WEYERHAEUSER CO Q1 FY2025 earnings call

• Timberlands: Domestic West log demand healthy, Western export shifted due to China ban, Southern timberlands saw muted log demand, Northern had slight EBITDA increase.
• Real Estate and CCS: Solid real estate markets, Occidental CCS project has 25-year off-take agreement.
• Wood Products: Lumber pricing supported by tariffs, OSB pricing down due to inventory and demand, Engineered Wood Products impacted by MDF outage.
• Dividends: Dividend increased 5% to $0.21, $925M repurchased under $1B authorization.
• Market Commentary: Housing and R&R markets analyzed, tariff impacts discussed.

Timberlands contributed $102 million to first quarter earnings with adjusted EBITDA of $167 million, a $41 million increase from Q4, driven by stronger domestic West sales. Real Estate, Energy and Natural Resources contributed $56 million to earnings and $82 million to adjusted EBITDA, with solid real estate markets and a CCS milestone with Occidental. Wood Products contributed $106 million to earnings; Lumber had adjusted EBITDA $40 million (+$19M from Q4), OSB $59M (-$4M), Engineered Wood Products $53M (-$16M) due to MDF outage, and Distribution had adjusted EBITDA down $4M.

• Timberlands: Q2 earnings and adjusted EBITDA expected $15M lower due to seasonal costs.
• Real Estate, Energy and Natural Resources: Q2 adjusted EBITDA and earnings higher, full-year adjusted EBITDA guidance $350M, natural climate solutions EBITDA $100M.
• Wood Products: Q2 earnings and adjusted EBITDA slightly higher, seasonal volume increase expected.

• Tariffs and Trade Policies: Impact on lumber and OSB pricing, supply chain uncertainty.
• Market Volatility: Macro-economic uncertainty affecting demand.
• Regulatory Changes: E.g., China log import ban impact.

Q: Talked about demand for lumber as building season starts, shift in order patterns between SPF and Southern yellow pine?

A: Steady lumber demand, less inventory building due to uncertainty, some inquiries on transitioning to Southern yellow pine.

Q: Outlook for EWP realization and volume?

A: Near-term pricing comparable, volume up in Q2, depends on housing value proposition.

Q: Adjusted harvest profile?

A: Harvest levels stable, no change to full-year plan.

Q: Occidental CCS project cash flows and timing?

A: Project expected to start injection in 2029, CCS opportunity significant but timeline pushed back.

Q: OSB annual maintenance impact?

A: Minor impact, operating rates in low to mid-90s.

Q: Forest carbon progress?

A: Projects progressing, expecting meaningful increase in 2025.

Q: OSB pricing stabilization?

A: Stable now, expected to pick up with building season.

Q: CCS opportunity scale and margin?

A: Significant opportunity, high margin due to subsurface leasing.