Release Date: April 25, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Weyerhaeuser Co (WY, Financial) reported a 12% increase in adjusted EBITDA to $328 million compared to the fourth quarter of 2024.
- The Timberlands segment saw a $41 million increase in adjusted EBITDA, driven by stronger domestic sales realizations in the West.
- The company achieved a significant milestone in its carbon capture and sequestration (CCS) project with Occidental Petroleum, indicating progress in its Natural Climate Solutions business.
- Weyerhaeuser Co (WY) increased its quarterly base dividend by 5% for the fourth consecutive year, demonstrating a commitment to returning value to shareholders.
- The company maintained a strong balance sheet with $560 million in cash and a strategic approach to capital allocation, including share repurchases and dividend payments.
Negative Points
- The Southern Timberlands segment experienced a $3 million decrease in adjusted EBITDA due to stable log markets and muted sawlog demand.
- The OSB segment saw a $4 million decrease in adjusted EBITDA, affected by elevated channel inventories and slower building activity.
- Engineered Wood Products faced a $16 million decrease in adjusted EBITDA, impacted by a multi-week outage at the MDF facility due to a fire event.
- The company anticipates a $15 million decrease in second-quarter earnings and adjusted EBITDA for the Timberlands business due to seasonal cost increases.
- Weyerhaeuser Co (WY) faced challenges in the housing market with a softer-than-expected start to the spring building season and cautious homebuilder sentiment.
Q & A Highlights
Q: What are you hearing about lumber demand as we enter the building season, and how might tariffs impact order patterns?
A: Devin Stockfish, CEO, noted that overall lumber demand is steady, though not as strong as anticipated. Builders' confidence has waned, but supply and demand are balanced due to capacity reductions. There is uncertainty around tariffs, particularly on Canadian lumber, which could affect order patterns. Southern yellow pine is gaining interest as a substitute for SPF lumber due to these dynamics.
Q: How do you see the outlook for Engineered Wood Products (EWP) pricing and volume going forward?
A: Devin Stockfish, CEO, stated that near-term pricing for EWP is expected to be comparable, with volumes likely to increase in the second quarter due to seasonal building activity. The focus remains on providing value to customers, which will influence pricing and demand over time.
Q: Have you adjusted your harvest profile given the softer start to the building season?
A: Devin Stockfish, CEO, explained that harvest levels are set to be sustainable over time and are unlikely to change unless there is a significant recession. The company does not anticipate any changes to its full-year harvest levels.
Q: Can you provide more details on the Occidental Petroleum CCS agreement and its expected impact?
A: Devin Stockfish, CEO, expressed excitement about the CCS project with Occidental, noting it as a significant opportunity. The project is expected to start generating cash flows in 2029 with first injection. Specific economics are not disclosed to ensure competitive agreements in the future.
Q: How might Section 232 tariffs on wood products impact timberland valuations?
A: Devin Stockfish, CEO, indicated that without clarity on the specifics of the tariffs, it's hard to determine their impact. However, he does not expect a meaningful impact on timberland valuations in the near term, as these are long-term assets.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
