Q1 2025 PotlatchDeltic Corp Earnings Call

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Good morning, My name is Rob and I'll be your conference operator today at this time I would like to welcome everyone to the Potlatch <unk> first quarter 2025 conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Rob: My name is Rob, and I'll be your conference operator today.

Rob: At this time, I would like to welcome everyone to the PotlatchDeltic first quarter 2025 conference call. All lines have been placed on mute to prevent any background noise.

Rob: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star and the number one. Thank you.

You'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question again press star and the number one.

Wayne Wasechek: I would now like to turn the call over to Mr. Wayne Wasechek, Vice President and Chief Financial Officer for opening remarks. Sir, you may proceed.

Speaker Change: I would now like to turn the call over to Mr. Wayne waste check Vice President and Chief Financial Officer for opening remarks, Sir you May proceed.

Wayne Wasechek: Good morning, and welcome to PotlatchDeltic's first quarter 2025 earnings conference call. Joining me on the call is Eric Cremers, PotlatchDeltic's President and Chief Executive Officer. This call will contain forward-looking statements.

Speaker Change: Good morning, and welcome to Potlatch <unk> first quarter 2025 earnings conference call.

Speaker Change: Joining me on the call is Eric Cremers, Potlatch del <unk>, President and Chief Executive Officer.

Speaker Change: This call will contain forward looking statements.

Wayne Wasechek: Please review the cautionary statements in our press release, on the presentation slides, and in our filings with the SEC regarding the risks associated with these forward-looking statements. Also, please note that a reconciliation of non-GAAP measures can be found in the appendix to the presentation slide. and on our website at www.potlatchdeltic.com.

Speaker Change: Please review the cautionary statements in our press release on the presentation slides and in our filings with the SEC regarding the risks associated with these forward looking statements.

Speaker Change: Also please note that a reconciliation of non-GAAP measures can be found in the appendix to the presentation slides.

Speaker Change: And on our website at Www Dot Potlatch Delta Dot com.

Eric Cremers: I'll turn the call over to Eric for some comments, and then we'll review our first quarter results and our outlook. Well, thank you, Wayne. And good morning, everyone. Thanks for joining us. Following a market close yesterday, we reported total adjusted EBITDA of $63 million for the first quarter. I'm pleased with our solid operational performance across all businesses despite the prevailing economic and trade policy uncertainties affecting the market. Our financial performance improved compared to the fourth quarter in all three of our business units, demonstrating strong execution by our teams, the resilience of our operations, and the positive effects of our strategic investment in the Waldo, Arkansas sawmill.

Speaker Change: I'll turn the call over to Eric for some comments and then I'll review, our first quarter results and our outlook.

Eric Cremers: Thank you Wayne and good morning, everyone. Thanks for joining us.

Eric Cremers: Following the market close yesterday, we reported total adjusted EBITDA of $63 million for the first quarter.

Eric Cremers: I am pleased with our solid operational performance across all businesses, despite the prevailing economic and trade policy uncertainties affecting the market.

Eric Cremers: Our financial performance improved compared to the fourth quarter in all three of our business units demonstrating strong execution by our teams the resilience of our operations and the positive effects of our strategic investment in the Waldo Arkansas sawmill.

Eric Cremers: Starting with timberlands, our teams in Idaho in the south did a great job of producing higher than planned harvest volumes during what is typically a seasonally slower period. This incremental volume was particularly advantageous in Idaho as we benefited from an increase in saw log prices due to our indexed saw log agreements, coupled with higher cedar prices driven by strong regional demand. In our wood products business, lumber markets were dominated by tariff discussions throughout most of the first quarter. The Random Links Western SPF composite price rose by $60 during the quarter in anticipation of Canadian tariffs.

Eric Cremers: Starting with timberlands, our teams in Idaho in the South did a great job of producing higher than planned harvest volumes. During what is typically a seasonally slower period.

Eric Cremers: This incremental volume was particularly advantageous in Idaho as we benefited from an increase in saw log prices due to our index saw log agreements coupled with higher cedar prices driven by strong regional demand.

Eric Cremers: In our wood products business lumber markets were dominated by tariff discussions throughout most of the first quarter.

Eric Cremers: The random lengths Western SPF composite price rose by $60 during the quarter in anticipation of Canadian tariffs as the tariff deadlines loomed buyers refrain from building inventory to hedge their positions.

Eric Cremers: As the tariff deadlines loomed, buyers refrained from building inventory to hedge their positions, preferring instead to continue to purchase for near-term needs. With Canadian lumber tariffs currently on hold, it remains to be seen how much of this run-up of SPF prices in Q1 will unwind. Conversely, Southern Yellow Pine markets did not experience near the pricing benefit as SPF. Nonetheless, Southern Pine lumber markets were more active and prices remained relatively firm during the quarter. Lumber markets continue to face relatively tepid demand from end markets. That said, the capacity curtailments announced last year continued to impact the market, providing greater balance to supply and demand dynamics and helping support lumber prices.

Eric Cremers: Referring instead to continue to purchase four near term needs with Canadian lumber tariffs currently on hold it remains to be seen how much of this run up of SPF prices in Q1 will unwind.

Eric Cremers: Conversely, southern yellow pine market did not experienced near the pricing benefit as SPF Nonetheless, southern pine lumber markets, we're more active and prices remained relatively firm during the quarter.

Eric Cremers: Lumber markets continue to face relatively tepid demand from end markets that said the capacity curtailments announced last year continued to impact the market, providing greater balance to supply and demand dynamics and helping support lumber prices.

Eric Cremers: Additionally, pending regulatory actions related to Canadian duties and potential tariffs have provided support to pricing thus far this year, and that should continue as we move to the second half of the year. Canadian producers who supply approximately 25% of US demand were recently spared from reciprocal tariffs. However, there are already well-established softwood lumber duties on imported Canadian lumber which are adjusted annually. Preliminary Canadian softwood lumber duty rates that will take effect later this year were announced, and they are higher than current levels. The preliminary quote all others rate is set to increase from 14% to over 34%, more than double the current rates once finalized.

Eric Cremers: Additionally, pending regulatory actions related to Canadian duties and potential tariffs have provided support to pricing. Thus far this year and that should continue as we move to the second half of the year.

Eric Cremers: Canadian producers, who supply approximately 25% of U S demand were recently spared from reciprocal tariffs.

Eric Cremers: However, there are already well established softwood lumber duties on imported Canadian lumber, which are adjusted annually.

Eric Cremers: Preliminary Canadian softwood lumber duty rates that will take effect later this year were announced and they are higher than current levels. The preliminary quote all others rate is set to increase from 14% to over 34% more than double the current rates once finalized.

Eric Cremers: Furthermore, on March 1st, the Secretary of Commerce initiated a Section 232 investigation to determine the effects of imports of lumber and derivative products on national security. Commerce will evaluate the extent to which U.S. production can meet domestic demand and the feasibility of increasing domestic timber and lumber capacity. The findings of this investigation could lead to the implementation of tariffs on all lumber imports into the U.S. and would be incremental to the already established Canadian softwood lumber duties. During Q1, we shipped 290 million board feet of lumber, which was 10 million board feet over the upper range of our Q1 guidance.

Speaker Change: Furthermore, on March 1st the Secretary of Commerce initiated a section 232 investigation to determine the effects of imports of lumber and derivative products on national security.

Speaker Change: Commerce will evaluate the extent to which U S production to meet domestic demand and the feasibility of increasing domestic timber and lumber capacity.

Speaker Change: The findings of this investigation could lead to the inflammation of tariffs on all lumber imports into the U S and would be incremental to the already established Canadian softwood lumber duties.

Speaker Change: During Q1, we shipped 290 million board feet of lumber, which was 10 million board feet over the upper range of our Q1 guidance.

Eric Cremers: This over-performance to plan was mainly driven by our Waldo, Arkansas sawmill. The ramp up in performance of this mill has gone extremely well. In fact, by March, we were consistently achieving a run rate that matches its new targeted annual nameplate capacity of 275 million board feet per year. By hitting the mill's targeted key production metrics, including improvement in recovery rates and a 30% reduction in cash processing costs, we have now completed the ramp-up phase of the project three months ahead of schedule. This modernization and expansion project at Waldo has significantly enhanced the competitiveness of the mill and is expected to generate approximately $25 million in incremental EBITDA annually, assuming a mid-cycle sales environment.

Speaker Change: This over performance to plan was mainly driven by our Waldo Arkansas sawmill.

Speaker Change: The ramp up in performance of this mill has gone extremely well in fact by March we were consistently achieving a run rate that matches its new targeted annual nameplate capacity of 275 million board feet per year.

Speaker Change: By hitting the mill is targeted key production metrics, including improvement in recovery rates in the 30% reduction in cash processing cost. We have now completed the ramp up phase of the project three months ahead of schedule.

Speaker Change: This modernization and expansion project at Waldo has significantly enhanced the competitiveness of the mill and is expected to generate approximately $25 million in incremental EBITDA annually, assuming a mid cycle sales environment.

Eric Cremers: Moving on to our real estate segment, this business continues to benefit from demand for rural real estate, particularly for conservation and recreational purposes. We sold over 7,000 acres in the first quarter, including several larger transactions which contributed to achieving notable premiums to Timberland value. Steady demand is expected to persist as buyers seek hard assets like rural land against an environment of significant volatility and many other asset classes.

Speaker Change: Moving on to our real estate segment. This business continues to benefit from demand for rural real estate, particularly for conservation and recreational purposes.

Speaker Change: We sold over 7000 acres in the first quarter, including several larger transactions, which contributed to achieving notable premiums to timberland value.

Speaker Change: Steady demand is expected to persist as buyers seek hard assets like rural land against an environment of significant volatility and many other asset classes.

Eric Cremers: Now, turning to our natural climate solution initiatives, solar continues to be very active. Since the end of 2024, we have expanded our acres under solar option contract by an additional 3,000 acres. This increases our total acreage under option to 38,000, with an estimated net present value of around $475 million. and recent conversations with solar developers, they continue to view their solar projects as viable and are therefore proceeding with their plans.

Speaker Change: Now turning to our natural climate solution initiatives solar continues to be very active since the end of 2024, we have expanded our acres under solar option contract by an additional 3000 acres. This increases our total acreage under option to 38000 with an estimated net present value of around 400.

Speaker Change: $75 million.

Speaker Change: In recent conversations with solar developers they continue to view their solar projects is viable and are therefore proceeding with their plans.

Eric Cremers: Another promising NCS opportunity for us is in lithium, as a portion of our property in southwestern Arkansas has potential for lithium development. We began our first step in potentially monetizing our land for lithium development this year by granting exclusive rights to a lithium developer to conduct brine exploration and production on approximately 900 surface acres in Lafayette County, Arkansas. The lease anticipates an initial five-year term for planning, engineering, and construction before potential production begins. Additionally, we are actively engaged in discussions on executing another large mineral rights lease in southwestern Arkansas.

Speaker Change: Other promising NCS opportunity for us is in lithium.

Speaker Change: As a portion of our property in southwestern Arkansas has potential for lithium development.

Speaker Change: We began our first step in potentially monetizing our land for lithium development. This year by granting exclusive rights to a lithium developer to conduct Brian exploration and production on approximately 900 surface acres in Lafayette County, Arkansas.

Speaker Change: The lease anticipates, an initial five year term from planning engineering and construction before potential production begins.

Speaker Change: Additionally, we are actively engaged in discussions on executing another large mineral rights lease and southwestern Arkansas.

Eric Cremers: Regarding forest carbon offsets, we are in the process of developing an improved forest management carbon offset project aimed at storing carbon in our forests, which we believe will generate cash flows that exceed our business as usual baseline. At this stage, we are currently conducting feasibility studies with reputable project developers that focus on potential projects in our Southern Timberlands. Due to the complexity and care required to develop a high-quality carbon project, we would target to bring a meaningful project to market sometime in the next 18 to 24 months.

Speaker Change: Regarding forest carbon offsets we are in the process of developing an improved forest management carbon offset project aimed at storing carbon in our forests, which we believe will generate cash flows that exceed our business as usual baseline.

Speaker Change: At this stage. We are currently conducting feasibility studies with reputable project developers that focus on potential projects in our southern timberlands.

Speaker Change: Due to the complexity and care required to develop a high quality carbon project, we would target to bring a meaningful project to market sometime in the next 18 to 24 months.

Eric Cremers: In addition, we continue to pursue a range of other longer-term natural climate solution opportunities, including carbon capture and storage and new markets for biomass such as bioenergy and sustainable aviation fuels. For CCS, we are exploring projects for development in a block of our timberlands in northern Louisiana that would support CO2 storage for potentially new emitting facilities in the region. We believe initiatives like these will ultimately increase demand for our rural land, likely driving timberland values significantly higher.

Speaker Change: In addition, we continue to pursue a range of other longer term natural climate solution opportunities, including carbon capture and storage and new markets for biomass, such as bioenergy and sustainable aviation fuel.

Speaker Change: For Ccs, we are exploring projects for development in a block of our timberlands in northern Louisiana that would support <unk> storage for potentially new emitting facilities in the region.

Speaker Change: We believe initiatives like these will ultimately increased demand for our rural land likely driving timberland values significantly higher.

Eric Cremers: Shifting to our capital allocation strategy, we maintain a balanced and disciplined approach, especially given current lumber markets and the uncertainty surrounding the broader economy. Our stock continues to trade at a significant discount to our estimated net asset value in addition to yielding over four and a half percent. As a result, share repurchases remain more attractive than acquiring timberlands or other capital allocation options. In the first quarter, we purchased $4 million of our common stock through our 10B51 program at an average price of $45 per share. And we have bought another $4 million at $40 per share so far this quarter.

Speaker Change: Shifting to our capital allocation strategy, we maintain a balanced and disciplined approach, especially given current lumber markets and the uncertainty surrounding the broader economy.

Speaker Change: Our stock continues to trade at a significant discount to our estimated net asset value. In addition to yielding over four 5%.

Speaker Change: As a result share repurchases remain more attractive than acquiring timberlands or other capital allocation options.

Speaker Change: In the first quarter, we purchased $4 million of our common stock through our <unk> one program at an average price of $45 per share.

Speaker Change: And we have bought another $4 million at $40 per share so far this quarter.

Eric Cremers: Our solid financial position coupled with our liquidity profile allows us to continue being opportunistic with capital deployment as we move through the year.

Speaker Change: Our solid financial position, coupled with our liquidity profile allows us to continue being opportunistic with capital deployment as we move through the year.

Eric Cremers: Turning our attention to the U.S. housing market, overall macroeconomic conditions continue to constrain consumer confidence and challenge affordability, leading to low buyer urgency in both new and existing home sale markets. While large U.S. homebuilders have pointed to a slower start to the spring selling season, annualized U.S. housing starts are stable, averaging nearly 1.4 million units. Single-family home building starts remained resilient near the 1 million unit level as the larger public home builders continue to offer rate buy-down incentives to drive home sales. The multi-family home building segment remains challenging due to the restrictive construction financing and an oversupply of units which continue to be digested in the market.

Speaker Change: Turning our attention to the U S housing market overall macroeconomic conditions continue to constrained consumer confidence and challenge affordability, leading to low buyer urgency in both new and existing home sale markets.

Speaker Change: While large U S. Homebuilders have pointed to a slower start to the spring selling season annualized U S. Housing starts are stable, averaging nearly one 4 million units.

Speaker Change: Single family Homebuilding starts remained resilient near the 1 million unit level as the larger public homebuilders continue to offer rate buy down incentives to drive home sales. The multifamily homebuilding segment remains challenging due to the restrictive construction financing and an oversupply of units, which continued to be digested in the market.

Eric Cremers: For existing homes, inventory has risen, but sales remain on pace with last year's low level as interest rates continue to be elevated and existing homeowners wanting to move are continuing to choose to stay in their current homes due to the lock-in effect of their low mortgage rates. Despite the current state of the housing market, the key drivers of inherent housing demand remain positive. These longer-term structural tailwinds include the massive undersupply of homes, a substantial demographic shift as millennials transition to homeownership, and strong household formations. We believe that once the constraints on housing affordability ease, this will serve as a catalyst for upward momentum in lumber demand.

Speaker Change: For existing homes inventory has risen but sales remain on pace with last year's low level as interest rates continue to be elevated in existing homeowners wanting to move are continuing to choose to stay in their current homes due to the lock in effect of their low mortgage rates.

Speaker Change: Despite the current state of the housing market. The key drivers of inherent housing demand remain positive. These longer term structural tailwind is include the massive under supply of homes are substantial demographic shift is millennials transitioned to homeownership and strong household formations. We believe that once the constraints on housing affordability.

Speaker Change: This will serve as a catalyst for upward momentum in lumber demand.

Eric Cremers: Shifting to the repair to model sector, the level of activity so far this year has remained relatively stable. On the one hand, underlying demand continues to be held back by several near-term challenges, including falling consumer confidence and elevated financing costs for discretionary home improvement projects. However, leading R&R pundits predict modest gains in repair and remodel as we move through the year, and big box retail centers are forecasting slight growth in comparable store sales. for our own home center business. We have strong takeaway and we expect this trend to continue. Additionally, the factors influencing demand for R&R remain intact, including an aging housing stock with a median age over 40 years, historically high home equity levels, and the enduring trend of people working from home.

Speaker Change: Now shifting to the repair and remodel sector the level of activity. So far. This year has remained relatively stable on the one hand underlying demand continues to be held back by several near term challenges, including falling consumer confidence and elevated financing costs for discretionary home improvement projects.

Speaker Change: However, leading R&R pundits predict modest gains in repair and remodel as we move through the year and big box retail centers are forecasting slight growth in comparable store sales.

Speaker Change: For our own home center business, we have strong takeaway and we expect this trend to continue.

Speaker Change: Additionally, the factors influencing demand for R&R remain intact, including an aging housing stock with a median age over 40 years, historically high home equity levels and the enduring trend of people working from home.

Eric Cremers: To close out my comments, while the near-term may be volatile and uncertain, we have a favorable view of long-term fundamentals in our industry. Lumber prices have made a strong run since last summer in what has been a flat-demand environment. And our view is that once markets settle down, demand will return, and as demand returns, pricing should improve as well. Combined with our strong balance sheet and excellent capital allocation track record, we are well-positioned to deliver long-term value to our shareholders.

Speaker Change: To close out my comments, while the near term may be volatile and uncertain. We have a favorable view of long term fundamentals in our industry.

Speaker Change: Lumber prices have made a strong run since last summer and what has been a flat demand environment.

Speaker Change: And our view is that once markets settle down demand will return and as demand returns pricing should improve as well.

Speaker Change: And bind with our strong balance sheet and excellent capital allocation track record, we are well positioned to deliver long term value to our shareholders I will now turn it over to Wayne to discuss our first quarter results as well as our outlook.

Wayne Wasechek: I'll now turn it over to Wayne to discuss our first quarter results as well as our outlook. Thank you, Eric. Starting from page 4 of the slides, total adjusted EBITDA increased $10 million, rising from $53 million in the fourth. $63 million dollars in the first.

Wayne: Thank you Eric.

Wayne: Starting from page four of the slides.

Wayne: Adjusted EBITDA increased $10 million rising from $53 million in the fourth quarter to $63 million in the first quarter.

Wayne Wasechek: This sequential quarter-over-quarter increase have contributed to improved performance across all our business segments, particularly Timberlake. benefited from higher saw log prices in Idaho and increased harvest volumes in both Idaho and the South.

Wayne: This sequential quarter over quarter increase is attributed to improved performance across all our business segments, particularly timberlands, which benefited from higher saw log prices in Idaho and increased harvest volumes in both Idaho and the south.

Wayne Wasechek: I will now review each of our operating segments and provide more details on our first quarter results.

Wayne: I will now review each of our operating segments and provide more details on our first quarter results.

Wayne Wasechek: Information regarding our Timberland segment is presented on slides 5 through 7. The segment suggested EBITDA increased from $34 million in the fourth quarter to $42 million in the first quarter. driven by higher harvest volumes, increased Idaho saw log prices, and seasonally lower forest management costs.

Wayne: Information regarding our timberlands segment as presented on slides five through seven the.

Wayne: The segment's adjusted EBITDA increased from $34 million in the fourth quarter to $42 million in the first quarter driven by higher harvest volumes increased Idaho solid prices and seasonally lower forest management costs.

Wayne Wasechek: The first quarter's overall harvest volume exceeded our plan for Q1, marking a good head start to 2025. In Idaho, we delivered 368,000 tons in the first quarter, taking advantage of favorable logging and hauling. and Adequate Contractor Availability. Saw log prices increased by 9% per ton compared to the fourth quarter due to higher index and cedar saw log prices. combined with a slightly higher mix of cedar. Lower seasonal spending on forest management and roads also favorably impacted results.

Wayne: The first quarter's overall harvest volume exceeded our plan for Q1, marking a good head start to 2025.

Wayne: In Idaho, we delivered 368000 tonnes in the first quarter, taking advantage of favorable logging and hauling conditions and adequate contractor availability.

Wayne: Saw log prices increased by 9% per ton compared to the fourth quarter due to higher index and SEDAR saw log prices combined with a slightly higher mix of cedar.

Wayne: Lower seasonal spending and forest management and roads also favorably impacted results.

Wayne Wasechek: In the South, we harvested 1.6 million tons in the first quarter. slightly above our fourth quarter harvest volume and exceeding our Q1 plan by almost 170,000 tons. Favorable weather and better than anticipated demand for stumpage cells, let us start the year ahead of schedule. In the first quarter, our southern saw log prices decreased by just over 2.5% compared to the fourth quarter. This decline in price was mainly attributed to a shift in product including a higher mix of smaller diameter saw logs and a lower volume of hard wood saw logs.

Wayne: In the South we harvested $1 6 million tons in the first quarter.

Wayne: Slightly above our fourth quarter harvest volume and exceeding our Q1 plan by almost 170000 tons.

Wayne: Favorable weather and better than anticipated demand for stumpage sales led to start the year ahead of schedule.

Wayne: In the first quarter.

Wayne: Our southern saw log prices decreased by just over two 5% compared to the fourth quarter. This decline in price was mainly attributed to a shift in product mix, including a higher mix of smaller diameter saw logs and a lower volume of hardwood saw logs.

Wayne Wasechek: Now, a return to wood product. which is shown on slides eight and nine. Justin Ibbita increased from $9 million in the fourth The increase was driven by slightly higher average lumber prices, somewhat offset by higher log costs in Idaho. Our average lumber price realization increased $9, or 2%, from $445 per 1,000 board feet in the fourth quarter to $454 per 1,000 board feet in the first Comparatively, the Random Lengths Framing Lumber Composite average price was about 6% higher in the first year. compared to the fourth. Note that a regional mix and product mix differs from the composite, and there's also a timing difference between our sales and the composite.

Wayne: Now I will turn to wood products, which is shown on slides eight and nine.

Wayne: Adjusted EBITDA increased from $9 million in the fourth quarter to $12 million in the first quarter.

Wayne: The increase was driven by slightly higher average lumber prices somewhat offset by higher log costs in Idaho.

Wayne: Our average lumber price realization increased $9 or 2% from $445 per thousand board feet in the fourth quarter to $454 per thousand board feet in the first quarter.

Wayne: Comparatively the <unk>.

Wayne: Random lengths framing lumber composite average price was about 6% higher than the first quarter compared to the fourth quarter.

Wayne: Note that our regional mix and product mix differs from the composite and there's also a timing difference between our sales and the composite.

Wayne Wasechek: Lumber shipments increased by 7 million board feet, rising from 283 million board feet in the fourth quarter to 290 million board feet in the first quarter.

Wayne: Lumber shipments increased by 7 million board feet rising from 283 million board feet in the fourth quarter to 290 million board feet in the first quarter.

Wayne Wasechek: This increase in shipment volume was primarily a result of the Waldo sawmill reaching its targeted production levels following the completion of our modernization and expansion project.

Wayne: This increase in shipment volume was primarily result of the Waldo sawmill, reaching its targeted production levels. Following the completion of our modernization and expansion project.

Wayne Wasechek: Shifting to real estate on slides 10 and 11. The segment generated adjusted EBITDA of $23 million in the first quarter, compared to $19 million in the fourth quarter. In our rural real estate business, we sold over 7,000 acres at an average of $3,300 per acre during the first quarter. Our first quarter results include three significant rural real estate sales. including a conservation land sale in Georgia for over $7 million at approximately $3,300 an acre. We continue to leverage strong demand for rural real estate across all buyer segments, but particularly for conservation outcomes and recreational purposes.

Wayne: Shifting to real estate on slides 10 and 11.

Wayne: The segment generated adjusted EBITDA of $23 million in the first quarter compared to $19 million in the fourth quarter.

Wayne: And our real estate rural real estate business, we sold over 7000 acres at an average of $3300 per acre during the first quarter our.

Wayne: Our first quarter results include three significant rural real estate sales included a conservation land sale in Georgia for over $7 million at approximately $3300 an acre.

Wayne: We continue to leverage strong demand for rural real estate across all buyer segments, but particularly for conservation outcomes and recreational purposes.

Wayne Wasechek: In the Chenal Valley development side of a real estate business, 11 residential lots were sold at an average price of $113,000 per lot in the first quarter. These sales were in line with our expectations due to the level of inventory available.

Wayne: In the <unk> Valley development side of our real estate business 11 residential lots were sold at an average price of $113000 per lot in the first quarter. These sales were in line with our expectations due to the level of inventory available.

Wayne Wasechek: Turning to our capital structure, summarized in slide 12. At the end of Q1, we had $447 million in liquidity. including $147 million of cash on our balance. as well as availability on our Undrawn Revolve. Net interest expense was approximately $2 million in the first quarter, which is the lowest level for the year since we received the vast majority of our annual patronage payments from the farm credit banks during this quarter.

Wayne: Turning to our capital structure summarized on slide 12 at the end of Q1, we had $447 million in liquidity.

Wayne: Including $147 million of cash on our balance sheet as well as availability on our undrawn revolver.

Wayne: Net interest expense was approximately $2 million in the first quarter, which is the lowest level for the year. Since we received the vast majority of our annual patronage payments from the farm credit banks during this quarter.

Wayne Wasechek: We have $100 million of debt maturing in August. We plan to re-finalize. We also have available $75 million of notional forward-starting interest rate swaps to lower borrowing costs for this debt refund.

Wayne: We have $100 million of debt maturing in August, which we plan to refinance we also have available $75 million of notional forward starting interest rate swaps the lower borrowing cost for this debt refinancing.

Wayne Wasechek: As Eric mentioned, we have been actively repurchasing our shares as our stock continues to trade at a significant discount to net asset value. Thus far this year, we have spent $8 million on share Having bought back 188,000 shares for an average of $42 per share under our 10B51 plan. We have $82 million remaining on our $200 million repurchase offers.

Wayne: As Eric mentioned, we have been actively repurchasing our shares as our stock continues to trade at a significant discount to net asset value.

Wayne: Thus far this year, we have spent $8 million on share repurchases, having bought back 188000 shares for an average of $42 per share under our <unk> one plan.

Wayne: We have $82 million remaining on our $200 million repurchase authorization.

Wayne Wasechek: Capital expenditures totaled $23 million in the first quarter. This amount includes real estate development. which are included in cash from operations and are cash.

Wayne: Capital expenditures totaled $23 million in the first quarter. This amount includes real estate development expenditures, which are included in cash from operations and our cash flow statement.

Wayne Wasechek: For the full year, we continue to anticipate CapEx spend of $60 to $65 million, which excludes the final closeout payment of $6 million for the Waldo Sawmill project that we made in Q1 and any potential timberless For more information visit www.FEMA.gov I will now provide some high-level Outlook comments.

Wayne: For the full year, we continue to anticipate capex spend of $60 million to $65 million, which excludes the final closeout payment of $6 million for the Waldo sawmill project that we made in Q1 and any potential timberland acquisitions.

Wayne: I will now provide some high level outlook comments. The details are presented on slide 13.

Wayne Wasechek: The details are presented on slide 13. In our Timberlands segment, we plan to harvest between 1.6 and 1.7 million tons in the second quarter, with approximately 82% of the volume coming from the South. Harvest volumes in the North are expected to be seasonally lower in the second quarter compared to the first quarter.

Wayne: In our Timberlands segment, we plan to harvest between one six and $1 7 million tons in the second quarter with approximately 82% of the volume coming from the south.

Wayne: Harvest volumes in the north are expected to be seasonally lower in the second quarter compared to the first quarter due to the anticipated spring breakup.

Wayne Wasechek: due to the anticipated spring break. Also, Northern Saw Lock prices are expected to remain mostly flat. In the south, we plan to harvest 1.4 million tons in the second quarter. We expect our southern saw log pricing to remain relatively stable as well. The plan is to ship 300 to 310 million board feet of lumber in the second half of the year. With Waldo now operating at full capacity, achieving this shipment level will set a new quarterly record. Our average lumber price thus far in the second quarter is $475 per thousand board which is roughly 5% higher compared to our average lumber price in the first quarter.

Wayne: So northern saw log prices are expected to remain mostly flat.

Wayne: In the South we plan to harvest, one 4 million tons in the second quarter, we expect our southern saw log pricing to remain relatively stable as well.

Wayne: We plan to ship 300 to 310 million board feet of lumber in the second quarter with Waldo now operating at full capacity achieving this shipment level will set a new quarterly record.

Wayne: Our average lumber price thus far in the second quarter is $475 per thousand board fee, which is roughly 5% higher compared to our average lumber price in the first quarter.

Wayne Wasechek: This is based on approximately 100 million board feet of lumber. Shifting to real estate, we expect to sell approximately 8,000 acres of rural land and roughly 20 Chennaul Valley residential lots in the second quarter.

Wayne: This is based on approximately 100 million board feet of lumber.

Wayne: Shifting to real estate, we expect to sell approximately 8000 acres of rural land and roughly 20, Chanel Valley residential lots in the second quarter.

Wayne Wasechek: Further details regarding real estate can be found on the slide.

Wayne: Further details regarding real estate can be found on the slide.

Wayne Wasechek: Overall, we estimate our second quarter total adjusted EBITDA will be lower compared to our first quarter results due to seemingly lower harvest volume and higher forest management costs.

Wayne: Overall, we estimate second quarter total adjusted EBITDA will be lower compared to our first quarter results due to seasonally lower harvest volumes and higher forest management costs.

Wayne Wasechek: That concludes our prayer remarks.

Speaker Change: That concludes our prepared remarks, Rob I would now like to open the call to questions.

Rob: Rob, I would now like to open the call to questions. Thank you. We will now begin the question and answer session.

Speaker Change: Thank you we will now begin the question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad you raise your hand and joined the queue. If you would like to withdraw your question simply press Star one again.

Rob: If you would like to ask a question, please press star one in your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again.

Ketan Mamtora: Your first question comes from the line of Ketan Mamtora from BMO. Your line is open. Good morning and thanks for taking my question. Great.

Speaker Change: Our first question comes from the line of kitchen Ventura from BMO. Your line is open.

Katherine Ventura: Good morning.

Speaker Change: Thanks for taking my question.

Ketan Mamtora: Maybe start with can you talk a little bit about The Demand Trends that you are seeing, both in the New Wealthy Channel and the R&R Channel as we move through April. As you pointed out, it seems like things have gotten off to a slow start, but I'm curious what you're hearing from your customers as we move to the busiest time of the year.

Katherine Ventura: Maybe start with.

Jon Melendy: Can you talk a little bit about the demand trends that you are seeing both in the new royalty Jon Melendy.

Katherine Ventura: INR China.

Katherine Ventura: As we move to a printer.

Katherine Ventura: As you pointed out.

Speaker Change: It seems like things have gotten off to a slow as Todd I'm curious.

Speaker Change: What are you hearing from them from the from your customers as we move through the busiest time of the year.

Eric Cremers: Yeah, Ketan, this is this is Eric. You know, the way I would describe the current market environment for lumber is that things are things are decent. I do believe it is a little bit of a tale of two cities right now. I, I believe the south is on firmer footing than the north. And in fact, I would I would tell you that, you know, right now prices are, I don't know, 10 to $20 per 1000 board feet higher than what the latest random lengths print is for for the various southern species and dimensions. And I would tell you that the North is actually selling a bit below the latest random lengths print.

Eric Cremers: Yes, Keith this is this is Eric.

Eric Cremers: The way I would describe the current market environment for lumber is that things are things are decent.

Eric Cremers: I do believe it is a little bit of a tale of two cities right now.

Eric Cremers: I I believe the south.

Eric Cremers: Is on firmer footing than the north.

Eric Cremers: And in fact, I would I would tell you that right now prices are.

Eric Cremers: I don't know 10 to $20 per thousand board feet higher than what the rate is random lengths print is for the various southern.

Eric Cremers: Species and dimensions.

Eric Cremers: And I would tell you that the north is actually is selling a bit below the latest random lengths prints to <unk>.

Eric Cremers: The South has been on pretty much an upward trajectory since the start of the year with greater activity, very, very solid. And if I had to speculate as to why it's a tale of two cities, I don't think it's because demand is different between the North and the South. I think it really has more to do with, you know, the northern species folks, the customers are basically digesting some inventory that they bought in anticipation of lumber tariffs, which, of course, didn't happen. Our home center takeaway, it remains relatively good. I mean, I think our year-to-date volumes are running something like 4% above the prior year.

Eric Cremers: <unk> has been on pretty much an upward trajectory since the start of the year with praetor activity very very solid and then if I had to if I had to speculate as to why it's a tale of two cities I don't think it's because demand is different between the north and the south I think it really has more to do with.

Eric Cremers: The northern species folks the customers are basically digesting some inventory that they bought in anticipation of the lumber tariffs, which of course of course didn't happen.

Eric Cremers: Our home center takeaway it remains relatively good I mean, I think our year to date volumes are running something like 4% above above the prior year.

Eric Cremers: We are getting into the slower summer months. If I had to guess, I think you'll see a little bit of a pullback here over the next month or two. You know, we've already seen random lengths pull back, I don't know, 3% or so from the peak, but I think as you get out in, I don't know if it's going to be in July or August or September, but at some point, the expectation, those duties going higher is going to compel people to start building inventories. And like I said, I don't know which month it's going to happen, but it's going to happen.

Eric Cremers: We are getting into the slower summer months.

Eric Cremers: If I had to guess I think youll see a little bit of a pullback here over the next month or two and we've already seen random lengths pullback I don't know, 3% or so from the peak, but I think as you get out into I don't know if its going to be in July or August or September but at some point the expectation those duties going higher is going to compel people to start building.

<unk> and like I said, I don't know, which month it is going to happen, but it's going to happen. So the price risk is clearly to the upside in the back half of the year.

Eric Cremers: And so the price risk is clearly to the upside in the back half of the year. But we are in a relatively flat demand environment. Just look at housing starts. We're stuck at 1.4. R&R markets, I think, are a little bit better than new residential construction, but even that, we're talking about modest demand improvement. So that's kind of how I see the backdrop here, but I do think the price risk is to the upside. understood. And I was just curious, you know, you talked about, you know, maybe in the north, folks buying in anticipation of tariffs.

Eric Cremers: But we are in a relatively flat demand environment. Just look at housing starts we're stuck at 1.4.

Eric Cremers: R&R markets, I think are a little bit better than than new residential construction, but.

Eric Cremers: Even that we're talking about modest demand improvement.

Eric Cremers: So that's kind of that's kind of how I see the backdrop here, but I do think the price risk is is to the upside.

Eric Cremers: Understood.

Eric Cremers: Just curious you talked about maybe in the non bulk buying in anticipation of Paris.

Eric Cremers: As we sit here today, how would you characterize channeling? Well, I think we're at relatively low levels. The industry has learned to operate at relatively low levels over the years. People don't like holding inventory, speculating on where prices are going to be headed. And also, we're in a relatively high interest rate environment, so there are carrying costs to holding high inventory levels. So I think the industry is running at a relatively low level of inventories, with the exception of maybe some of the northern species, there may still be a little bit of inventory hangover from the potential for inventory building due to tariff concern.

Eric Cremers: As we sit here today, how would you characterize channel inventory.

Eric Cremers: Well I think we're I think we're relatively low levels. The industry has learned to operate at relatively low levels over the years.

Eric Cremers: People don't like holding inventory speculating on where prices are going to be are going to be headed and also we're in a relatively high interest rate environment. So there are carrying cost to holding high inventory levels.

Eric Cremers: So I think the industry is running at a relatively low level of inventories with the exception of maybe some of the some of the northern species, there may still be a little bit of inventory hangover from.

Eric Cremers: The potential for inventory building due to tariff concern.

Wayne Wasechek: And Wayne, one for you, in terms of second quarter Northern Solock price realizations, my understanding is generally going from Q1 to Q2, we see a pretty meaningful improvement just from the density component. Is that getting offset by some of the recent declines we've seen in some of the northern species in lumber, or is there anything else that's going on? Yeah, Ketan, you're right. There is the positive effect of weight. in the second quarter, but that's being.

Eric Cremers: Understood.

Eric Cremers: One for you in terms of.

Eric Cremers: Second quarter, Northern solid price realization my understanding is generally going from Q1 to Q2, we see a pretty meaningful.

Eric Cremers: Improvement just from the density component.

Eric Cremers: Is that getting offset offset by some of the recent declines we've seen in some of the northern species in lumber.

Eric Cremers: Anything else that's going on.

Eric Cremers: Yes, and Youre right. There is the positive effect of weight in the second quarter, but that's been.

Wayne Wasechek: Our forecast is that's offset by lower pricing. Now, keep in mind that with spring breakup, you know, we'll start. Moving logs here in the month of May, so there's nothing in April. So, and then the first, those shipments and those deliveries in May will have April prices. We've seen a little bit of rollover in northern pricing in April. That's what's theater. That, in fact, is what we do. Got it. That's helpful. I'll jump back in the queue. Good luck.

Eric Cremers: Our forecast since that's offset by.

Eric Cremers: Lower pricing now keep in mind that with spring breakup will start <unk>.

Eric Cremers: Moving logs here in the month of May So theres nothing in April So and then the first that those shipments and those deliveries in May we will have April pricing.

Eric Cremers: We've seen a little bit of a rollover in northern pricing in April's that's that's.

What Steve that effect is what we're anticipating.

Eric Cremers: Got it Thats helpful.

Eric Cremers: Jump back in the queue. Good luck.

Eric Cremers: Thanks.

Anthony Pettinari: Your next question comes from a line of Anthony Pettinari from Citi. Your line is open. Uh, good morning. Hey, just following up on Ketan's question, when tariffs were announced on Liberation Day, you know, we didn't get Canadian lumber tariffs, but we did get kind of very high tariffs on kind of everything else. When Liberation Day happened, did you see a significant change in your order book? Or did your, you know, kind of dealer customers, did they communicate kind of a big change in their demand, or maybe even on the real estate side? I'm just kind of curious, like, what impact that event happened?

Speaker Change: Your next question comes from the line of Anthony Pettinari from Citi. Your line is open.

Anthony Pettinari: Hi, good morning.

Speaker Change: Good morning.

Speaker Change: Hey, just following up on Keith's question, when tariffs were announced on Liberation day, we didn't get Canadian lumber tariffs, but we did get kind of very high tariffs on kind of everything else. When liberation day happened did you see a significant change in your order book or did your kind of dealer.

Speaker Change: Customers.

Speaker Change: Did they communicated kind of a big change in there.

Speaker Change: Demand or maybe even on the real estate side.

Speaker Change: Just kind of curious like what impact that event happened.

Eric Cremers: Or what would have what that what that did to end consumer demand, if anything? I don't really know that it changed end consumer demand a whole lot, Anthony. You know, there was some, I'm sure some folks were speculating that there were going to be Canadian, you know, tariffs on imported Canadian lumber. And when it didn't happen, all of a sudden, people had inventory that they had to, you know, let come back down again. But I think most of the market never really anticipated a huge inventory. Now, the 232 tariff is still hanging out there. And I do actually think there's going to be a tariff for lumber this fall.

Speaker Change: Or what.

Speaker Change: What that.

Speaker Change: What that did to end consumer demand if anything.

Speaker Change: I don't really know that it changed and consumer demand.

Anthony Pettinari: A whole lot Anthony.

Speaker Change: There was some I'm sure some folks were speculating that there were going to be Canadian tariffs.

Anthony Pettinari: Ported Canadian lumber.

Anthony Pettinari: And then when it didn't happen all of a sudden people at inventory that they had had to come.

Anthony Pettinari: Come back down again, but.

Anthony Pettinari: But I think most of the market never really anticipated a huge a huge inventory now the 232 tariff is still hanging out there and I do actually think there is going to be a tariff for lumber.

Eric Cremers: It's anybody's guess as to what that might be. But back to your question, I don't know that it really changed a whole lot other than there may have been some advance ordering for SPF or SPF, you know, corollary species like hemp fur, dog fur. There may have been some people out buying in advance of Liberation Day. And then that had to be unwound.

Anthony Pettinari: This fall, it's anybody's guess as to what that might be.

Anthony Pettinari: But back to your question I don't I don't know that it really changed a whole lot other than there may have been some advanced ordering.

Anthony Pettinari: For SPF for SPF.

Anthony Pettinari: Corollary species like him for Doug fir.

Anthony Pettinari: There may have been some people out buying in advance of Liberation day, and then that had to be unwound, but I don't think that the effect was huge.

Eric Cremers: But I don't think that the effect was huge. Okay, that's helpful. And then when we do go from, I guess, 15% to 34%, 35%, do you think, you know, Canadian lumber volumes into the US basically get shut down? Are they maybe able to absorb some of those costs? Or, you know, or not pass those on to the end consumer? Like what actually happens to Canadian volumes? When we get up to like a 34%, 35% duty? When I guess when you think about history? Yeah, I think it's going to be a little bit of both. I think there are going to be some competitors.

Anthony Pettinari: Okay. That's helpful. And then when we do go from 15% to $34, 35% do you think Canadian lumber volumes into the U S basically get shut down or they may be able to absorb some of those costs.

Anthony Pettinari:

Anthony Pettinari: We're not pass those on to the end consumer like what actually happens to Canadian volumes, when we get up to like a 34% 35% duty when I guess when you think about history.

Anthony Pettinari: Yeah, I think it's going to be a little bit of both I think theyre going to be some competitors I mean, if youre.

Eric Cremers: I mean, if you're, you know, Wes Fraser, and you've got mills in Canada, and you got mills in the south, you can absorb some of that higher duty and keep operating. If you're a smaller independent operator, and you've got one mill in Canada, and you're disadvantaged with expensive logs, it's going to be it's going to be a world of hurt. I do expect there to be more mill closures or curtailments up in Canada as we get into the fall with these with these higher duties. I mean, a 30-34% duty is pretty, it's pretty onerous. Got it.

Anthony Pettinari: West Frazier and you've got mills in Canada, and you got mills in the South you can absorb some of that higher duty and keep them operating.

Anthony Pettinari: If you're a smaller independent operator, and you've got one mill in Canada.

Anthony Pettinari: Youre disadvantaged with expensive logs, it's going to be it's going to be world of hurt I do expect there to be more mill closures or curtailments up in Canada as we get into the fall with these with these higher duties EMEA 30, 34% duty is pretty its pretty onerous.

Anthony Pettinari: Got it got it.

Eric Cremers: That's helpful. I'll get back in the queue. Thanks.

Speaker Change: That's helpful I'll get back in the queue.

Anthony Pettinari: Thanks.

George Staphos: Your next question comes from a line of George Staphos from Bank of America. Your line is open. Hi, everyone. Good morning. Thanks for the details.

Speaker Change: Your next question comes from the line of George Staphos from Bank of America. Your line is open.

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

George Staphos: Recognizing that we're not at mid-cycle pricing yet in lumber, what do you think Waldo's actual contribution was on a year-on-year basis to the EBITDA and the wood product segment? Any sense that you could relate to us? Well, you know, what I what I'd say, you know, so far, George, is that it's not where we want it to be. It's not because the mill is not running well, the mill is running exceptionally well. I think the real issue right now is, is pricing. And that mill generally runs wider dimensions, not narrow dimensions. And this spring in the south, it was relatively dry, logs were accessible.

Speaker Change: Recognizing that we're not at mid cycle pricing, yet and lumber what do you think while those actual contribution.

George Staphos: Was on a year on year basis to the EBITDA and the wood products segment.

Speaker Change: Any sense that you can relate to us.

George Staphos: Well, what I'd say, so far George is that it.

Speaker Change: It's not where we want it to be.

Speaker Change: Not because the mill is not running well the mill is running exceptionally well I think the real issue right now is is pricing.

Speaker Change: And that mill generally runs wider dimensions not narrowed dimensions.

Speaker Change: And this spring in the south that was relatively dry.

Speaker Change: Blogs were accessible.

Eric Cremers: And so we didn't get the price run up and wides this spring that we would normally get. So I'm not, you know, we've had we've had we've had one quarter, where pricing isn't exactly where I'd like it to be. But I do have an expectation for higher prices, as the year progresses. And I especially have a higher price expectation for next year, as I think starts are going to come back and R&R is going to be on firmer footing next year.

Speaker Change: And so we didn't get the price run up in Wides. This spring that we would normally get so I'm not.

Speaker Change: We've had we've had one quarter, where pricing is and exactly where I'd like it to be but I do have an expectation for higher prices as the year progresses.

Speaker Change: Especially you have a higher price expectation for next year as I think starts are going to come back and R&R is going to be on firmer footing next year. So I have no doubt Waldo is going to grow into its pro forma it's not quite there yet, but it's getting there.

George Staphos: So I have I have no doubt Waldo is going to grow into its pro forma, it's not quite there yet, but it's getting there. Okay. I appreciate that, Eric.

Eric Cremers: Okay I appreciate that Eric switching gears, a little bit I mean, you had a reasonably constructive.

George Staphos: Switching gears a little bit, I mean, you had a reasonably constructive quarter in real estate. I think you noted that overall prices went up. But from our vantage point, looking at some of the trade periodicals, it looks like activity in the South in particular has been a little bit sluggish. I don't think there's been a meaningful change in pricing per acre. Now, if you agree with that, what do you think is happening? And if you have a different view of things, please relay what you're seeing in the Southern markets, recognizing it's not a monolithic market.

Speaker Change: At quarter end and real estate.

Speaker Change: You noted that overall prices went went up but from our vantage point looking at some of the trade periodicals. It looks like activity in the south in particular has been a little bit sluggish.

Speaker Change: There's been a meaningful change in pricing per acre now if you agree with that what do you think's happening and if you have a different view of things. Please.

Speaker Change: What youre seeing in the southern markets recognizing.

Speaker Change: It's not a monolithic market theyre going to be.

George Staphos: There are going to be different regional trends. How would you paint that picture for us?

Speaker Change: Regional trend, how would you paint that picture for us.

George Staphos: Yeah, George, this is Wayne. I think I'd start with, you know, looking at our rural real estate business, you know, typically, you know, smaller transactions. Again, that market, we're seeing strong demand. We forecasted, you know, our guidance is 26,000 acres this year. So, you know, still, still strong environment. We've seen that in Q1. You know, we're forecasting another 8000 acres in Q2. So the pipeline looks strong there. Demand is strong from conservation to recreational, but those tend to be Smaller sales, relatively speaking. Now, if you're kind of referring to the broader M&A environment, larger transactions, you know, 10,000 plus acres.

Speaker Change: Yes, George this is Wayne.

Speaker Change: I think I'd start with looking at our rural real estate business.

Speaker Change: Typically smaller transactions again that market, we're seeing strong demand.

Speaker Change: Forecasted.

Speaker Change: Our guidance is 26000 acres. This year, so still still a strong environment, we've seen that in Q1.

Speaker Change: We're forecasting another 8000 acres in Q2, so the pipeline looks strong there and demand is strong from conservation to recreational but those tend to be.

Speaker Change: Smaller sales relatively speaking now if you're kind of referring to the broader M&A environment.

Speaker Change: Larger transactions 10000 plus acres.

Wayne Wasechek: Yeah, we're still seeing There's a lot of buyers for those tracks and the demand and the pricing, lower discount rates. Yeah, that's still a healthy market. still very strong from an M&A. Now, there's not a lot of acres and transactions coming to market, but the ones that do that are quality tracks, yeah, we're seeing a lot of buyers for those, or a lot of bidders.

Speaker Change: We're still seeing.

Speaker Change: There's a lot of buyers for those tracks and the demand and the pricing lower discount rates.

Speaker Change: Yes, that's still a healthy market.

It is still very strong from an M&A standpoint, now theres not a lot of acres and transactions coming to market, but the ones that do that are quality tracks.

Speaker Change: We're seeing a lot of a lot of buyers for those are a lot of bidders.

Speaker Change: Bidders.

Speaker Change: Holly from those tracks.

Wayne Wasechek: Do you anticipate there'll be a little bit more activity in the larger transactions at some point? If so, what would be the catalyst from where you see if it's just rates coming down or if there's something else that would be a driver for you from what you see? I think rates could influence it, but also maybe more clarity on where. We're waiting for a little more clarity or the ability to monetize more of the NCS opportunities. So I think that could, you know, once that picks up, you could see more properties coming in the market.

Speaker Change: Do you anticipate there will be a little bit more activity in the larger transactions at some point and if so what would be the catalysts from <unk>, where he says it just rates coming down it or something else that would be in <unk>.

Speaker Change: River for you from what you see.

Speaker Change: I think rates could influence it but also maybe more clarity on where.

Speaker Change: NCS plays out I think some some sellers are waiting too.

Speaker Change: Waiting for for a little more clarity or the ability to monetize more of the NCS opportunities. So we think that could.

Speaker Change: Once that picks up you could see more properties coming in the market I think that's a big big factor.

Wayne Wasechek: I think that's a big, big factor.

Wayne Wasechek: Okay, last two for me, and I'll turn it over. Can you talk, maybe you mentioned I'd missed it, why you saw more mixed... Small dianalogues in the south, what was driving that, you know, recognizing ultimately, you know, you have to be opportunistic in your markets, you know, whatever you have, you have. And then just as we think about 2Q and the guidance, and we appreciate that color that you provide. You know, we have, maybe not the pricing you want, but we do have wallow coming up. We do have pricing in wood and lumber up, although I know you said that's maybe pulling back a bit.

Speaker Change: Okay.

Speaker Change: Last two for me and I'll turn it over can you talk maybe you mentioned I had missed it of why you saw more mix for small diameter logs in the south what was driving that.

Speaker Change: And ultimately you have to be opportunistic in your markets. Whatever you have you have.

Speaker Change: And then just as we think about <unk> and the guidance. So we appreciate that color that you provide.

Speaker Change: We have maybe not the pricing you want but we do have Waldo coming up we do have pricing in wood and lumber up although I know you said thats, maybe pulling back a bit how would you have us think about at least directionally. The segment EBITDA trends <unk> versus <unk> should we expect that wood is up given that backdrop or.

Wayne Wasechek: How would you have us think about, at least directionally, the segment EBITDA trends, 2Q versus 1Q? Should we expect that wood is up, given that backup, or might it also be lower for whatever reason?

Speaker Change: It also would be lower for whatever reason so.

Wayne Wasechek: So, mix in the south and sort of the EBITDA bridge, whatever you can relay there for 2Q, and I'll turn it over. Thank you. Yeah, so George on your mix question, yeah, it's just a function of really just wet weather. So when it's wetter in the south for us, especially in the Gulf South, we can't get as deep into the woods where larger logs are at. So we stick closer to the roads where that tends to be more chip and saw, and that chip and saw sells for a lower price point. So again, that's just a kind of weather driven and, you know, a reflection of that.

Speaker Change: Mix in the south and sort of the EBITDA bridge, whatever you can relay there for <unk> and I'll turn it over thank you.

George Staphos: Yeah. So George on your mix question, Yes, it's just a function of.

George Staphos: Really just wet weather so when it's winter in the south for us, especially in the Gulf South we can't get as deep into the woods, where larger logs are at so we stay closer to the roads, where that tends to be more chip and saw and that chicken sauce sells for a lower price point. So again thats just kind of.

George Staphos: Weather driven.

George Staphos: The reflection of that I would say from a pricing is stable by product. So again, it's really mix driven.

Wayne Wasechek: I would say pricing is stable by product. So again, it's really... On the thinking overall from a guidance standpoint, yeah, we're, as we said in the prepared remark, on about a third of our shipment volume, forecasted shipment volume for the quarter, we're up 5% on a pricing standpoint. You know, how much of that holds for the rest of the quarter? Yeah, that's hard to say. I mean, random lengths is coming down a bit. still, you know, we're up 5% quarter to date. How much of that will roll through on what products? But still, we. I think we're at that level where we've come in at Q2 or even a bit higher for what product.

George Staphos: The thinking overall from a guidance standpoint, yes, we're as we.

George Staphos: <unk> said in the prepared remarks.

George Staphos: On a about a third of our shipment volume forecasted shipment volume for the quarter were up 5% on a pricing standpoint, how much of that holds for the rest of the quarter. Yes, that's hard to say I mean random lengths is coming down a bit but still were up 5% quarter to date how.

How much lateral roll through on wood products.

George Staphos: But still we.

George Staphos: I think we're kind of at that level, where we've come in at.

George Staphos: Q2, or even a bit higher for wood products.

George Staphos: Okay.

Wayne Wasechek: I appreciate it.

Mark Weintraub: Thank you, Wayne. Your next question comes from a line of Mark Weintraub from Seaport Research Partners. Your line is open. Thank you. I just actually first wanted to follow up on this, the lumber pricing in the second quarter. In the slide, you have it flat. When you provide that guidance of expecting EBITDA to be lower than Q1, is that assuming that you give back the 5% through the balance of the quarter and so that lumber prices are flat? Yeah, so Mark, you know, we're up 5% spot 10 quarter to date in lumber. We're indicating flattish prices for Q2.

George Staphos: I appreciate it thank you Wang.

George Staphos: Turn out.

Speaker Change: Your next question comes from the line of Mark Weintraub from Seaport Research Partners. Your line is open.

Mark Weintraub: Thank you just actually first I wanted to follow up on this the lumber pricing in the second quarter in the slide you have it flat.

Mark Weintraub: Is are you and when you provide that guidance of expecting EBIT that would be lower than Q1.

Mark Weintraub: Is that assuming that you give back the 5% through the balance of the quarter and so that lumber prices are flat.

Mark Weintraub: Yes, so mark.

Mark Weintraub: We're up 5%.

Mark Weintraub: <unk> 10 quarter to date in lumber.

Mark Weintraub: We're indicating flattish prices for Q2 now is it up three is that up for us the down one.

Wayne Wasechek: Now, is it up three? Is it up four? Is it down one? I think our expectation is for it to be kind of where it's at, maybe a little soft. We've seen random lengths roll over 3% from the peak, so it could come down a little bit. I wouldn't read too much into us lumber prices are going to be flat. It'll be in that zip code. We are expecting our wood products business to have higher earnings in the second quarter than the first quarter. Timberlands is where we expect earnings to come down, and we expect it to come down through normal seasonality.

Mark Weintraub: Our expectation is for it to be kind of where it's at.

Mark Weintraub: Maybe a little soft we've seen random lengths rollover, 3% from the peak so it could come down a little bit.

Mark Weintraub: I wouldn't read too much into us, saying that lumber prices are going to be flat.

Mark Weintraub: It'll be in that ZIP code, we are expecting our wood products business to have higher earnings in the second quarter than the first quarter Timberlands is where we expect.

Mark Weintraub: Earnings to come down and we expect it to come down through normal seasonality.

Wayne Wasechek: So that's where the drag on the P&L is going to be in Q2. It's not going to be in wood products.

Mark Weintraub: So that's where the drag on the P&L was going to be in Q2, it's not going to be in wood products.

Wayne Wasechek: Right, although I guess I was trying to because I would have thought wood products would be up and if you have prices up three to four or 5% it actually would be up, you know, a decent amount. And so I'm really trying to get a sense as to how much you think Timberlands are going to be down that you'd kind of say even if prices are up three to 5% that you're expecting 2Q to be Clearly lower than 1Q. So that sort of was the angle that I was trying to get a sense of. Yeah.

Speaker Change: Right, Although I guess I was trying to because I would've thought wood products would be up and if you have prices up 3% to four 5% it actually would be up a decent amount.

Speaker Change: So im just trying to get a sense as to how much you think timberlands are going to be down that you'd kind of say, even if prices are up 3% to 5% that youre expecting.

Speaker Change: <unk> to be.

Speaker Change: Clear clearly lower than <unk>. So that's sort of what's the angle that I was trying to get a sense of.

Speaker Change: Yes.

Wayne Wasechek: Any help there in maybe quantifying? on the Timberlands side. you know, lower seasonal volume. Pricing relatively flat in both The other thing I would highlight is just normal seasonality from our forest management costs and roads, and that'll, you know, from Q1 to Q2, that's, that's about an additional almost $4 million. So that's, yeah. Lowering results on Timberlands compared to Q1. And then...

Speaker Change: Any help there and maybe quantifying.

Speaker Change: On the timberland side.

Lower seasonal volume.

Speaker Change: Pricing relatively flat in both regions. The other thing I would highlight is just normal seasonality from our forest management costs and roads and that'll from Q1 to Q2, that's about an additional almost $4 million. So that's the other.

Speaker Change: Kind of slipped from Q1 to Q2.

Speaker Change: Lowering results on timberlands compared to Q1 got you that's helpful. Thank you.

Speaker Change: Then.

Mark Weintraub: So maybe first, one other follow-up on LEMRS. You had mentioned, Eric, you had mentioned that you thought that there would be tariffs from the Section 232 investigations. I'm just curious, is there kind of what's sort of the thought process behind that? I just feel like I hear a lot of noise from the administration around lumber, and it's not just lumber, it's automobiles, aluminum, steel, the fact that it was singled out to be one of the industries under investigation, the fact that the U.S. does have ample supplies of timber, the fact that it's well known that Canada basically subsidizes its lumber producers.

Speaker Change: So maybe first one other follow up on <unk>.

Speaker Change: You had mentioned Eric you had mentioned that you are you thought that there would be tariffs from the.

Speaker Change: Section 232 investigations.

Speaker Change: Im just curious is there kind of what sort of the thought process behind that.

Speaker Change: I just feel like I hear a lot of noise from the administration around lumber.

Speaker Change: Not just lumber it's automobiles.

Speaker Change: Aluminum steel.

Speaker Change: The fact that it was singled out to be one of the industry's under investigation of the fact that the U S does have ample supplies of timber.

Speaker Change: But it's well known that Canada, basically subsidizes its lumber producers.

Eric Cremers: I can't predict what the future hold marks, I just look at the anecdotes that I read in the paper and the backchatter that I hear, and it's just what my gut tells me is that there could very well be a tariff. There may not be, but who knows. Gotcha. I don't know if they're engaging either industry groups or companies that are involved, but that... Is that happening to your understanding? Well, yeah, the Department of Commerce is talking to all sorts of people trying to figure out where to go with this.

Speaker Change: I can't predict what the future hallmarks I just look at the the.

Speaker Change: The anecdotes that are reading the paper.

Speaker Change: The back chatter that I hear and Thats, just with what my gut tells me that there could very well be a tariff there may not be.

Speaker Change: But who knows got you I just didnt I don't know if theyre engaging either industry groups or companies that are involved but.

Speaker Change: Is that happening to your understanding.

Speaker Change: The department of Commerce is talking to all sorts of people trying to figure out where to go with this.

Speaker Change: Gotcha, but okay fair enough and then.

Eric Cremers: Lastly, you did buy back some more stock. Your balance sheet is still strong and stock price is even lower. What sort of a comfortable level of cash for you to have on the balance? Well, I think historically, we've talked about having $100 million of cash on the balance sheet, you know, as a sort of a safety net, if you will. So, I mean, that's kind of how we're thinking about it. I'm not happy where the stock is at. I'm surprised we're executing extremely well right now across the business units. I think, like I said earlier, pricing risk is to the upside.

Speaker Change: Lastly, you did buy back some more stock your balance sheet is still strong stock prices even lower.

Speaker Change: What's sort of a comfortable level of cash for you to have on the balance sheet.

Speaker Change: Well I think historically, we've talked about having $100 million of cash on the balance sheet.

Speaker Change: There's a sort of a safety net if you will.

Speaker Change: So I mean, that's kind of how we're how we're thinking about it I am not happy where the stock is at.

Speaker Change: I'm surprised we're executing extremely well right now across the business units.

Speaker Change: I think like I said earlier pricing risk is to the upside.

Eric Cremers: And certainly, share repurchases, it's moved to the top of the capital allocation toolkit here. So, we'll see where things go from here.

Speaker Change: And certainly share repurchases.

Speaker Change: <unk> moved to the top of the capital allocation.

Speaker Change: Toolkit here.

So, we'll see where things go from here.

Eric Cremers: Great. Appreciate all the thoughts. Thank you.

Speaker Change: Great I appreciate all the thoughts thank you.

Buckhorn: Your next question comes from a line of Buckhorn from Raymond James. Your line is open. Hey, thanks. Good morning. I wanted to go back to the solar and lithium opportunities you guys We're making a lot more progress with. All of you just help.

Speaker Change: Your next question comes from the line of Buck Horne from Raymond James Your line is open.

Buck Horne: Hey, Thanks, good morning.

Speaker Change: I wanted to go back to the.

Speaker Change: Solar in lithium opportunities you guys are.

Speaker Change: Being a lot more progress with.

Maybe you could just help.

Eric Cremers: Help us understand the potential timeline for when some of those option contracts would convert to more meaningful, you know, royalty revenues, or when would we see like a more meaningful financial contribution as those those things move to, you know, full operational capability? Those option periods are anywhere from three to five years. So that period is now starting to come to the tail end of those option cycles. You know, I would note that, I think. Developers want to move forward. I think there's a lot of strong demand there. I think one of the challenges that we hear is just from the regulatory agencies, they're backed up approving projects, which that stretches out the process.

Speaker Change: Help us understand the potential timeline for when some of those option contracts would convert to more meaningful royalty revenues or when would we see like a more meaningful financial contribution as those things move too.

Speaker Change: Full operational capability.

Speaker Change: Yes for Us Bob.

Speaker Change: Darcy one of these deals closing this year than we currently have under option I think there's a strong likelihood next year that we would see one or two start to fall in.

Speaker Change: Those those option periods are anywhere from three to five years so that.

Speaker Change: That period is now starting to come to the tail end of those option cycles.

Speaker Change: I would note that I think.

<unk> want to move forward I think there's a lot of strong demand there I think one of the one of the challenges that we hear it's just.

Speaker Change: From the regulatory agencies, and other Baxter approving projects, which that stretches out process.

Eric Cremers: But yeah, I think with that, you know, we stay in close contact with all of our developers and where they're at in the process and how it's progressing.

Speaker Change: But yes, I think with that we stay in close contact with all of our developers on where they're at in the process and how it's progressing and like I said, we think one or two will start to fall next year then.

Eric Cremers: And like I said, we think, you know, one or two will start to fall next year and then, you know, kind of the dominoes. http://TheBusinessProfessor.com That's very helpful. Thank you.

Speaker Change: The dominoes from from after that.

Got you got you that's very helpful. Thank you.

Eric Cremers: And then switching to a little bit on the lumber side of the equation, I'm thinking about Potential for these duties and tariffs. Canadian species of wood, spruce, you know, that the home building industry usually is reliant on. Wondering if you're hearing... Talk about homebuilders trying to switch species or maybe get up to speed on using more yellow pine in their operations. Head of Potential Duties Increases. Are you hearing or? Increased interest from builders looking to get up to speed on using Yellow Pine in their operations. Yeah, but that that that substitution has been taking place over the past several years as you know, US Southern alpine production has really grown.

Speaker Change: And then switching to a little bit on the lumber side of the equation thinking about.

Speaker Change: The potential for these duties and tariffs hitting.

Speaker Change: Various.

Speaker Change: Canadian species of woods, Bruce that the homebuilding industry industry, usually is reliant on <unk>.

Speaker Change: Wondering if you're hearing of any talk about homebuilders trying to switch species or maybe get up to speed on using more yellow pine in their operation ahead of potential duties increases are you hearing or getting any increased interest from builders looking to get up to speed on using yellow pine in their operation.

Speaker Change: Yes.

Speaker Change: Substitution has been taking place over the past several years as you know U S. Southern yellow pine production has really grown.

Eric Cremers: We are hearing about it more and more. And I think it's just gonna it's just going to continue to grow as we move forward.

Speaker Change: We are hearing about it more and more and I think it's just going to it's just going to continue to grow as we move forward.

Speaker Change: Okay.

Eric Cremers: Is it any noticeable acceleration or change? Uh, I would say we're hearing a little bit more chatter about it, for sure. Um, you know, I can't, I can't quantify it for you. Um, I can just say that I am, I am hearing about it more and more. Appreciate the color. Thanks, guys. Good luck.

Speaker Change: Any noticeable acceleration or change in that recently.

Speaker Change: I would say, we're hearing a little bit more chatter about it for sure.

Speaker Change: I can't I can't quantify it for you I can just say that I am I'm hearing about it more and more.

Speaker Change: Okay I appreciate the color. Thanks, guys. Good luck. Thanks.

Matthew Mckellar: Your next question comes from a line of Matthew McKellar from RBC Capital Markets. Your line is open. Thanks for taking my questions. Just a couple of quick ones from me. First, I think you mentioned higher cedar log prices in Idaho a couple of times in your opening remarks. Could you maybe just provide a bit of color on what you're seeing in cedar markets? And then second, if we do see meaningful Section 232 tariffs on wood products, what would be your view on the likely impact of timberland valuations over the medium?

Speaker Change: Your next question comes from the line of Matthew Mckellar from RBC capital markets. Your line is open.

Matthew Mckellar: Thanks for taking my questions just a couple of quick ones from me.

Matthew Mckellar: Firstly, I think you mentioned higher Cedar log prices in Idaho, a couple of times in your opening remarks can you maybe just provide a bit of color on what youre seeing in Cedar markets and then second.

Matthew Mckellar: If we do see meaningful section 232 tariffs of wood products.

Matthew Mckellar: What would be your view on the likely impact of timberland valuations over the medium term.

Wayne Wasechek: Yeah, Matt, this is Wayne. Regarding Cedar, I don't know, that's really our view is more of a kind of market specific what we're seeing in our region. Our customers, I think, have been short on cedar, and that's really been a regional mix. regional demand, which is driving prices up for us.

Matthew Mckellar: Yes, Matt this is Wayne regarding Cedar.

Matthew Mckellar: No. That's really our view is more of a kind of market specific what we're seeing in our region.

Matthew Mckellar: Our customers <unk> been short on Cedar and that's really been a regional a regional mix.

Matthew Mckellar: Our regional demand, which is driving prices up for us. So we've capitalized on that with our customers specifically in the regions that we and our customers that we service.

Wayne Wasechek: So we've capitalized on that with our Yeah, Matt, I'll take the second one on your question regarding the 232 impact on Timberland valuations. You know, it's really, really hard to speculate what that impact is going to be until we know more. Like, how big is the tariff, number one, and then number two, how long is that tariff going to last? You know, I think I've read in some places that the Canadians are going to turn to try to settle this dispute very quickly. And if that's the case, then I would say it's going to have little to no impact on Timberland valuations.

Speaker Change: Yeah, Matt I'll take the second one on your question regarding the $2 32 impact on timberland valuations.

Matthew Mckellar: It's really really hard to speculate what that impact is going to be until we until we know more.

Speaker Change: Like how big is the tariff number one and then number two how how long is that tariff going to last.

Matthew Mckellar: I think I've read in some places that.

Matthew Mckellar: The Canadians are going to turn to try to settle this dispute very quickly.

And if thats the case and I would I would I would say, it's going to have little to no no impact from timberland valuations.

Wayne Wasechek: But if they dig their heels in, and the tariff goes on for an extended period of time, then I would say it could have a meaningful impact on Timberland valuations. So it's just really hard to speculate where we wind up with all this.

Matthew Mckellar: But if they they dig their heels in.

Matthew Mckellar: And the tariff goes on for an extended period of time, then I would say it could have it could have a meaningful impact on timberland valuation. So it's just really hard to speculate where we wind up with all of this.

Matthew Mckellar: Okay, thanks very much for the color.

Matthew Mckellar: Okay. Thanks, very much for the color I'll turn it back.

Michael Roxland: Your next question comes from a line of Mike Roxland from Truist Securities. Your line is open. Thanks, Eric and Wayne for taking my questions and congrats on the Thanks.

Speaker Change: Your next question comes from the line of Mike <unk> from <unk> Securities. Your line is open.

Speaker Change: Thanks for taking my questions and congrats on the quarter.

Speaker Change: Thanks, Craig.

Wayne Wasechek: My first question is, I want to go back to your Southern Song Login. So obviously they exceeded our forecast, they exceeded your own guidance. I think when you mentioned favorable weather as being a contributor. is some of the. Unknown Executive, Ketan Mamtora, Matthew McKellar, Wayne Wasechek, Niccolo Piccini, harvest volumes for sub-install logs and Yeah, like for us salvage, we don't We were very little impact from Hurricane Helene for us, that more coastal. in the South and we're more South Central. So for us, not a not a big impact and not a driver. Look, it was both in Idaho.

Speaker Change: Just my first question is going to go back to the your southern saw log and pulpwood harvest, obviously, they exceeded our forecasts exceed your guidance I think when you mentioned favorable weather as being a contributor.

Speaker Change: Some of them.

Speaker Change: Harvest related to salvage wood from prior.

Speaker Change: Our team is lean as well I mean, I guess I'm, just like what really happened that drove the huge outperformance in terms of harvest volumes grew southern saw logs and pulpwood and <unk>.

Mike: Yes, Mike for Us salvage.

Speaker Change: We have very little impact from hurricane clean for us.

Mike: More coastal.

Mike: In the south where more south central so for us not a not a big impact and not a driver.

Mike: <unk>.

Mike: Over performance for the quarter look it was both in Idaho. So we took advantage of.

Wayne Wasechek: So we took advantage of, you know, favorable hauling conditions, log in hauling conditions in Idaho to outperform a little bit there. In the South, again, whether we could move volume. Also, We have an estimate baked in of, you know, what we Stumpage will be a little bit stronger demand than stumpage in the first quarter. Now that doesn't change our overall forecast. Stumpedge for the year, but it was just a little bit higher. Some of our customers wanted to get ahead of that to begin the year, so Stumpedge is up a little bit more. Okay.

Mike: Favorable hauling conditions logging and hauling conditions in Idaho to outperform a little bit there in the south again, whether we could move volume also just we have a estimate baked in.

Mike: What we think.

Mike: Stumpage will be little bit stronger demand in stumpage in the first quarter now that doesn't change our overall <unk>.

Mike: <unk> somewhat.

Mike: We'll sell for stumpage for the year, but it was just a little bit higher some of our customers wanted to get ahead of that to.

Mike: To begin the year stumpage is up a little bit more than we anticipated.

Mike: Got it okay.

Mike: Helpful. Thank you in terms of MTS.

Eric Cremers: Wayne, thank you. In terms of NCS, Eric, you mentioned, obviously, solar is doing very well. You have the 35,000 acres under solar option. You've identified another 30 to 35,000 acres. You mentioned that last quarter. When you look at your portfolio in the U.S. house, how much of your acreage do you think it ultimately be? Well, as we sit here today, it's, you know, it's in the low 70,000 acre kind of range. But, you know, I think one of the things that it's it's hard to hard to know is, these are the obvious sites, the 70 to 75,000 acres that I'm referring to, you know, is do the economics of solar get to the point where you can go a little bit farther with your solar farm from from the grid.

Mike: You mentioned, obviously solar is doing very well you have the 35000 acres under sole option you've identified another 30 to 35000 acres you mentioned that last quarter. When you look at your portfolio in the U S. How much of your acreage do you think it ultimately be stratified for solar.

Mike: Now as we sit here today, it's in the low 70000 acre kind of range, but.

Mike: I think one of the things that it's hard to hard to know is these are the obvious sites. The 70 to 75000 acres that I am referring to.

Mike: Is do the economics of solar get to the point where.

Mike: You can go a little bit farther with your solar farm from from the grid.

Eric Cremers: Today, developers are demanding sites that are, you know, virtually right below the high voltage power lines. But I could see the costs, or the P&L benefit to solar, I could see it growing over time as technology improves. And that could drive the developers to look a little bit further away from being right below those high voltage power lines and substations and transformers and whatnot. And under that scenario, you could we could have a whole bunch more acres that could be could be applicable to solar. So that 70,000 to 75,000 acres that we referred to, that's the obvious stuff today.

Mike: Today developers are demanding sites that are.

Mike: Virtually right below the high voltage power lines.

Mike: But I can see the costs.

Mike: The P&L benefit to solar I could see it growing over time as technology improves.

Mike: And that could drive the developers to look a little bit further away.

Mike: From being right below those high voltage power lines, and Substations Transformers, and whatnot and under that scenario you could we could have a whole bunch more acres that could be could be applicable to solar.

Mike: So that 70 to 75000 acres that we referred to that's the obvious stuff today.

Eric Cremers: But there could be more acres on top of that, but we'll just have to see how the industry develops. Gotcha.

Mike: But there could be more acres on top of that but we'll just have to see how the industry develops.

Eric Cremers: And any timeline for the 70,000 acres in terms of how do you think about how it deploys? Yeah, you know, it's really hard. It's really hard to know it's it's it feels like it's taking longer than any of us would would like, you know, we had a conversation with a developer the other day about what is taking so long. And they their response was, look, there is just a huge bottleneck of projects that these grid operators have to evaluate. And our systems called the MISO, acronym M-I-S-O. And it controls, you know, for 15 states, the Midwestern part of the United States, that's the one that we deal with primarily.

Mike: Got it and any timeline for 70000 acres in terms of how you're thinking about how to deploy.

Mike: Over time.

Mike: Yes, it's really hard it's really hard to know it feels like it's taking longer than any of us would like we had a conversation with a developer the other day about what is taking so long.

Mike: Their response was look there is just a huge bottleneck.

Mike: <unk> projects that these grid operators have to evaluate in our system is called the MISO acronym so.

Mike: And it controls electricity for 15 states and the Midwestern part of the United States. That's the one that we deal with primarily.

Eric Cremers: And what I would tell you is that the solar developer that we spoke with, the note they sent me, was that the queue process for the projects, it's very long, it's very tedious, and it's very disorganized. And this operator, this MISO operator, they have to do a utility study for each and every one of these projects that they look at, and each and every one of these projects, the study takes about, you know, two years to get complete. And think about all the projects that they have been inundated with over the past couple of years, and, you know, think about what's going on with electricity demand in the U.S., and where that demand is.

Mike: And what I would tell you is that the solar developer that we spoke with a note. They sent me was that the <unk> process for the projects, it's very long, it's very tedious and its very disorganized.

Mike: And this this this operator this MISO operator, they have to do with utility study for each and every one of these projects that they look at in each and every one of these projects. The study takes about two years to get complete.

Mike: Think about all the projects that they have been inundated with.

Mike: Over the past couple of years.

Mike: And think about what's going on with electricity demand in the U S and where that demand is.

Eric Cremers: And MISO is just, they've got their hands full trying to figure all this out. So, you know, I think to summarize, this is taking a lot longer than any of us would like, but I don't think that means that the projects get canceled, I just think it means they get stretched out a little bit. got it all. It's a really helpful remark.

Mike: So it's just they've got there they've got their hands full trying to figure all this out.

Mike: So I think to summarize this is taking longer than any of us would like but I don't think that means that the projects get canceled I just think it means that gets stretched out a little bit.

Speaker Change: Got it that's really helpful. And then just one quick one.

Eric Cremers: And then just one quick one in terms of lumber. Obviously, if you produce 10 million bore feet more than the higher end of your previous range, but you also mentioned, Eric, that lumber demand is... So how do you reconcile, you know, producing more with the comment that demand is not there? And I understand you want to get it rolled off and running. , Eric Staphos, Eric Cremers, Anthony Pettinari, Mark Weintraub, Kurt Yinger, Michael Roxland, Yeah, well, first of all, 10 million board feet in the grand scheme of a, you know, 50 million board foot market is not is not a whole lot.

Anthony Pettinari: In terms of lumber, obviously, you produced 10 million board feet more than the higher end of your previous range, but you also mentioned Eric that lumpy demand is tepid. So how do you reconcile producing more with the comment that demand is not there.

Speaker Change: Understand you want to get it.

Speaker Change: So while they are up and running.

Speaker Change: That's the capacity, but can you just tell us.

Speaker Change: Help me understand clearly what happen with respect the lumber demand for your own order book relative to your production with the incremental production of 10 billion board feet.

Speaker Change: Yes, well first of all 10 million board feet in the Grand scheme of the 50 million Board foot market has not is not a whole lot.

Eric Cremers: So I'm going to be forcing I'm going to be forcing a higher cost competitor or fourth quartile mill to produce 10 million feet less all things all things equal. But when I say when I say demand is tepid, that doesn't mean that it's that it's falling. It just means it's not growing rapidly. I do actually think lumber markets in the US are going to grow this year, not by a lot by, I don't know, a half a billion, three quarters of a billion board feet. I don't think it's by and large going to come from new residential construction.

Speaker Change: So I'm going to be forcing I'm going to be forcing a higher cost competitor fourth quartile mill to produce 10 million feet less all things all things equal, but when I say when I say demand is tepid.

Speaker Change: That doesn't mean that it's that it's falling it just means it's not growing rapidly I.

Speaker Change: I do actually think lumber markets in the U S are going to grow this year not by a lot by I don't know a half a billion three quarters of 1 billion board feet. I don't think it's by and large is going to come from new residential construction I think it's mostly going to come from from R&R projects. The R&R market is hanging in there we talked about treater demand earlier.

Eric Cremers: I think it's mostly going to come from from R&R projects. The R&R market is hanging in there. We talked about treater demand earlier. The other thing I read an interesting statistic the other day, and that is that R&R searches on Google are up 25% year over year. Now, it's hard. That doesn't directly translate into 25% higher lumber demand, obviously, for R&R projects. But it shows that, you know, that that that peak R&R period that the country experienced back in COVID, you know, that's long in the rearview mirror. And where we sit today with low existing home sales, and tons of home equity having been built up in the country, people want to do R&R projects, and it's slowly but surely starting to happen.

Speaker Change: The other thing I read an interesting statistic the other day and that is that all.

Speaker Change: R&R searches on Google are up 25% year over year.

Speaker Change: It's hard to doesn't directly translate into 25% higher lumber demand, obviously for R&R projects, but it shows that.

Speaker Change: Peak R&R period that the country experienced back in Covid.

Speaker Change: Its long in the rearview mirror, and where we sit today with low existing home sales and.

Speaker Change: And tons of home equity, having been built up in the country people want to do R&R projects and it's slowly but surely starting to happen. So we will have no trouble finding a home for that 10 million board feet. I guess is the long and short of it.

Rob: So we'll have no trouble finding a home for that 10 million board feet, I guess, is the long and short of it. I got it, it makes a ton of sense. Thanks for the call and good luck in 2Q. Thanks. At this time, I'm showing there are no more questions.

Speaker Change: Got it makes a ton of sense. Thanks for the color and good luck to you.

Speaker Change: Thanks. Thanks.

Speaker Change: At this time I'm showing there are no more questions. So I'll now turn the call back over to Wayne waste check.

Wayne Wasechek: I'll now turn the call back over to Wayne Wasechek. Thank you, everyone, for joining us this morning and your continued interest in Potlatch Deltic. Have a great day. This concludes today's conference call. Thank you for your participation. You may now disconnect. Please wait, the conference will begin shortly.

Speaker Change: Thank you everyone for joining us this morning, and your continued interest in Pantalets Delta.

Okay.

Speaker Change: This concludes today's conference call. Thank you for your participation you may now disconnect.

Speaker Change: Please wait the conference will begin shortly.

Speaker Change: Okay.

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