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The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

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This year’s Fortune 500 marks the 67th running of the list.

F500-2021-385-Weyerhaeuser

The timberland management company, which does business as a real estate investment trust, oversees more than 12 million acres of forestry in the United States. Pandemic-driven growth in home construction and remodeling delivered a windfall to Weyerhaeuser in 2020; the company's revenue jumped 15%, and it rose 70 spots on the <em>Fortune</em> 500.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-457-Weyerhaeuser

The giant forest-products company is one of the largest private landholders in the U.S.

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

This year's Fortune 500 marks the 63rd running of the list.

This year's Fortune 500 marks the 62nd running of the list.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

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Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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Q1 2025

Q4 2024

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Weyerhaeuser (WY): Company Profile, Stock Price, News, Rankings

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Weyerhaeuser

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Greetings, and welcome to the Weyerhaeuser Fourth Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' remarks, there will be a question and answer As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Andy Taylor, Vice President of Investor Relations. Thank you, Mr.

Thank you, Rob. Good morning, everyone. Thank you for joining us today to discuss Weyerhaeuser's Q4 2024 earnings. This call is being webcast at www.weyerhaeuser.com. Our earnings release and presentation materials can also be found on our website.

Please review the warning statements in our earnings release and on the presentation slides concerning the risks associated with forward looking statements as forward looking statements will be made during this conference call. We will discuss non GAAP financial measures and a reconciliation of GAAP can be found in the earnings materials on our website. On the call this morning are Devin Stockfish, Chief Executive Officer and Davey Wold, Chief Financial Officer. I will now turn the call over to Devin Stockfish.

Thanks, Andy. Good morning, everyone, and thank you for joining us. Yesterday, Weyerhaeuser reported full year GAAP earnings of $396,000,000 or $0.54 per diluted share on net sales of $7,100,000,000 Excluding special items, full year 2024 earnings totaled $384,000,000 or $0.53 per diluted share. Adjusted EBITDA totaled $1,300,000,000 for the year. For the Q4, we reported GAAP earnings of $81,000,000 or $0.11 per diluted share on net sales of $1,700,000,000 Adjusted EBITDA was $294,000,000 a 25% increase over the Q3.

I'll start this morning by expressing my sincere gratitude to our Weyerhaeuser employees for their solid execution and dedication in 2024 in what was a very challenging market backdrop. Through their collective efforts, we continued to serve our customers, delivered industry leading operating performance and drove meaningful improvements across each of our value levers in the investment thesis. Notably, we grew our Timberlands through acquisitions in Alabama, announced plans to expand our Engineered Wood Products portfolio, advanced our Natural Climate Solutions business and captured additional operational excellence improvements. We also increased our base dividend by more than 5% and returned $735,000,000 of cash to shareholders based on our 2024 results, including $153,000,000 of share repurchase. I'm incredibly proud of these accomplishments, all of which support our growth strategy and drive long term value for our shareholders.

Before moving into the business segment results, I'd like to comment briefly on an exciting growth initiative within our EWP business, which is summarized on Page 24 of our earnings slides. As we announced in the Q4, we plan to invest approximately $500,000,000 to build a state of the art TimberStrand facility in Arkansas. Timber Strand is a proprietary and versatile engineered wood product with applications in residential, industrial and mass timber end markets. The new facility will address an underserved and growing market for the product in the U. S.

South and showcases Weyerhaeuser's innovation in wood products. Notably, we combined institutional expertise from our existing timber strand facility in Canada with extensive research and development to enable manufacturing of the product with Southern Yellow Pine as the primary feedstock. Given its location in Arkansas, the new facility will deliver seamless integration with our existing Timberlands and distribution network. In fact, approximately 80% of the raw material sourcing for the facility will come from Weyerhaeuser P Timberlands, resulting in an excellent new outlet for our southern fiber logs in the region. Construction of the facility will begin this year with start up expected in 2027.

Once fully operational, the facility will add 10,000,000 cubic feet of production, doubling Weyerhaeuser's timber strand offering and increasing total company EWP capacity by approximately 24%. In addition, the facility is expected to generate over $100,000,000 of annual adjusted EBITDA with additional upside from portfolio integration benefits. We're excited to bring this new facility online and look forward to expanding our footprint and workforce in Arkansas. With that, I'll now turn to our Q4 business results, starting with Timberlands on Pages 7 through 10. Timberlands contributed $62,000,000 to 4th quarter earnings.

Adjusted EBITDA was $126,000,000 a slight increase compared to the 3rd quarter. In the West, adjusted EBITDA was comparable to the 3rd quarter. Turning to the Western domestic market. Log demand improved in the 4th quarter as mills responded to strengthening lumber prices and a seasonal reduction in log supply across the system. As a result, pricing for grade logs increased as the quarter progressed and moved substantially higher in December.

That said, our average domestic sales realizations were comparable to the Q3 due to mix. Our sales volumes to domestic customers increased moderately as we reduced shipments to our customers increased moderately as we reduced shipments to customers in China. Per unit log and haul costs were comparable to the Q3 and forestry and road costs were seasonally lower. Our fee harvest volumes were slightly lower, largely due to fewer working days in the Q4. Moving to our Western export business.

In Japan, log markets remained soft in the 4th quarter due to ongoing consumption headwinds and elevated inventories of finished products for our customers. As a result, our sales volumes and average realizations for export logs to Japan were slightly lower compared to the Q3. However, inventories and shipments of European lumber imports decreased as the quarter progressed, allowing our customers to pick up market share. As a result, we expect stronger demand for our Japanese export logs in the Q1. In China, despite ongoing consumption headwinds, log markets remained relatively stable in the 4th quarter and demand from our strategic customers was steady.

That said, our sales volumes into China were significantly lower as we intentionally flex logs to our domestic customers. Our average sales realizations were comparable to the 3rd quarter. Turning to the South. Adjusted EBITDA for Southern Timberlands increased by $2,000,000 compared to the 3rd quarter. Southern sawlog markets remained muted in the 4th quarter as log supply was ample and mills continued to align capacity with lower takeaway finished goods.

This was partially driven by the seasonal reduction in lumber demand around the holidays. In contrast, Southern fiber markets were generally stable. On balance, takeaway for our logs remained steady, given our delivered programs across the region and our average sales realizations increased slightly compared to the Q3, largely driven by a higher mix of grade logs. Our fee harvest volumes and forestry and road costs increased in the 4th quarter as operating activities in certain regions shifted from the prior quarter due to wet weather conditions. Per unit log and haul costs were comparable to the 3rd quarter.

In the North, adjusted EBITDA increased slightly compared to the 3rd quarter, largely driven by higher fee harvest and sales volumes given favorable weather conditions. Turning now to Real Estate, Energy and Natural Resources on Pages 11 12. In the 4th quarter, Real Estate and E and R contributed $46,000,000 to earnings. Adjusted EBITDA was $76,000,000 and largely in line with 3rd quarter results. For the full year, the segment generated $349,000,000 of adjusted EBITDA, slightly higher than our revised full year guidance and $29,000,000 higher than our initial outlook.

These results were largely driven by solid demand and pricing for HBU properties in our real estate business, resulting in high value transactions with significant premiums to timber value. They also reflect a significant year over year increase in contributions from our Natural Climate Solutions business. As shown on Page 23, full year adjusted EBITDA for NCS was $84,000,000 a 79% increase compared to 2023, primarily driven by strong contributions from our conservation, mitigation banking and renewables business, where we continue to see solid demand. In forest carbon, we achieved notable milestones in 2024, including the approval and credit issuance from our 2nd project located in the U. S.

South and a new issuance of credits from our project in Maine. In the Q4, we sold approximately 50,000 credits in the voluntary market. We continue to see strong demand and premium pricing for our credits given our commitment to developing projects that meet high standards for quality and integrity. Looking forward, our forest carbon pipeline is developing rapidly and we currently have 7 additional projects in progress. For 2025, we expect a significant increase in credit generation and sales relative to the last couple of years.

In Renewables, demand continues to increase for large scale solar development, and we're well positioned to capitalize on opportunities as markets continue to expand. We've signed approximately 70 agreements for potential solar projects across our portfolio and our 1st solar site commenced operations in the Q4 and we have 2 additional sites currently under construction. With respect to wind, operations commenced on our 7th site in December and we expect an additional project to come online in the coming months. Turning briefly to our carbon capture and sequestration business. We continue to work closely with the developers on our 3 announced agreements and are in discussions with new counterparties for additional projects.

While the timeline for CCS and the permitting queue in particular has extended beyond our initial expectations, we remain confident that projects will ultimately be developed and continue to expect CCS to be a meaningful contributor to our NCS growth strategy over time. So in summary, we continue to make excellent progress in our Natural Climate Solutions business, and we remain on track to reach $100,000,000 of adjusted EBITDA by the end of this year. As we've said all along, early growth has largely been supported by our existing businesses. That said, we expect 2025 NCS results to include a meaningful increase in contributions from forest carbon credits. As we look beyond 2025, we see additional upside across the carbon and renewables businesses as those markets continue to develop.

We built a world class team with deep technical expertise and strong commercial focus, and we continue to believe there's no company in this space with the capabilities or asset base to deliver on this value creation opportunity at scale like Weyerhaeuser. Now moving to Wood Products on Pages 13 through 15. Wood Products contributed $106,000,000 to 4th quarter earnings. Adjusted EBITDA was $161,000,000 a 77% increase compared to the 3rd quarter, largely driven by an increase in lumber and OSB pricing. Starting with lumber.

4th quarter adjusted EBITDA was $21,000,000 a $50,000,000 improvement compared to the 3rd quarter. Benchmark prices entered the 4th quarter on an upward trajectory, largely driven by supply constraints from recent curtailments and closures across the North American market, combined with a slight increase in demand as buyers replenished lean inventories. As the quarter progressed, demand signals moderated given typical seasonal slowdowns in building activity over the winter months. As a result, benchmark pricing declined slightly through year end and has remained relatively stable in January. For our lumber business, production volumes were moderately higher in the 4th quarter as we returned to a more normal operating posture following market related production adjustments in the prior quarter.

Our sales volumes were comparable to the 3rd quarter. Our average sales realizations increased by 9% in the quarter. Unit manufacturing costs were comparable and log costs were slightly lower. Turning to OSB. 4th quarter adjusted EBITDA was $63,000,000 a $24,000,000 increase compared to the 3rd quarter.

Average benchmark pricing for OSB increased by 16% in the 4th quarter, primarily driven by resilient demand from single family construction activity and limited open market supply. Our average sales realizations increased by 5% compared to the prior quarter with the relative difference largely due to the length of our order files, which results in a lag effect for OSB realizations. Our sales volumes were moderately higher and unit manufacturing costs were moderately lower as production levels increased given less downtime for planned annual maintenance. Fiber costs were comparable to the prior quarter. Engineered Wood Products delivered $69,000,000 of adjusted EBITDA, an increase of $8,000,000 compared to the 3rd quarter.

Demand for EWP products was steady at the outset of the 4th quarter given favorable weather conditions for homebuilding activity, but softened seasonally as the quarter progressed. On balance, our sales volumes increased slightly compared to the Q3, largely attributable to solid section products. Our average sales realizations decreased for most products as previously determined price adjustments took effect in certain markets. Our unit manufacturing costs improved compared to the Q3 and raw material costs were slightly lower for most products. In distribution, adjusted EBITDA decreased by $4,000,000 compared to the Q3, largely due to seasonally lower sales volumes primarily in December.

With that, I'll turn the call over to Davey to discuss some financial items and our Q1 and full year 2025 outlook.

Thank you, Devin, and good morning, everyone. I'll begin with key financial items, which are summarized on Page 17. We generated $218,000,000 of cash from operations in the Q4, bringing our total for the year to $1,000,000,000 We ended the year with just under $700,000,000 of cash and gross debt of $5,100,000,000 Adjusted funds available for distribution totaled $567,000,000 in 2024. And as summarized on Page 19, we returned $735,000,000 back to shareholders based on 2024 results and actions. This includes our quarterly based dividends, which we increased by 5.3% in 2024 $153,000,000 of share repurchase activity during the year.

4th quarter share repurchase activity totaled $28,000,000 and we have now completed approximately $900,000,000 under our $1,000,000,000 share repurchase authorization. Entering 2025, we will continue to leverage our flexible cash return framework and look to repurchase shares opportunistically when we believe it will create shareholder value. It's worth noting that although our cash generation in 2024 was lower than the last couple of years due to challenging market conditions, we continue to demonstrate the durability of our portfolio and the flexibility of our capital allocation framework across market cycles. In addition to returning a meaningful amount of cash back to shareholders in 2024, we continued investing in our businesses and deployed capital towards strategic growth opportunities. These are notable achievements given the headwinds our industry faced in 2024 and a direct result of the actions we've taken over the last several years to make Weyerhaeuser a stronger and more valuable company.

Looking forward, our balance sheet, liquidity position and financial flexibility remain strong and we are well positioned to drive further advancements across all of our capital allocation levers. 4th quarter results for our unallocated items are summarized on Page 16. Adjusted EBITDA for this segment decreased by $15,000,000 compared to the 3rd quarter. This was primarily attributable to an increase in variable compensation expense and a charge in inter segment profit elimination and LIFO, partially offset by a slight benefit in liability classified share based compensation. Key outlook items for the Q1 and full year 2025 are presented on Pages 2526.

In our Timberlands business, we expect Q1 earnings and adjusted EBITDA to be approximately $20,000,000 higher compared to the Q4 of 2024, largely driven by higher sales volumes and realizations in the West. Turning to our Western Timberlands operations. As Devin mentioned, pricing for domestic grade logs increased substantially in December and we've seen additional upward momentum in January. This is being driven by healthy demand for logs in the domestic markets as mills navigate seasonally lower log supply and the prospect of improving lumber takeaway ahead of the spring building season. Given this dynamic, we expect higher domestic sales volumes and realizations compared to the Q4.

Absent weather related disruptions, we expect our fee harvest volumes to be slightly higher in the Q1. Forestry and road costs are expected to be moderately lower due to the seasonal nature of these activities. And per unit log in haul costs are expected to be slightly higher. Moving to the export markets, starting with Japan. As Devin mentioned, inventories and shipments of imported European lumber have decreased, allowing our customers to take market share.

We expect this dynamic to continue through the Q1. As a result, demand for our logs is expected to improve, and we anticipate higher sales volumes and realizations compared to the Q4. In China, log demand is expected to moderate in the Q1 in response to reduced consumption during the Lunar New Year holiday. Given this dynamic, coupled with improving Western domestic market conditions, we expect to significantly decrease our sales volumes into China during the quarter. Our average sales realizations are expected to be comparable to the Q4.

Turning to the South, despite ample log inventories, southern sawlog demand is expected to improve slightly as mills navigate the risk of log availability challenges resulting from wet weather conditions that are typical in the Q1. In contrast, we expect fiber markets to remain fairly stable. On balance, we expect our average sales realizations to be comparable to the Q4. Our fee harvest volumes and forestry and road costs are also expected to be comparable, and we anticipate slightly higher per unit log and haul costs. In the North, our fee harvest volumes are expected to be slightly lower compared to the Q4 and we anticipate moderately higher sales realizations.

Turning to our full year harvest plan. For 2025, we expect total company fee harvest volumes of approximately 35,500,000 tons, which is slightly higher than 2024. From a regional perspective, we anticipate the South and North will be slightly higher than last year and the West will be comparable. Moving to our Real Estate, Energy and Natural Resources segment, we anticipate steady demand for our real estate properties in 2025 and continue to expect a consistent flow of transactions with significant premiums to timber value. In our Natural Climate Solutions business, we expect to reach $100,000,000 of adjusted EBITDA by year end.

And as Devin mentioned, we anticipate a meaningful increase in contributions from forest carbon credit sales in 2025. For the segment, we expect full year 2025 adjusted EBITDA of approximately $350,000,000 Basis as a percentage of real estate sales is expected to be between 35% and 45% for the year. 1st quarter earnings and adjusted EBITDA are expected to be comparable to the Q4 of 2024. Turning to our Wood Products segment. Excluding the effect of changes in average sales realizations for lumber and OSB, we expect 1st quarter earnings and adjusted EBITDA to be slightly higher compared to the Q4 of 2024.

It's worth noting that adverse weather conditions in January resulted in temporary downtime at several of our Wood Products facilities. We have since resumed normal operations and expect to capture affected volumes as the quarter progresses. As Devin mentioned, demand for wood products has softened into the winter months, which is typical for this time of year. That said, we expect market conditions and demand to improve from current levels as we head into the spring building season. Benchmark prices for lumber have been fairly stable since early December as supply and demand have approached a more balanced state.

As for OSB, benchmark pricing entered the Q1 on a downward trajectory largely due to elevated channel inventories and seasonally softer demand. As shown on Page 27, our current and quarter to date average sales realizations for lumber are moderately higher than the 4th quarter average. For OSB, our current realizations are comparable to the 4th quarter average, while quarter to date realizations are moderately higher. For our lumber business, we expect higher production and sales volumes in the Q1 and lower unit manufacturing costs. Log costs are expected to be slightly higher, primarily for Western and Southern logs.

For our oriented strand board business, we anticipate moderately higher sales volumes compared to the Q4. Fiber costs and unit manufacturing costs are expected to be slightly higher. Turning to our Engineered Wood Products business. We expect improving demand heading into the spring building season. As a result, we anticipate slightly higher sales volumes for most products in the Q1.

Our average sales realizations are expected to be comparable to the prior quarter and raw material costs are expected to be slightly higher primarily for OSB Webstock. For our distribution business, we expect adjusted For our distribution business, we expect adjusted

to the Q4 as demand improves into the building season. I'll wrap up with some additional full year outlook items highlighted on Page 26. In 2025, we expect our interest expense to be approximately $270,000,000 For taxes, we expect our Q1 and full year effective tax rate to be between 16% 19% before special items based on the forecasted mix of earnings between our REIT and taxable REIT subsidiary. Additionally, we anticipate moderately lower cash taxes relative to our overall tax expense. For pension and post employment plans, our non cash non operating pension and post employment expense is expected to be approximately $75,000,000 We do not anticipate any required cash contributions to our U.

S. Qualified pension plan in 2025, but expect approximately $20,000,000 of required cash payments for all other plans. As for capital expenditures, we expect our typical CapEx program to be approximately $440,000,000 in 25, which includes $120,000,000 for timberlands inclusive of reforestation costs, dollars 310,000,000 for wood products and $10,000,000 for planned corporate IT system investments. This excludes the investment required in 2025 for the construction of our new EWP facility in Arkansas. The total investment for this facility is expected to be approximately $500,000,000 and will be incurred between 2025 2027.

As we previously communicated, capital expenditures associated with this project will be excluded for purposes of calculating the company's annual adjusted FAD as used in our flexible cash return framework. With that, I'll now turn the call back to Devin and look forward to your questions.

Thanks, Davey. I'll make a few comments on the housing and repair and remodel markets. Starting with housing, Despite elevated mortgage rates for most of the year, single family construction activity remained resilient in 2024 with starts increasing by 7% over the prior year. This was supported by healthy underlying demand for housing, a limited inventory of existing homes on the market and incentives used by the homebuilders to offset affordability challenges. In contrast, multifamily starts decreased by approximately 25 percent in 2024, largely driven by higher interest rates in the wave of new units that came to market over the last 18 months.

As we enter 2025, mortgage rates remain elevated. We'll likely continue to see some volatility with rates as the markets weigh potential impacts from policy decisions from the new administration as well as future Fed decisions on rates. Notwithstanding the rate environment, we're expecting new home construction to improve somewhat compared to last year. For the single family segment, there are a few underlying dynamics that support our view. 1st, from a buyer psychology perspective, mortgage rates in the 6% to 7% range are increasingly being viewed as the new normal, which is a different mindset from a few years ago.

Single family starts reached 1,000,000 units in 2024, a respectable level given the rate environment. We expect this positive trend for single family to continue into 2025 given solid underlying demand for housing with upside potential if mortgage rates move meaningfully lower. 2nd, while we do expect to see more sales activity in the existing home market, the lock in effect will largely remain in place, which will continue to support steady demand for new home construction. And finally, we believe the larger public builders will continue to navigate buyer affordability challenges and are well positioned to increase production to meet pent up demand. With respect to multifamily construction, we expect headwinds to persist in the near term as the market digests the latest wave of supply, But we could see a modest increase in activity in the back half of the year, which would be a tailwind for total housing starts.

So in summary, we should see some improvement in the housing market for 2025, assuming the economy and consumer remain healthy. And our longer term view on housing fundamentals continues to be very favorable, supported by strong demographic trends and a vastly under built housing stock. Turning to repair and remodel. Activity was softer in 2024 compared to the last couple of years. This was largely driven by a significant reduction in the buying and selling of existing homes, which is normally a catalyst for R and R activity.

In addition, inflationary pressures and elevated interest rates weighed on the consumer sentiment, particularly for lower end do it yourself projects. As for 2025, we're expecting repair and remodel activity to improve slightly compared to last year. That's based on our view that we'll see an uptick in existing home sales, which should increase demand for repair and remodel projects over the course of 2025. In addition, I think we've now worked our way through the pull forward of projects that occurred during the pandemic, so this should be less of a headwind for R and R going forward. Looking further out, many of the key drivers supporting healthy repair and remodel demand remain firmly intact, including an aging housing stock.

I'd also note, there is a fairly significant amount of home equity that can be tapped for repair and remodel projects. As rates come down, this could be a meaningful tailwind for the segment. Finally, I'll provide an update on the progress we've made against the multi year targets we announced at our Investor Day in September of 2021. As highlighted on Slide 21, we've made meaningful advancements on all fronts. Starting with our portfolio, following our recent acquisitions in Alabama, we're now more than 3 quarters of the way through our $1,000,000,000 Timberlands growth target.

We've grown our Natural Climate Solutions business to $84,000,000 of adjusted EBITDA. In terms of our operating performance, we've captured $117,000,000 of margin improvements over the $117,000,000 of margin improvements over the last few years, a notable achievement given the inflationary and market related headwinds we faced during this period. Additionally, through the Q3 of 2024, we delivered peer leading EBITDA margins across all of our Wood Products manufacturing businesses and maintain the number one position in EBITDA per acre in Western Timberlands. On the ESG front, we remain committed to net 0 by 2,040 and have showcased leadership in carbon integrity by publishing our carbon credit and greenhouse gas inventory principles. And finally, we continue to demonstrate our commitment to returning meaningful amounts of cash back to shareholders by increasing our quarterly base dividend by more than 5% annually and returning more than $5,300,000,000 of cash back to shareholders from 2021 through 2024.

I'm extremely proud of the progress we've made against our strategic targets. Looking forward, we're committed to further advancements across each of these areas and are well positioned to achieve our multiyear goals by year end. So in closing, while 2024 was an extremely challenging year in many of our key markets, particularly lumber, I'm pleased with how the organization navigated this environment and executed well across our businesses. I believe this is a testament to our people and our strategy. Entering 2025, our balance sheet is strong and we are well positioned to capitalize as market conditions improve.

We remain focused on serving our customers and driving long term value for shareholders through our unmatched portfolio, industry leading performance, strong ESG foundation and disciplined capital allocation. With that, I think we can open it up for questions.

Thank you. We will now be conducting a question and answer session. Our first question comes from Susan Maklari with Goldman Sachs. Please proceed with your question.

Good morning. My first question is maybe digging in a bit to the commentary on demand around housing. I think, Devin, it was good to hear that you see a path to some growth there for both new homes and R and R. I guess, could you just give some more details on how you're thinking about inventories heading into the spring and the busy season there? And especially any thoughts on retailers and how they're approaching this market given the potential for some inflation in commodity prices against in the more uncertain macro backdrop?

Yes. Sue, are you talking about inventories at the product level or housing specific?

Well, inventories at the product level more than the housing side of things, yes.

Sure. Yes, so it's differential by product. I'd say on the lumber side, generally inventories in the channel are relatively lean. That's certainly true for Southern Yellow Pine and Doug fir, maybe a little less so with SPF. I think there's some angst about what's going to happen with tariffs there and that may be impacting things.

On the OSB side, inventories are a little heavy. I think you saw a little bit of a backup in the channel around the holidays and so dealers and the home improvement warehouse customers are working through a little of that. On EWP, pretty normal for this time of year. As we think about heading into the spring building season in general, I think there's just more optimism in general across the board that we're going to see some level of improvement. That's certainly what we're hearing from most of our big builder customers.

On the retail side, again, I think for that part of our customer base, there is some optimism that you're going to see some improvement in R and R this year. Last year was a pretty tough year on that front, and I think we're seeing just a little bit more optimism for how that's going to play out this year. It's always hard to tell when you're in the January time frame. Particularly, we saw a lot of weather, cold weather across the U. S.

South here recently. That's not atypical. You see a little bit of tick down in demand in the colder months. But ultimately, I think the general view is we're going to see a better year this year.

Okay. That's helpful. And then following up, there's been obviously a lot of talk on tariffs or the potential for tariffs that could come through with the new administration. Can you talk about the implications across the various wood products and how that could potentially come in and what it could mean for your margins and business?

Yes. I mean, so look at a high level, I'll just note that it's still somewhat unclear if the tariffs are going to happen, when they're going to be put in place, how they're going to be affected. And so there's still, I would say, a lot of unknown about how that's going to play out. But if you were to have a 25% blanket tariff on products coming in from Canada, there will be some puts and takes. Obviously, we do have operations in Canada, but the majority

manufacturing is in the U. S. And Canadian manufacturing center product into the U. S. Would be margin positive.

Otherwise, you would expect capacity to come out of the system. So I think it would have some upward pricing pressure. Obviously, lots of variables that go into that, including on the demand side. But directionally, I think you would see that go up. I would just note, for us on the lumber side, about 80% of our lumber manufacturing is in the U.

S. And our Canadian lumber, relatively small percentage of that does go into the U. S, probably 20% to 30%. So not a terribly high percentage of our lumber production in Canada comes into the U. S.

On the OSB and EWP side, the majority of the volume we produce in Canada does come in the U. S. So that would obviously be subject. But again, the vast majority of our production is in the U. S.

Okay. That's great color. Thank you and good luck with everything.

Our next question is from Ketan Mamtora with BMO Capital Markets. Please proceed with your question.

Thank you and good morning. Devin, to start with on the EWP side, can you talk a little bit about the progress you guys are making in recapturing share from open web flow process and this sort of dynamic this year when and it's been going on for a little while where sort of builders are providing more incentives to customers. So how is the competitive dynamics there on the pricing side?

Yes. I mean, so as we've said previously, during the pandemic, when EWP supply was difficult for many of the builders, out of necessity, there was some conversion to open web trusses. We've seen that a little bit slower to convert back to EWP, largely as a result just of the low lumber prices that we've seen here recently. So from a pricing standpoint, that's been a little bit more challenging. Ultimately, we still expect the majority of that to come back to EWP over time, and that will certainly be supported as lumber prices get back to what we would consider a more normalized level.

But ultimately, there are a lot of advantages in using EWP in the home. And so we would expect to recapture that market share over time.

Understood. And then on the NCS side, Devin, you talked about a pretty nice uptick coming in 2025 in forest carbon. Can you give us some sense as to kind of how much did you credit did you sell in 2024 and what do you expect in 2025 and roughly sort of the price expectation there?

Yes. So in 2024, we sold right around 50,000 credits. Those were also at a premium price, slightly up from what we sold last year. When we think about 2025, the pipeline is filling up. So as we mentioned, we have 7 additional projects that are working their way through the process.

The timing on some of those is always a little challenging to predict. We've got our ducks in a row, but you still have to go through 3rd party audits and there's a whole process that you have to go through. But I would expect a pretty material uptick, something in the neighborhood of 5x to 10x year over year increase in our carbon sales for 2025. And obviously, we have more coming behind those 7 that we're currently in development. So we're just continuing to build out the pipeline and that will continue to grow over time.

And we're just we're really pleased with the work our team is doing. And I think we're starting to see that progress come to fruition.

That is a big jump, Devin. Congrats on all the progress you've made there. I'll jump back in the queue.

Our next question is from George Staphos with Bank of America. Please proceed with your question.

Thanks so much, everyone. Good morning, Devin.

Good morning. Davey, Andy. Congrats on the progress during the year. I guess, I want to come back to lumber. And Devin, you were saying that from your vantage point, inventories are relatively lean in the channel.

We also read in here that there's uncertainty about the tariffs. But as you were commenting a few minutes ago, certainly, if the tariff does go in place, it's probably more inflationary than deflationary, right? And so why are we not seeing in your view or what you're hearing from the field more uplift in lumber pricing right now? It seemed like we have some supply constraints, we have inventories lean, we have the potential optionality, but that's probably more up than down in terms of the optionality from tariffs. Why aren't we seeing more of an uplift?

Does it give us any worry perhaps about the overall demand outlook for this year? How would you have us think about that?

Yes. I think there are 2 things that I would highlight, George. First of all, is I do think the weather here recently, particularly the cold stretch across the U. S. South, did impact demand to some degree.

So that's a portion of it. But I think with respect to the tariffs, on balance, there has been skepticism in the market that the tariffs are in fact going to go into effect. And so we haven't seen people that are putting a lot of pre buy orders out to get ahead of the tariffs. And I just I think that there has been a disbelief that, that will actually happen. Or if it does come into effect, maybe there's some delay in the effective date, so people will still have time.

I mean, I think that's the answer. The latest that we've heard is we'll get a little bit more clarity on that tomorrow. And so perhaps

will provide a little bit more insight into how this is going to come in effect and the timeline for how quickly it will come into effect.

Okay. Thank you for that. Next question is really around capital allocation. Certainly, the company going back to its goals that it set out back in 2020 has been hitting or achieving hitting or exceeding its capital return goals and the value return. The last year or 2, the value return to shareholders has been in excess of FAD.

How should we think about your priorities in the next couple of years in terms of the dividend? Should we continue to expect it grows at 5% or better? You certainly have the maturities coming up in 2026, not that Weyerhaeuser can't handle that given its asset base, but nonetheless, should we expect a little bit more focus on deleveraging relative to dividend, relative value return to shareholders given that construct? Thank you.

lot in there. So I'll try to take them component by component. I think on the base dividend, obviously, that's

to increase that base dividend is supported by all the work we've been doing over the last few years to increase sustainable cash flow generation. So all the work we've been doing on Timberlands acquisitions, the growth in the natural climate solutions space, improvements in OpEx, all of those things are things that give us confidence that no matter the scenario, we feel confident in our ability to increase the base dividend amidst challenging market conditions. So as we think about the debt maturities, yes, we do have $1,000,000,000 of maturities coming due in 2026. We feel really good about our ability to refinance those. I don't think anything changes from our overall capital allocation approach as we look at that.

The biggest component of that is a 3 year maturity that we refinanced back in 2023. There's also some smaller maturities that are a lot older that have a much higher rate. So all in, we're looking at a rate average in the mid-5s on all the debt coming due next year. So we should be able to refinance those at comparable rates. But I think just reflecting on what we've accomplished over the course of 2024, this is exactly what the cash return framework was designed to accomplish.

We essentially covered our base dividend through adjusted FAD even in what was probably the most challenging lumber market in about 15 years or so. So we're quite pleased about how this played out over the course of the year, being able to continue to have that exceptionally strong balance sheet, making progress towards our strategic growth initiatives such as the Alabama acquisitions, the announcement on the new Timber Strand facility, while also being able to maintain our program at CapEx at meaningful levels and being active in share repurchase. So again, looking at all of those things, I think it demonstrates the power of our cash return framework, why it works so well for us and it's going to allow us to create value through the cycle for our shareholders.

Weyerhaeuser (WY) Q4 2024 Earnings Call Transcript

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