WEYERHAEUSER CO Q4 FY2024 earnings call

• Expressed gratitude to employees for their execution in 2024. - Announced plan to invest approximately $500 million to build a state-of-the-art TimberStrand facility in Arkansas, with construction starting in 2024 and startup expected in 2027. - Progress in Natural Climate Solutions business with full year 2024 adjusted EBITDA of $84 million, a 79% increase, and seven additional Forest Carbon projects in progress. - Commentary on housing and repair & remodel markets, expecting improvement in 2025. - Progress against multiyear targets announced in 2021, including advancements in portfolio, operating performance, and ESG.

Timberlands contributed $62 million to fourth quarter earnings with adjusted EBITDA of $126 million, a slight increase compared to the third quarter. Real Estate and ENR contributed $46 million to fourth quarter earnings with adjusted EBITDA of $76 million, largely in line with third quarter results. Wood Products contributed $106 million to fourth quarter earnings with adjusted EBITDA of $161 million, a 77% increase compared to the third quarter, largely driven by an increase in lumber and OSB pricing.

• First quarter 2025 outlook: Timberlands expects higher sales volumes and realizations; Real Estate and ENR anticipates steady demand; Wood Products expects improving demand heading into spring. - Full year 2025 guidance: total company fee harvest volumes of approximately 35.5 million tons, Natural Climate Solutions to reach $100 million adjusted EBITDA, CapEx expected to be approximately $440 million.

• Uncertainty regarding tariffs and their impact on wood products. - Delays in CCS projects due to extended permitting queue. - Weather-related disruptions affecting operations and demand.

Q: Digging in on demand around housing, specifically inventories at the product level?

A: On lumber, inventories in the channel are relatively lean; on OSB, inventories are a little heavy; on EWP, pretty normal for the time of year.

Q: Implications of tariffs across wood products and margin impact?

A: Unclear if tariffs will happen, but a 25% blanket tariff on Canadian products would likely have upward pricing pressure, with most of Weyerhaeuser's manufacturing in the U.S.

Q: Progress on recapturing share from open web floor trusses in EWP?

A: During pandemic, some conversion to open web trusses due to EWP supply issues, but expect recapture as lumber prices normalize.

Q: Forest Carbon sales in 2024 and outlook for 2025?

A: Sold ~15,000 credits in 2024, expect a material uptick in 2025, possibly 5x to 10x year-over-year increase.

Q: Lumber pricing uplift despite lean inventories and potential tariffs?

A: Weather impact and skepticism about tariffs being implemented are factors; more clarity expected soon.

Q: Capital allocation priorities, dividend growth, and debt maturities?

A: Base dividend increase supported by sustainable cash flow generation, confident in refinancing debt maturities in 2026.

Q: Operating rates in lumber, OSB, and EWP?

A: Lumber in low 80% range, OSB in high 90s, EWP in low to mid-70s; no material difference between U.S. and Canadian operations.

Q: Flexibility in harvest levels to meet higher U.S. output?

A: Some flexibility, but generally manage within sustainable harvest range; South has adequate fiber availability.

Q: Flexibility to adjust production by business?

A: Lumber has some flexibility, OSB less so, EWP more complex but products well received.

Q: Impact of new administration on Natural Climate Solutions?

A: Lots of unknowns, but ultimate trajectory and momentum behind projects will carry them forward.

Q: Testing and operating rates for new EWP facility in Arkansas?

A: Extensive testing done, confident in product performance; EWP operating rates expected to increase in Q1.

Q: CapEx for TimberStrand project and staffing?

A: CapEx to ramp up in 2026, strong internal resources and mill manager from Canada to lead startup.