Weyerhaeuser Company Q2 FY2025 earnings call

• Announced acquisition of 117,000 acres of high-quality timberlands in North Carolina and Virginia for $375 million, expected to deliver immediate and sustained portfolio-leading cash flows. - Discussed operational performance in various segments, including challenges and opportunities in lumber, OSB, and Engineered Wood Products. - Mentioned share repurchase activity, with $100 million repurchased in the second quarter at an average price of $25.74. - Highlighted capital expenditures, including $107 million in the second quarter with $22 million related to the construction of the EWP facility in Monticello, Arkansas. - Progress on the Monticello EWP facility, with the project on track and expected total investment of approximately $500 million through 2027.

Timberlands

• Contributed $88 million to second quarter earnings. Adjusted EBITDA was $152 million, a $15 million decrease compared to the first quarter, largely due to higher costs in Western operations. Domestic log demand and pricing faced downward pressure in the third quarter, while log export to Japan was expected to have steady demand. Sawlog markets in the South were expected to moderate with some changes in supply and demand dynamics.

Real Estate, Energy and Natural Resources

• Contributed $106 million to second quarter earnings and $143 million to adjusted EBITDA. Second quarter EBITDA was $61 million higher than the prior quarter, driven by the timing and mix of real estate sales. Expected full year 2025 adjusted EBITDA for the segment was approximately $350 million, including a target to reach $100 million of EBITDA from Natural Climate Solutions business.

Wood Products

• Contributed $46 million to second quarter earnings and $101 million to adjusted EBITDA. Lumber adjusted EBITDA was $11 million, a $29 million decrease compared to the first quarter due to lower product pricing and slightly higher log costs. OSB adjusted EBITDA was $30 million, a $29 million decrease primarily due to lower product pricing. Engineered Wood Products adjusted EBITDA was $57 million, a slight increase.

• Timberlands: Expected third quarter earnings and adjusted EBITDA to be approximately $10 million lower compared to the second quarter of 2025, largely driven by lower sales realizations and higher costs in the West. Domestic log demand and pricing faced downward pressure, while log export to Japan was expected to have steady demand. - Real Estate, Energy and Natural Resources: Expected third quarter adjusted EBITDA will be approximately $80 million lower and earnings will be approximately $60 million lower than the second quarter of 2025 due to the timing and mix of real estate sales. - Wood Products: Expected third quarter earnings before special items and adjusted EBITDA to be comparable to the second quarter of 2025 excluding the effect of changes in average sales realizations for lumber and OSB. Lumber and OSB pricing had volatility, but expected demand to remain at current levels into the third quarter.

• Market Volatility: Impact on product pricing and demand, such as softening demand in housing and construction affecting Wood Products segment. - Tariff Changes: Trade disputes and tariff changes impacting lumber and other product markets, like duties on Canadian lumber shipments to the U.S. - Uncertainty in Housing Activity: Fluctuations in housing starts and related activity affecting Wood Products segment performance.

Q: On the Wood Products segment, balancing capacity and OpEx 2.0.

A: Devin discussed focus on operational excellence, being on a good cost curve, and being well positioned to navigate down market, with ability to run more during down market and focus on opportunities in down market.

Q: On timberlands acquisitions and divestitures.

A: David Wold talked about solid timberlands market, typical range of activity being $2 billion to $3 billion annually, strong interest in the asset class, and progress on divestitures with expectation to deliver strong value.

Q: On EWP prices and catalysts for improvement.

A: Devin discussed EWP driven by single-family construction, R&R activity, and efforts to convert markets, with expectation that housing activity will return to better place and company positioned to navigate and take market share.

Q: On Natural Climate Solutions and the big beautiful bill.

A: Devin and David Wold talked about the bill being net positive, 45Q tax incentive preserved, and impact on renewable projects, with underlying conviction in climate mitigation unchanged.

Q: On lumber market conditions and duties.

A: Devin discussed diverging dynamics in SPF and Southern Yellow Pine lumber, impact of duties, and expectation of pricing volatility and potential for Southern Yellow Pine to pick up market share.

Q: On divestitures and balance sheet.

A: David Wold talked about funding the Roanoke acquisition through divestitures and balance sheet flexibility, with ability to focus on allocating cash for long-term value creation.

Q: On substitution of SPF for SYP and operating rates.

A: Devin discussed substitution opportunity due to price differential and Q2 operating rates of high 80s in lumber, mid-90s in OSB, and high 70s in EWP.

Q: On forest carbon credits and pipeline.

A: Devin talked about carbon projects in development, with some expected to be issued in 2025 and remainder early 2026, and pipeline expected to continue growing.

Q: On Japan log market share sustainability.

A: Devin discussed sustainable market share in Japan due to cost advantage and customer mill progress, with expectation of continued strong and healthy business.

Q: On China imports and India pivot.

A: Devin talked about China imports likely not resuming until trade war resolves, and pivot to India as a growth opportunity.

Q: On softwood lumber dispute and quota.

A: Devin discussed ongoing discussions and uncertainty, with expectation of resolution in future but not necessarily near term.

Q: On EWP 3Q operating rate and wood products outlook.

A: Devin talked about lower operating rate in 3Q considering market dynamic and wood products outlook being comparable to 2Q excluding pricing effects, with expectation of lumber pricing volatility and industry eventually operating profitably.