Weyerhaeuser Co Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Susan Maklari - Goldman Sachs Group Inc - Analyst : Thank you. Good morning, everyone. My first question is on the Wood Products segment. When you think about the outlook and what the builders are telling us in terms of guiding to the lower end of their closings range for this year, talking about perhaps going into 2026 with less inventory on the ground as well, how are you thinking about balancing your capacity across the wood products space? And how are you also thinking about any incremental opportunities in terms of OpEx 2.0 to perhaps improve or sustain the profitability in that part of the business?

Question: Susan Maklari - Goldman Sachs Group Inc - Analyst : Yes. Okay. That's great color, Devin. And then maybe turning to timberlands. It's exciting to see the deal that you announced in North Carolina and Virginia. Can you talk a bit about just the overall environment for timberland acquisitions? And anything that you're also seeing perhaps on the divestiture side, just how that is coming together?

Question: Susan Maklari - Goldman Sachs Group Inc - Analyst : Okay. Thank you both and good luck with the quarter.

Question: Brad Barton - BofA Securities Inc - Analyst : Hey, good morning, Devin and Dave. This is Brad Barton, on for George. Just quickly, when we look at EWP prices, there seems to have been a trend downward for some time now. And you're guiding Q3 lower again. So just wondering what your thoughts on what you think the catalyst is that ultimately slows and then reverse that trend, so we can see prices inflect higher? And I guess, when do you think that happens?

Question: Brad Barton - BofA Securities Inc - Analyst : Great. Thank you. And just a quick follow-up. On the real estate side, prices per acre, they seem to have been appreciating over the last five quarters or so. So is that just simply due to mix and timing? Or is there something larger at play, maybe like the optionality on Climate Solutions related businesses? And I guess, maybe related to that question, if we look out over the next year or so, where do you estimate the appropriate price per acre to be?

Question: Brad Barton - BofA Securities Inc - Analyst : Okay, great. Appreciate that, guys.

Question: Anthony Pettinari - Citi Infrastructure Investments LLC - Analyst : Good morning. Devin, do you see the one big beautiful bill impacting your Natural Climate Solutions business? And I guess I'm thinking specifically about sort of solar and wind projects. You have any projects at risk? Or does the bill impact your expectations for future growth for Natural Climate Solutions?

Question: Anthony Pettinari - Citi Infrastructure Investments LLC - Analyst : Okay. That's very helpful. And then just switching gears. Lumber does seem to have stabilized a little bit in recent weeks. And I'm wondering if you had any additional thoughts on what might be driving that or what you're seeing in terms of are dealers buying ahead of import duties or 232? Or are you seeing curtailments in Canada or elsewhere? Or is demand picking up? I'm just curious if you had any additional color on kind of current market conditions, especially in number?

Question: Anthony Pettinari - Citi Infrastructure Investments LLC - Analyst : Okay. That, that's very helpful. I'll turn it over.

Question: Mark Weintraub - Seaport Research Partners - Analyst : Thank you. So maybe a couple of follow-ups. One would be on lumber and with the duties coming, et cetera. And at the same time, kind of looking at the second quarter, you guys, I think, were like $11 million in EBITDA. And if you look at where prices are today, you presumably would be fairly negative in EBITDA in lumber. And you've certainly indicated in the past in margins and things like that would suggest that you have a better system, lower cost system than most. I mean are you surprised or hasn't been more response on the capacity side to date? Or do you think that's just -- it's going to come, but soon and just waiting for the duties? Any thoughts there would be helpful. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 25, 2025 / 2:00PM, WY.N - Q2 2025 Weyerhaeuser Co Earnings Call

Question: Mark Weintraub - Seaport Research Partners - Analyst : Understood. And just -- but is there any reason why that the window we get on sort of costs, looking at what you're doing, like the $11 million, again, if you put in where prices are, would seem to be fairly negative EBITDA, why that wouldn't be a good visual on just how distressed you would think most other manufacturers would be at this juncture?

Question: Mark Weintraub - Seaport Research Partners - Analyst : Great. And then lastly, so just on the section 232, 1st, any intelligence on, how you think that might play out and then one, point of clarification, so I believe that, tariffs, for instance, on European lumber are not being applied while Section 232 is in process. Is that accurate so that when the section 232 investigation is concluded, do you then do at least your European would start having a tariff on it.

Question: Mark Weintraub - Seaport Research Partners - Analyst : Thanks, Devin. I appreciate it.

Question: Kurt Yinger - D.A. Davidson & Co - Analyst : Great, thanks. Good morning everyone. I just wanted to circle back around on the divestitures, understanding -- or not getting to get into specifics of transactions that haven't been announced. But from an expectation standpoint, I guess, how much of the Roanoke acquisition would you expect to be kind of funded with divestitures? And is there a reasonable kind of time line for us to think about at least when you hope to maybe have those deals completed by?

Question: Kurt Yinger - D.A. Davidson & Co - Analyst : Okay. Got it. That's helpful. And then just kind of looking at the balance sheet if we don't factor in the divestitures, it seems like leverage could maybe pick up into the mid-4s by year-end. I guess in that context, how should we think about your appetite for share repurchases at least here in the near term? And how are you thinking about overall flexibility, just given what we know is coming in terms of Monticello spending next year as well?

Question: Kurt Yinger - D.A. Davidson & Co - Analyst : Okay, got it, thank you.

Question: Ketan Mamtora - Bank of Montreal - Analyst : Thank you. Good morning. Thank thanks for taking my question. Perhaps to start with Devin, are you hearing anything from your customers around kind of substitution of SPF for SYP when these duties go into place? Is there a price differential where this sort of really starts to pick up?

Question: Ketan Mamtora - Bank of Montreal - Analyst : Yes, that's helpful. And then just as a follow-up, your operating rate in Q2 for lumber OSB and EWP, please?

Question: Ketan Mamtora - Bank of Montreal - Analyst : Got it. That's very helpful. I'll turn it over. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 25, 2025 / 2:00PM, WY.N - Q2 2025 Weyerhaeuser Co Earnings Call

Question: Matthew McKellar - RBC Capital Markets Inc - Analyst : Good morning. Thanks for taking my question. One big beautiful bill and the increase in the size of the taxable REIT subsidiary that could be held in REITs, just recognizing you've expressed a bullish view on similar valuations here. Is it appropriate or attractive to allocate additional capital to wood products? What makes sense for your business? Thanks.

Question: Matthew McKellar - RBC Capital Markets Inc - Analyst : Great. That's helpful. Thank you. And then last one for me. Just around forest carbon credits, I think you mentioned six additional projects under development. Could you just clarify, are those all track into 2026 in terms of registration and sales? And just maybe more broadly, what is the pipeline for '26 look like compared to how we're thinking about '25 here?

Question: Matthew McKellar - RBC Capital Markets Inc - Analyst : Thanks very much. I'll be right back. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 25, 2025 / 2:00PM, WY.N - Q2 2025 Weyerhaeuser Co Earnings Call

Question: Hong Zhang - JPMorgan Chase & Co - Analyst : Hey, good morning everybody. Yes. I guess on Japan, you talked about gaining some market share in the country this quarter. Do you think that's sustainable? Or is there an expectation for that to kind of reverse later in the year?

Question: Hong Zhang - JPMorgan Chase & Co - Analyst : Got it. And I guess on China, is it safe to just say the expectation is that imports won't resume until the entire trade war results itself?

Question: Hong Zhang - JPMorgan Chase & Co - Analyst : Yes, thanks. Have a great weekend. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 25, 2025 / 2:00PM, WY.N - Q2 2025 Weyerhaeuser Co Earnings Call

Question: Hamir Patel - Cibc World Markets Inc - Analyst : Hi, good morning. Devin, there's been some reports in Canada that the federal and provincial governments are more open to exploring a quota as a potential solution to the softwood lumber dispute. Do you see any kind of movement on the US side there? And any prospects that may be a path forward?

Question: Hamir Patel - Cibc World Markets Inc - Analyst : Yes, fair enough, thanks. That's all I had. I'll I'll turn it over.

Question: Michael Roxland - Truist Securities - Analyst : Yes, thank you, Devin, Davy, Andy. Thank you for taking my questions. Just the first one I had in terms of the EWP. Devin, what's your expectation for 3Q operating rate, given your outlook [line] for lower sales volume?

Question: Michael Roxland - Truist Securities - Analyst : Got it. Makes sense. And then just one quick question on your 3Q wood product outlook overall. Based on your guidance calling for 3Q would probably be comparable to 2Q. And given where lumber and OSB prices stand today versus the 2Q average, is it fair to say that EBITDA would possibly be down $50 million, $60 million sequentially?

Question: Michael Roxland - Truist Securities - Analyst : Thank you very much.