PotlatchDeltic (PCH) 2025 Conference June 04, 2025 08:00 AM ET Speaker0 What I would tell you is that any kind of a demand increase or supply reduction, especially coming out of Canada, is likely to result in in price tension. So the fact that nobody is expanding right now, it bodes well for the future is the way we think of it. And I think the smaller competitors probably are less likely to put capital back into their mills, unlike the larger competitors like us that understand you need to keep these mills ...

Summary of Weyerhaeuser Company (WY) 2025 Conference Call Company Overview - Weyerhaeuser is the largest private owner of timberlands in North America, with approximately 10.5 million acres of high-quality timberlands across the Pacific Northwest, U.S. South, and Northeast [3] - The company is also one of the largest manufacturers of wood products, including lumber and engineered wood products [3][4] Key Business Segments - The company operates in timberland, wood products manufacturing, and real estate, energy, and natural resources [4] - Weyerhaeuser aims to maximize value from its timberlands through various initiatives, including its Natural Climate Solutions business [4] Financial Performance and Targets - Weyerhaeuser has achieved $1.1 billion in timberland acquisitions since 2021, surpassing its $1 billion target [5] - The company aims to grow its Natural Climate Solutions business to $100 million in annual EBITDA by the end of 2025, having delivered $84 million last year [5][6] - The company has returned approximately $5.7 billion in cash to shareholders through dividends and share repurchases [7] Recent Acquisitions - Weyerhaeuser announced a significant acquisition of 115,000 acres in North Carolina and Virginia for $375 million, expected to close in Q3 [11] - The acquired timberlands are projected to yield over 7 tons per acre and a cash flow yield of over 5%, enhancing the quality of Weyerhaeuser's portfolio [11][12] Market Dynamics - The timberland market remains strong, particularly for high-quality timberlands, with over $2 billion in transactions expected this year [14] - The company is actively divesting lower-quality timberlands to fund acquisitions and improve portfolio quality [12][17] Housing Market Insights - The housing market has been weaker than expected, primarily due to high mortgage rates and uncertainty around tariffs [22][23] - Single-family housing demand has been below expectations, while multifamily housing has shown signs of improvement [24][25] - Repair and remodel markets have remained steady, with potential for growth in the latter half of the year [26] Tariffs and Regulatory Environment - The U.S. administration is supportive of the timber industry, with upcoming duties on Canadian lumber expected to rise from 14% to 34% [32][33] - The increase in duties is anticipated to impact lumber prices, potentially benefiting Weyerhaeuser [34][39] OSB Market - The OSB market has faced challenges due to supply-demand imbalances and new capacity coming online [40] - Prices are expected to fluctuate based on demand and supply dynamics in the latter half of the year [41] New Projects - Weyerhaeuser is investing $500 million in a new Timber Strand facility in Arkansas, projected to generate $100 million in EBITDA [46][51] - The facility will utilize lower-cost pulp logs and is expected to enhance the company's market share in engineered wood products [44][49] Conclusion - Weyerhaeuser is strategically positioning itself for growth through acquisitions, new projects, and a focus on high-quality timberlands while navigating a challenging housing market and regulatory landscape [2][6][22]

Core Strategy and Acquisition - Weyerhaeuser Company is making a significant move by acquiring 117,000 acres of timberlands in North Carolina and Virginia for $375 million, enhancing its presence in the U.S. South where demand for sawlogs and fiber is strong [1] - The acquisition is expected to unlock immediate and long-term cash flow advantages by integrating these mature, high-yield timberlands with existing assets [1][2] Financial and Operational Impact - The newly acquired land is expected to yield an average annual harvest of 860,000 tons over the next five years, with 81% of the land covered in planted pine [2] - Weyerhaeuser anticipates a 5.1% average timber free cash flow yield during this period, reinforcing its Southern Timberlands business as a cash flow leader [2] Long-Term Value Creation - The acquisition offers potential for additional value creation through real estate, carbon credits, and broader resource development, aligning with Weyerhaeuser's strategy of monetizing natural climate solutions [3] - Since 2022, Weyerhaeuser has acquired over $1.1 billion in high-quality land holdings, supporting its multi-year timberland growth target set in 2021 [3] Financial Discipline and Shareholder Value - The $375 million acquisition will be funded primarily through tax-efficient divestitures of non-core assets, ensuring minimal impact on the balance sheet [4] - Weyerhaeuser's management emphasizes a commitment to disciplined capital allocation, having returned substantial capital via dividends and buybacks [4] Market Performance and Challenges - Weyerhaeuser's stock has decreased by 15.7% in the past three months, contrasting with a 1.7% rise in the Zacks Building Products - Wood industry [5] - The company has faced challenges due to lower export sales volumes, particularly to China, impacting overall performance [5][7] Future Outlook - Despite recent challenges, Weyerhaeuser's focus on expanding its facility and strategic long-term investments is expected to enhance its business portfolios and shareholder value [8] - The acquisition is viewed as a strategic move that positions the company well for sustainable value delivery, appealing to long-term investors [8]

Financial Data and Key Metrics Changes - Total adjusted EBITDA for the first quarter of 2025 was $63 million, an increase of $10 million from $53 million in the fourth quarter of 2024, reflecting improved performance across all business segments [22][3][21] - The Timberlands segment's adjusted EBITDA rose from $34 million in Q4 to $42 million in Q1, driven by higher harvest volumes and increased sawlog prices [23][22] - Wood Products adjusted EBITDA increased from $9 million in Q4 to $12 million in Q1, attributed to slightly higher average lumber prices [25][22] Business Line Data and Key Metrics Changes - Timberlands harvested 1.968 million tons in Q1, exceeding plans, with Idaho sawlog prices increasing by 9% per ton [23][24] - Wood Products shipped 290 million board feet of lumber in Q1, surpassing guidance by 10 million board feet, primarily due to the Waldo sawmill's performance [10][26] - Real Estate segment generated adjusted EBITDA of $23 million in Q1, up from $19 million in Q4, with over 7,000 acres sold at an average price of $3,300 per acre [27][22] Market Data and Key Metrics Changes - Lumber markets faced tepid demand, with Southern yellow pine prices remaining firm while SPF prices increased due to tariff discussions [5][4] - U.S. housing starts remained stable at nearly 1.4 million units, with single-family homebuilding starts resilient near 1 million units [16][17] - The multifamily homebuilding segment faced challenges due to restrictive financing and oversupply [18] Company Strategy and Development Direction - The company is focused on natural climate solutions, expanding solar option contracts and exploring lithium development opportunities [12][14] - A balanced capital allocation strategy is maintained, with share repurchases prioritized over timberland acquisitions due to stock trading at a discount to net asset value [15][14] - The company anticipates a favorable long-term outlook despite near-term volatility, with expectations for lumber demand to improve as housing affordability constraints ease [20][21] Management's Comments on Operating Environment and Future Outlook - Management noted that while the near-term environment is uncertain, long-term fundamentals in the industry remain strong, driven by demographic shifts and housing undersupply [20][21] - The company expects second-quarter total adjusted EBITDA to be lower than Q1 due to seasonally lower harvest volumes and higher forest management costs [33][32] - Management expressed confidence in the Waldo sawmill's contribution to future EBITDA growth, despite current pricing challenges [57][56] Other Important Information - The company has $447 million in liquidity, including $147 million in cash, and plans to refinance $100 million of maturing debt [29][30] - Capital expenditures in Q1 totaled $23 million, with a full-year CapEx forecast of $60 million to $65 million [30][29] Q&A Session Summary Question: Can you talk about demand trends in the new IT channel and R&R channel? - Management described the current lumber market as decent, with the South performing better than the North, and noted that prices are higher in the South [36][38] Question: How would you characterize channel inventories? - Management indicated that the industry operates at relatively low inventory levels, with some northern species experiencing inventory hangover from tariff concerns [41][42] Question: What impact did the recent tariff announcements have on order books? - Management stated that there was no significant change in end consumer demand, although some advanced ordering may have occurred [48][50] Question: What is the expected impact of higher Canadian lumber duties? - Management anticipates that some Canadian competitors may absorb costs, while smaller operators may face challenges, potentially leading to mill closures [51][52] Question: Can you provide insights on cedar log prices? - Management noted that cedar prices are driven by regional demand and that customers have been short on cedar, leading to price increases [93] Question: What is the timeline for solar and lithium opportunities? - Management expects that one or two solar deals may close next year, with option periods typically lasting three to five years [83][84] Question: How does the company reconcile increased production with tepid demand? - Management clarified that increased production does not necessarily indicate falling demand, as the overall market is expected to grow modestly [110]

PotlatchDeltic (PCH) Q1 2025 Earnings Call April 29, 2025 12:00 PM ET Company Participants Wayne Wasechek - VP & CFOEric Cremers - President & CEOKetan Mamtora - Director - Building Products Equity ResearchGeorge Staphos - Managing DirectorBuck Horne - Managing Director - Equity ResearchMatt McKellar - Vice PresidentMichael Roxland - MD - Equity Research Conference Call Participants Anthony Pettinari - AnalystMark Weintraub - Senior Analyst and Head of Business Development Operator Good morning. My name is ...

Financial Data and Key Metrics Changes - Weyerhaeuser reported first quarter GAAP earnings of $83 million or $0.11 per diluted share on net sales of $1.8 billion [6] - Adjusted EBITDA totaled $328 million, a 12% increase over the fourth quarter of 2022 [7] - The company ended the first quarter with $560 million of cash and total debt of just under $5.2 billion [31] Business Line Data and Key Metrics Changes - Timberlands contributed $102 million to first quarter earnings with adjusted EBITDA of $167 million, a $41 million increase compared to the fourth quarter [8] - Real Estate and Natural Resources contributed $56 million to first quarter earnings and $82 million to adjusted EBITDA, with a $6 million increase from the fourth quarter [16] - Wood Products contributed $106 million to first quarter earnings with adjusted EBITDA of $161 million, comparable to fourth quarter results [19] Market Data and Key Metrics Changes - Log demand was healthy in the first quarter, with pricing for grade logs increasing significantly compared to the fourth quarter [9] - In Japan, sales volumes for export logs increased significantly compared to the fourth quarter due to improved demand [11] - In China, log demand moderated significantly due to reduced consumption during the Lunar New Year holiday, leading to a decrease in sales volumes [12] Company Strategy and Development Direction - The company is focused on advancing its Carbon Capture and Sequestration (CCS) project, with a significant milestone achieved through a 25-year off-take agreement with Occidental Petroleum [18] - Weyerhaeuser aims to capitalize on steady demand and pricing for high-value real estate properties [16] - The company is strategically shifting logs to domestic customers in response to market conditions, particularly in light of the ban on U.S. log imports to China [10] Management's Comments on Operating Environment and Future Outlook - Management noted that the housing market remains uncertain, with homebuilder sentiment waning due to economic concerns [50] - The company remains optimistic about long-term housing demand supported by demographic trends and low existing home inventories [51] - Management expects a slight uptick in demand for engineered wood products as building activity increases in warmer months [72] Other Important Information - The company returned $152 million to shareholders through dividends, marking the fourth consecutive year of increasing the base dividend by 5% [32] - Capital expenditures for the quarter were $93 million, including $16 million for the construction of an engineered wood products facility [34] - The company anticipates adjusted EBITDA for the real estate segment to be approximately $50 million higher in the second quarter compared to the first quarter [43] Q&A Session Summary Question: What is the outlook for lumber demand as the building season begins? - Management indicated that overall lumber demand is steady, with some pullback noted in builder confidence levels [62] Question: How do you see the outlook for engineered wood products (EWP) pricing? - Management expects pricing for EWP to remain comparable in the near term, with volumes anticipated to increase due to seasonal building activity [72] Question: Have you adjusted your harvest profile given the softer demand? - Management stated that harvest levels are set to be within sustainable levels and do not anticipate changes unless a significant recession occurs [78] Question: Can you provide more details on the Occidental Petroleum agreement? - Management expressed excitement about the CCS project, noting it is a significant milestone and expects first injection to begin in 2029 [84] Question: How do you view the impact of potential tariffs on timberland valuations? - Management does not expect a meaningful impact on timberland valuations in the near term due to the long-term nature of the asset class [94] Question: What is the expected impact of planned maintenance on OSB pricing? - Management indicated that the planned maintenance would not have a meaningful impact on operating rates in the second quarter [102] Question: How are channel inventories characterized in the current market? - Management noted that inventories are lighter than usual for this time of year, but supply is currently meeting demand [114] Question: What is the outlook for repair and remodel (R&R) activity? - Management expects R&R activity to pick up later in the year, supported by high levels of home equity and an aging housing stock [141]