Weyerhaeuser Co at NAREIT REITweek: Investor Conference Transcript

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

Question: Buck Horne - Raymond James & Associates, Inc. - Analyst : Yes. No, there's plenty, I think, for us to dive into and speaking to the housing market and the dynamic and things are kind of mixed in terms of new residential construction, single-family seems to be doing okay, but we're held back by affordability to a degree, multifamily is coming off of a kind of a multiyear high in terms of their start. So it's been a little bit choppy. And lumber prices have not gotten a lot of traction year-to-date, and so that's been part of the concern. Now we're starting to see OSB pricing start to come in a little bit as well. Can you just give us an update on kind of where we stand kind of midyear in terms of -- are we stabilizing? Is there more pressure in terms of sawmill capacity that needs to be absorbed? What's the kind of the near-term commodity price outlook?

Question: Buck Horne - Raymond James & Associates, Inc. - Analyst : Have we seen similar kind of periods of time where they are in our market kind of falls, because what it feels like, the feedback we continue to get from and see from builders as well as real estate agents is the quality of resale inventory that's out there is still very, very poor, if you will. And there's a lot of houses that need significant repair projects, and a lot of that is going to require significant wood upgrades. Are we seeing just this period where this is just a deferred maintenance cycle due to higher interest rates, and it comes back in some period of time? And how have you seen that play in prior cycles?

Question: Buck Horne - Raymond James & Associates, Inc. - Analyst : And how do you think about inventory that's kind of in the supply chain kind of as it stands today? And are there wildcards and we obviously had the issue of European imports hit us probably this time last year. Is there anything else in terms of the import window or any other channel checks you can see in terms of how tight we are?

Question: Buck Horne - Raymond James & Associates, Inc. - Analyst : And can we talk a little bit about just how OSB is trading relative to lumber, because OSB seem to be acting very differently than lumber for a period of time. What was the primary driver of that disconnect?

Question: Buck Horne - Raymond James & Associates, Inc. - Analyst : Got it. Got it. Engineered wood products. Are we getting more traction? Are the builders starting to take more of that product back into their mix of deliveries? And how does the pricing outlook for engineered wood look?

Question: Buck Horne - Raymond James & Associates, Inc. - Analyst : All right. Well, I'm going to have to shift gears because there's so much to cover with your company. So we covered the Wood Products segment pretty thoroughly. Let's talk a little bit about the timberland side and kind of the raw materials that go into the wood products. So what are the kind of the different market dynamics are you seeing in terms of log pricing or trends, whether is the South acting differently than the West at this stage of the game? And what are the factors driving pricing tension in the log markets right now?

Question: Buck Horne - Raymond James & Associates, Inc. - Analyst : Is there a continued drag from just the softness in pulp and paper markets, and you've seen a lot of mill closures related to the pulp industry recently. Have we kind of bottomed out there? Or is there maybe still more to come?

Question: Buck Horne - Raymond James & Associates, Inc. - Analyst : Got you. Got you. And as you think about the M&A opportunities for your -- towards your goal for $1 billion of timber acquisitions. So you made some -- a lot of progress towards that goal already. Where do you see the more attractive opportunities? Do you go into the US South where pricing just hasn't quite gotten lift off yet? Or do you go into a more tension market like the Pacific Northwest? What's the thought process there? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 04, 2024 / 7:45PM, WY.N - Weyerhaeuser Co at NAREIT REITweek: Investor Conference

Question: Buck Horne - Raymond James & Associates, Inc. - Analyst : Now has the market shifted in terms of what your -- maybe the window which you're willing to consider? I mean you've done some really -- some deals that are very well stocked timber in previous acquisitions. But now there's more potential optionality going back to the climate solutions opportunities. Are you willing to potentially consider timberland that's maybe younger age or maybe it's already been recently clear cut you could use that for potential NCS opportunities? Or what's the opportunity set and what you're willing to consider?

Question: Buck Horne - Raymond James & Associates, Inc. - Analyst : I certainly appreciate that you guys are being conservative with the underwriting in that approach. But the markets are ambitious and right? So there's lots of animal spirits and how the private buyers of timberland seem to be underwriting more than just timber values right now. Maybe you can walk us through that dynamic and what are you seeing in terms of what competitors or other private market players are willing to underwrite right now and how is that affecting timberland value?

Question: Buck Horne - Raymond James & Associates, Inc. - Analyst : So can we, Devin, I mean there's a lot to chew on with the Climate Solutions and all the opportunities here. Let's maybe go into them kind of one by one in terms of the alternative uses and kind of what seems to be maybe the nearest case monetization, whether that's the forest carbon credits or maybe solar leasing or -- if we can kind of dive into those one by one.

Question: Buck Horne - Raymond James & Associates, Inc. - Analyst : So what percentage of the portfolio are we talking about that could be utilized for what's realistically attributable to like could be compatible with solar leases? What could be compatible CCS?

Question: Buck Horne - Raymond James & Associates, Inc. - Analyst : And so when we think about your $100 million target that's out there for year-end 2025, what's the majority of that going to be composed of? Is that the forest carbon credits being monetized?

Question: Buck Horne - Raymond James & Associates, Inc. - Analyst : All right. So I'm going to shift gears a little bit to capital allocation real quick in the balance sheet. And so you do have the balance sheet in great position and the debt-to-EBITDA ratios are near -- correct me if I'm wrong, close to company record lows. So you've got some flexibility and you've got this flexible payout [sched] that you can divert cash to a dividend or repurchases, the stock being where it's at right now, does it [bear] to us, be trading at a very significant NAV discount. So how do you think about the trade-off in terms of where you can put incremental cash and drive the best return?

Question: Buck Horne - Raymond James & Associates, Inc. - Analyst : Would that include any potential dispositions or noncore assets you might look to?

Question: Buck Horne - Raymond James & Associates, Inc. - Analyst : All right. Well, I think we're right there at the time limit. So with that, thank you, guys. I really appreciate it. Great job. Thank you, everybody, for attending and joining us.