for US it's not really a matter of having to choose between the various outcomes. We're not in a position where we've got to get to an appropriate leverage placer or meet dividend requirements, we feel really good about about.

Devin Stockfish: We feel really good about those. So really, we're able to think about the various components and opportunities that are available to us separately. So on the Timberland side, as we've said, we've got a high degree of confidence that the value is going to go up over time. So we're going to continue to be active there. But that said, it is critical to be disciplined in our approach as we as we look at those transactions, so we don't overpay. And we haven't been afraid to make adjustments to our portfolio when we can find more efficient uses of capital, whether that be through the real estate program, whether that be through swap like transactions like we did late in 2023, really looking to improve the quality of our portfolio, the cash flow generation capability.

So really we're able to think about the various components and opportunities that are available to us.

Speaker Change: Separately, so on the timberland side as we've said we've got a high degree of confidence that the value is going to go up over time. So we're going to continue to be active there, but that said it is critical to be disciplined in our approach as we as we look at those transactions. So we don't overpay and we haven't been afraid to make adjustments to our portfolio. When we can find more efficient uses of capital.

Speaker Change: <unk>, whether that be through the real estate program, whether that be through swap like transactions like we did late in 2023 really looking to improve the quality of our portfolio the cash flow generation capability.

Devin Stockfish: And we've been active in share repurchase. We've nearly completed that billion dollar authorization. We'll continue to lean in and be opportunistic there. But as always, it's a matter of looking at all the opportunities that are available to us and allocating our capital in a way that creates the most value for shareholders. That's appreciate that. Thanks, Davey.

Speaker Change: And we've been active in share repurchase we've nearly completed the $1 billion authorization.

Speaker Change: We'll continue to lean in and be opportunistic there, but as always it's a matter of looking at all the opportunities that are available to us in allocating our capital in a way that creates the most value for shareholders.

David: Got it I appreciate that thanks, David.

Devin Stockfish: And I saw a follow up on on solar leasing. Is there any update in terms of, you know, market momentum and in terms of option conversions? Or how do you view kind of the opportunity set for for solar uptake in the next, you know, couple of years? Yeah, well, I mean, we're making great progress. So we've got our first operating solar site. At this point, we got two more that are currently under construction that I suspect will be online later this year, or at the latest early next year. The pipeline continues to grow, we're continuing to sign new agreements.

Speaker Change: I'll follow up on the solar leasing is there any update in terms of market momentum in terms of option conversions or how do you view kind of the opportunity set for solar.

David: Uptake in the next cut.

David: All of the years.

Speaker Change: Yeah, well I mean, we're making great progress. So we've got our first operating solar site.

Speaker Change: At this point, we've got two more that are currently under construction that I suspect will be online later this year or at the latest early next year.

Speaker Change: The pipeline continues to grow we're continuing to sign new agreements are where we're really focused on.

Devin Stockfish: We're, we're really focused on, you know, signing up with counterparties that are big and sophisticated and can navigate, you know, whether it's the permitting process, or, you know, ultimately, with some of the challenges here, from a supply chain standpoint, the folks that can navigate that. So we feel good about the conversion rate in terms of the pipeline that we've developed. And my expectation is we'll be adding several of these every year, really over the next decade. So We're expecting this to continue to become a bigger and bigger component of our NCS business over time, so very positive.

Speaker Change: Signing up with Counterparties that are big and sophisticated and can navigate you know whether it's the permitting process or you know ultimately with some of the challenges here from a supply chain standpoint, the folks that can navigate that so we feel good about that.

Speaker Change: The conversion rate in terms of the pipeline that we've developed and my expectation is we'll be adding several of these every year really over the next decade. So.

Speaker Change: We're expecting this to continue to become a bigger and bigger component of our NCS business over time, so very positive.

Devin Stockfish: Thanks, guys. Appreciate it.

Speaker Change: Alright, Thanks, guys I appreciate it.

Yes.

George Staphos: Our next question is from George Staphos with Bank of America.

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

George Staphos: Please proceed with your Thanks. A couple quick follow ons just on tariffs. So to the extent you can comment, and I know it's really hard to parse this Devin and Dave. I think, and recognizing that tariffs are a moving target, has there been much, from what you see and what you talk to, in terms of the field, impact from tariffs built into lumber pricing as you see it right now? And the related question... Given the fact that there's been so much capacity that's gone into the U.S. over the last number of years, and that gap...

George Staphos: Thanks, a couple of quick follow on just on tariffs. So to the extent you can comment and I know, it's really hard to parse as Kevin and David do you think the and recognizing the tariffs are a moving target.

Speaker Change: Has there been much from what you see and what you talked to.

Speaker Change: Terms of the field impact from tariffs built into lumber pricing as you see it right now and the related question given the fact that there's been so much capacity that's gone into the U S over the last number of years.

Speaker Change: The gap between supply and demand has diminished I recognized and a stronger housing market that gap would widen out again do you think tariffs would have had much effect.

Devin Stockfish: Ltd. Yeah, in terms of today, I don't think it's having a meaningful impact on It can. And I think we saw that, you know, around the April 2 announcement, there was clearly some impact to lumber pricing in anticipation of that. And you kind of saw the run up and then when it was determined that wood products would be exempted from the across the board tariff, you saw those prices come I do think, you know, as you get closer to the August-September timeframe where the new duty structure will come into place, I suspect you'll see some impact there.

On lumber pricing as we sit here today, thanks, guys and good luck in the quarter.

Speaker Change: Yeah in terms of Ted.

Speaker Change: Today, I don't think it's having a meaningful impact on pricing.

Speaker Change: It can and I think we saw that you know around the April 2nd announcement, there was clearly some impact to lumber pricing in anticipation of that and you kind of saw the run up and then when it was determined that wood products would be exempted from the across the board tariff you saw those prices come back down.

Speaker Change: I do think you know as you get closer to you.

Speaker Change: The August September timeframe, where the new duty structure will come into place I suspect youll see some impact there and.

Devin Stockfish: And, you know, the wild card too is, you know, what happens in the broader tariff environment, whether that's the 232 or just broad based tariffs to the extent that those come into play. I mean, it will impact pricing around the margins or Is it going to have a material impact? I think that, to your point, George, is really just a function of where we are in the demand cycle. If demand is strong, you know, that'll push pricing up. Tariffs may be put a little bit on top of that. If demand is weak, you know, really what it does is just adjust where the costs are.

And you know the wildcard too is you know what happens in the broader tariff environment, whether that's the 232 or just.

Speaker Change: The broad based tariffs to the extent that those come into play I mean, it will impact pricing around the margins for sure.

Speaker Change: Is it going to have a material impact I think that to your point George is really just a function of where we are in the demand cycle if demand is strong.

Speaker Change: And that will push pricing up tariffs, maybe put a little bit on top of that if demand is weak you know really what it does is just adjust where the cost floor is and so that ultimately can impact capacity.

Devin Stockfish: So that ultimately can impact capacity decisions. So I think this will play out over time. There's a lot of uncertainty around it. And I think to some degree, you may see some hesitancy, people building inventories not knowing necessarily what's going to happen on tariffs, at least until we get closer to a more certain date on those new duties.

Speaker Change: Capacity decisions. So I think this will play out over time, there's a lot of uncertainty around it and I think to some degree you may see some hesitancy people building inventories not knowing necessarily what's going to happen on tariffs at least until we get closer to a more certain date on on those new duties.

Speaker Change: Thanks, Kevin.

George Staphos: Thanks, Devin. Have a good quarter.

Speaker Change: Have a good quarter.

Devin Stockfish: All right. Thank There are no further questions at this time.

Speaker Change: Alright, thank you.

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

Devin Stockfish: I'd like to turn the floor back over to Devin Stockfish for closing. Okay, well, thank you, everyone, for joining us this morning. Thank you for your continued interest in Weyerhaeuser. Have a great day.

Devin Stockfish: Okay, well. Thank you everyone for joining us. This morning. Thank you for your continued interest in Weyerhaeuser have a great day.

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