Core Viewpoint - Weyerhaeuser Company has completed the sale of its lumber mill in Princeton, British Columbia, to the Gorman Group, which includes associated timber licenses that will transfer separately in the coming months [1][2]. Company Overview - Weyerhaeuser Company is one of the largest private owners of timberlands, controlling approximately 10.4 million acres in the U.S. and additional public timberlands in Canada [3]. - The company generated $7.1 billion in net sales in 2024 and employs around 9,400 people globally [3]. - Weyerhaeuser operates as a real estate investment trust and is listed on the New York Stock Exchange under the symbol WY [3]. Transaction Details - Weyerhaeuser received approximately $60 million USD from the sale of the lumber facility, with additional proceeds expected from the timber license transfer [2]. - The company recognized a gain on the sale and anticipates a tax liability of about $11 million USD related to the transaction [2]. Gorman Group Overview - The Gorman Group is a family-owned company with operations in Southern British Columbia and northern Washington state, employing 900 people [4]. - Founded in 1951, the Gorman Group focuses on high-value lumber products for home finishing and renovation markets [4].

Financial Data and Key Metrics Changes - Total adjusted EBITDA for Q2 2025 was $52 million, down from $63 million in Q1 2025, primarily due to lower harvest volumes and higher forest management costs in the Timberland segment, along with an inventory impairment charge in Wood Products [19][3][4] - Adjusted EBITDA for the Timberlands segment decreased from $42 million in Q1 to $40 million in Q2, while Wood Products saw a drop from $12 million to $2 million [20][22] Business Line Data and Key Metrics Changes - The Wood Products division earned $2 million in adjusted EBITDA during Q2, impacted by lower lumber prices and several nonrecurring items totaling approximately $7 million [4][22] - Timberlands harvested 1.86 million tons in Q2, with Idaho's sawlog prices increasing by 9% per ton compared to Q1, while Southern sawlog prices rose by 2% [20][21] - Real estate segment produced adjusted EBITDA of $23 million in Q2, matching Q1 results, with 7,500 acres sold at an average price of $3,100 per acre [23][24] Market Data and Key Metrics Changes - Average total housing starts were just above 1.3 million units in Q2, with single-family starts around 900,000 units, indicating a stable market despite economic uncertainty [14][15] - The repair and remodel sector remains subdued, but slight gains in expenditures are forecasted for 2025 and modest growth in 2026 [16][17] Company Strategy and Development Direction - The company is focused on capital allocation strategies that create long-term shareholder value, including maintaining dividends, key capital investments, and opportunistic share repurchases [12] - The company anticipates improved results in Wood Products for Q3, driven by the resolution of temporary challenges faced in Q2 [29][30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about long-term fundamentals driving demand in the industry, despite near-term headwinds [18] - Lumber prices are expected to trend higher as Canadian softwood lumber duties and potential tariffs come into effect [9][18] Other Important Information - The company repurchased $56 million of its common stock in Q2 at an average price of $39 per share, marking the largest share repurchase volume in a single quarter since becoming a REIT in 2006 [12][13] - The company has $395 million in liquidity, including $95 million in cash, and plans to refinance $100 million of debt maturing in August [25][26] Q&A Session Summary Question: What are the assumptions behind the forecast of flat lumber prices for Q3 despite a 9% decline quarter-to-date? - Management indicated that duties are coming into effect, which will force supply adjustments in the marketplace, leading to a gradual increase in prices [34][35] Question: Will the unfavorable costs and inventory charge in Wood Products largely go away in Q3? - Management confirmed that the challenges faced in Q2 are expected to reverse in Q3, leading to improved earnings [38][39] Question: How does the company balance near-term uncertainty with attractive discounts to NAV for share repurchases? - Management emphasized the importance of protecting dividends and the balance sheet while utilizing free cash flow for shareholder value [42][46] Question: What is the outlook for tariffs and duties on lumber? - Management speculated that a tariff may be imposed on top of the duties, based on historical actions of the administration [51][52] Question: Is the company inclined to be an incremental buyer or seller of Timberland? - Management expressed a desire to buy Timberland but noted that current prices may not yield acceptable returns, leading to a more cautious approach [88][90] Question: What are the expectations for capital expenditures in the Wood Products business? - Management indicated that opportunities exist for growth and improvement in the Wood Products business, with plans to revisit expansion opportunities later in the year [99][100]

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]

Financial Data and Key Metrics Changes - Total adjusted EBITDA increased by $10 million, rising from $53 million in the fourth quarter to $63 million in the first quarter [24][5][6] - The Timberlands segment's adjusted EBITDA increased from $34 million in the fourth quarter to $42 million in the first quarter [25][24] - Wood Products adjusted EBITDA rose from $9 million in the fourth quarter to $12 million in the first quarter [27][24] Business Line Data and Key Metrics Changes - Timberlands harvested 1.968 million tons in the first quarter, exceeding the Q1 plan by almost 170,000 tons [26][25] - Wood Products shipped 290 million board feet of lumber, which was 10 million board feet over the upper range of Q1 guidance [12][28] - Real Estate segment generated adjusted EBITDA of $23 million in the first quarter compared to $19 million in the fourth quarter [28][24] Market Data and Key Metrics Changes - The Random Lengths Western SPF composite price rose by $60 during the quarter, while Southern yellow pine markets remained relatively firm [6][7] - U.S. housing starts averaged nearly 1.4 million units, with single-family homebuilding starts near 1 million units [20][19] - Existing home inventory has risen, but sales remain on pace with last year's low levels due to elevated interest rates [21][20] Company Strategy and Development Direction - The company is focused on natural climate solutions, including solar and lithium development, with an estimated net present value of around $475 million for solar options [14][15] - The capital allocation strategy remains balanced, with share repurchases prioritized over timberland acquisitions due to the stock trading at a significant discount to net asset value [17][18] - The company anticipates a favorable long-term outlook despite near-term volatility, driven by structural tailwinds in the housing market [22][23] Management's Comments on Operating Environment and Future Outlook - Management noted that the current lumber market is characterized by tepid demand, but expects price risks to be to the upside in the latter half of the year [41][40] - The company plans to harvest between 1.6 million and 1.7 million tons in the second quarter, with expectations for stable Southern sawlog pricing [32][33] - Management expressed confidence in the long-term fundamentals of the industry, despite current economic uncertainties [22][23] Other Important Information - The company has $447 million in liquidity, including $147 million in cash, and plans to refinance $100 million of debt maturing in August [30][24] - Capital expenditures totaled $23 million in the first quarter, with an anticipated full-year spend of $60 million to $65 million [31][24] Q&A Session Summary Question: Can you talk about demand trends in the new IT channel and the R&R channel? - Management described the current market environment for lumber as decent, with the South on firmer footing than the North, and noted that prices are higher in the South [37][38] Question: How would you characterize channel inventories? - Management indicated that the industry is operating at relatively low inventory levels, with some northern species experiencing a slight inventory hangover [42][43] Question: What impact did the recent tariffs have on order books? - Management stated that there was no significant change in end consumer demand, although some advanced ordering may have occurred [51][52] Question: What do you expect regarding Canadian lumber volumes with increased duties? - Management expects a mix of outcomes, with larger competitors potentially absorbing costs while smaller operators may face challenges [55][56] Question: Can you discuss the performance of the Waldo mill? - Management noted that the mill is running well, but pricing has not yet reached desired levels, with expectations for improvement as the year progresses [60][62] Question: What is the outlook for larger real estate transactions? - Management indicated that while smaller transactions are strong, larger transactions may see increased activity as clarity on NCS opportunities improves [66][68] Question: What is the timeline for solar and lithium opportunities? - Management anticipates that one or two deals may close next year, with option periods ranging from three to five years [85][86] Question: Are homebuilders switching to yellow pine due to potential duties? - Management confirmed that substitution has been occurring and is expected to continue as Southern yellow pine production grows [90][91] Question: What is the impact of cedar log prices in Idaho? - Management noted that cedar prices are driven by regional demand and customers being short on cedar [93][94] Question: How will Section 232 tariffs impact timberland valuations? - Management stated that the impact is uncertain and depends on the size and duration of the tariffs [95][94]