Weyerhaeuser Q1 2025 Earnings Report

Weyerhaeuser EPS Results

• Actual EPS: $0.11
• Consensus EPS: $0.11
• Beat/Miss: Met Expectations
• One Year Ago EPS: $0.16

Weyerhaeuser Revenue Results

• Actual Revenue: $1.76 billion
• Expected Revenue: $1.80 billion
• Beat/Miss: Missed by -$32.78 million
• YoY Revenue Growth: -4.90%

Weyerhaeuser Announcement Details

• Quarter: Q1 2025
• Date: 4/24/2025
• Time: After Market Closes
• Conference Call Date: Friday, April 25, 2025
• Conference Call Time: 10:00AM ET

Weyerhaeuser (NYSE:WY) Company, one of the world's largest private owners of timberlands, began operations in 1900. We own or control approximately 11 million acres of timberlands in the U.S. and manage additional timberlands under long-term licenses in Canada. We manage these timberlands on a sustainable basis in compliance with internationally recognized forestry standards. We are also one of the largest manufacturers of wood products in North America. Our company is a real estate investment trust. In 2022, we generated $10.2 billion in net sales and employed approximately 9,200 people who serve customers worldwide. Our common stock trades on the New York Stock Exchange under the symbol WY.

Weyerhaeuser Q1 2025 Earnings Call Transcript

Presentation

[Operator]

Greetings, and welcome to the Weyerhaeuser First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are on a listen only mode. After the speakers' remarks, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

[Operator]

As a reminder, this conference call is being recorded. It is now my pleasure to introduce your host, Andy Taylor, Vice President of Investor Relations. Thank you, Mr. Taylor. You may begin.

[Andy Taylor, Vice President-Investor Relations at Weyerhaeuser Company]

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

[Andy Taylor, Vice President-Investor Relations at Weyerhaeuser Company]

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.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

Thanks, Andy. Good morning, everyone, and thank you for joining us. Yesterday, Weyerhaeuser reported first quarter GAAP earnings of $83,000,000 or $0.11 per diluted share on net sales of $1,800,000,000 Adjusted EBITDA totaled $328,000,000 a 12% increase over the fourth quarter of twenty twenty four. These are solid results considering elevated macroeconomic uncertainty in the first quarter, and I'm pleased with the operational performance delivered by our teams. Turning now to our first quarter business results.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

I'll begin with Timberlands on Pages five through eight of our earnings slides. Timberlands contributed $102,000,000 to first quarter earnings. Adjusted EBITDA was $167,000,000 a $41,000,000 increase compared to the fourth quarter, largely driven by stronger domestic sales realizations in the West. Turning to the domestic market in the West. Log demand was healthy in the first quarter as mills responded to strengthening lumber prices and seasonally lower log supply.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

As a result, pricing for our grade logs increased and our average domestic sales realizations were significantly higher compared to the fourth quarter. Our domestic sales volumes increased moderately as we strategically shifted logs to domestic customers and paused shipments to China given the recent ban on U. S. Log imports. Fee harvest volumes were moderately higher and per unit log and haul costs decreased as we made the seasonal transition to lower elevation and lower cost harvest operations.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

Forestry and road costs were seasonally lower. Moving to our Western export business. In Japan, demand for our logs improved in the first quarter. This was largely driven by a recent decrease in shipments and inventories of imported European lumber, which has allowed our customers to increase market share. As a result, our sales volumes for export logs to Japan were significantly higher compared to the fourth quarter and average sales realizations were slightly higher.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

In China, log demand moderated in the first quarter in response to reduced consumption during the Lunar New Year holiday. Given this dynamic, coupled with improving Western domestic market conditions, we elected to significantly reduce volumes into China during the quarter. In early March, we paused all shipments in response to Chinese regulators announcing an immediate ban on log imports from The U. S. As a result, our sales volumes decreased significantly compared to the fourth quarter and average realizations were moderately lower.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

It's worth noting that the log ban had a minimal impact on our first quarter results and we don't anticipate this being a material headwind to our Western business in the near term. Given our diverse customer base, we were able to shift volumes to other buyers for our Western logs. I'll also note that we had reduced our China export program in the quarters leading up to the log band, primarily due to ongoing consumption headwinds in the region and improving Western domestic market conditions. Turning to the South. Adjusted EBITDA for Southern Timberlands decreased by $3,000,000 as log markets were largely stable compared to the fourth quarter.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

Southern sawlog demand remained muted in response to ample log supply and mills continuing to align capacity with lower takeaway of finished goods. In contrast, Southern fiber markets were generally balanced. In general, takeaway for our logs remained steady in the first quarter given our delivered programs across the region. As a result, our average sales realizations were comparable to the fourth quarter. Our fee harvest volumes and per unit log and haul costs were also comparable.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

Forestry and road costs were slightly higher. In the North, adjusted EBITDA increased slightly compared to the fourth quarter due to slightly higher sales realizations and volumes. Turning now to Real Estate, Energy and Natural Resources on pages nine and ten. Real Estate and E and R contributed $56,000,000 to first quarter earnings and $82,000,000 to adjusted EBITDA. First quarter EBITDA was $6,000,000 higher than the fourth quarter, largely driven by the timing and mix of real estate sales.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

Real estate markets have remained solid year to date and we continue to capitalize on steady demand and pricing for HBU properties with significant premiums to timber value. I'll now turn to our Natural Climate Solutions business and cover some exciting news on one of our previously announced carbon capture and sequestration agreement. Earlier this month, Occidental Petroleum announced an important milestone associated with our CCS project in Livingston Parish, Louisiana. They've signed a twenty five year offtake agreement for approximately 2,300,000.0 metric tons of CO2 per year from a third party facility that's being constructed in the region. The emitting facility is expected to be operational in 2029 and subsurface injection of CO2 should commence around that time.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

This is an important step for our CCS project with Oxy and represents tangible progress in advancing Weyerhaeuser's growth in the CCS space. In addition, this underscores the importance of selecting sophisticated counterparties counterparties with strong technical, commercial and project development expertise. Now moving on to Wood Products on pages 11 through 13. Wood Products contributed $106,000,000 to first quarter earnings. Adjusted EBITDA was $161,000,000 which was comparable to our fourth quarter results.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

Starting with lumber, first quarter adjusted EBITDA was $40,000,000 a $19,000,000 improvement compared to the fourth quarter. Although buyer sentiment remained cautious, the framing lumber composite increased moderately in the first quarter, largely driven by supply constraints from previously enacted curtailments and closures across the North American market combined with a slight seasonal improvement in building activity into the spring months. Pricing was further supported by concerns and speculation around tariffs on Canadian supply, particularly SPF lumber products. I'll also note that we've seen a steady increase in Southern Yellow Pine lumber prices since January. For our lumber business, average sales realizations increased by 5% in the first quarter, largely in line with the Framing Lumber composite.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

Our sales volumes increased slightly compared to the fourth quarter and unit manufacturing costs were slightly lower as production levels increased. It is worth noting that both sales volumes and unit manufacturing costs were slightly unfavorable to our initial outlook for the quarter. This was primarily driven by temporary operational impacts from winter weather in January and a somewhat softer demand environment in the more uncertain macro backdrop. Our log costs were moderately higher, primarily for Western logs. Turning to OSB.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

First quarter adjusted EBITDA was $59,000,000 a $4,000,000 decrease compared to the fourth quarter. Benchmark pricing for OSB entered the first quarter on a downward trajectory, largely in response to elevated channel inventories and slower building activity in the winter months. As the quarter progressed, demand and pricing improved slightly in anticipation of the spring building season, but later reversed as buyers weighed the potential impacts of tariffs on the economy and housing demand. This dynamic has persisted into April. For our OSB business, average sales realizations decreased by 1% in the first quarter, which was favorable to the OSB composite.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

This is largely due to the length of our order files, which results in a lag effect for OSB realizations. Given the softer demand environment, our sales volumes were comparable to the fourth quarter. Unit manufacturing costs and fiber costs were slightly higher. Engineered Wood Products adjusted EBITDA was $53,000,000 a $16,000,000 decrease compared to the prior quarter. I'll note that we experienced a multi week outage at our MDF facility in Montana as a result of a fire event in February.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

This impacted our first quarter EWP results by approximately $11,000,000 The facility resumed partial production in mid March and is now back to a more normal operating posture. We plan to make up most of the lost volume over the course of 2025. Moving to our full EWP segment. Average sales realizations for most products were comparable to slightly higher than fourth quarter averages. Our sales volumes decreased in the first quarter, primarily for MDF section products, whereas I joist volumes were comparable.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

Unit manufacturing costs were lower for most product categories, excluding MDF, and raw material costs were higher. Turning to the overall demand environment, although our EWP sales volumes and pricing held up reasonably well in the first quarter, demand was softer than our initial expectations. That said, we have seen a slight uptick in our order files over the last several weeks, and we do expect our sales volumes to increase seasonally in the second quarter. Moving forward, demand for EWP products will remain closely aligned with new home construction activity, particularly in the single family segment. In Distribution, adjusted EBITDA decreased by $4,000,000 compared to the fourth quarter, largely driven by lower sales volumes.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

With that, I'll turn the call over to Davey to discuss some financial items and our second quarter outlook.

[David Wold, Senior VP & CFO at Weyerhaeuser Company]

Thanks, Devin, and good morning, everyone. I'll begin with key financial items, which are summarized on Page 15. We ended the first quarter with $560,000,000 of cash and total debt of just under $5,200,000,000 First quarter share repurchase activity totaled approximately $25,000,000 and as of quarter end, we had completed approximately $925,000,000 of repurchase under our $1,000,000,000 authorization. We returned $152,000,000 to shareholders through the payment of our quarterly base dividend, which we increased by 5% to $0.21 per share during the quarter. This marked the fourth consecutive year of increasing our sustainable base dividend by 5% or more.

[David Wold, Senior VP & CFO at Weyerhaeuser Company]

We continue to believe that our dividend framework, combined with opportunistic share repurchase, enhances our ability to drive long term value by returning meaningful and appropriate amounts of cash back to shareholders across market cycles. Capital expenditures for the quarter were $93,000,000 which includes $16,000,000 related to the construction of our EWP facility in Arkansas. As we previously communicated, CapEx associated with this project will be excluded for purposes of calculating adjusted FAD as used in our flexible cash return framework. In the first quarter, we generated $70,000,000 of cash from operations. It's worth noting that the first quarter is usually our lowest operating cash flow quarter due to seasonal inventory and other working capital build.

[David Wold, Senior VP & CFO at Weyerhaeuser Company]

During the quarter, we refinanced $210,000,000 of high coupon debt at maturity by issuing a $300,000,000 variable rate term loan. We have no additional debt maturing in 2025. Our balance sheet, liquidity position, and financial flexibility remain strong, and we are well positioned to navigate a range of market conditions. Unallocated items are summarized on page 14. Adjusted EBITDA for unallocated decreased by $13,000,000 compared to the fourth quarter, primarily attributable to changes in intersegment profit elimination and LIFO.

[David Wold, Senior VP & CFO at Weyerhaeuser Company]

Looking forward, key outlook items for the second quarter are presented on page 17. In our Timberlands business, we expect second quarter earnings and adjusted EBITDA to be approximately $15,000,000 lower compared to the first quarter of twenty twenty five, primarily due to the seasonal increase in forestry and road costs in our Western operations. Turning to the West, we anticipate steady log demand in the domestic market in the second quarter as mills respond to improving lumber takeaway as we get deeper into the spring building season. At the same time, log supply is expected to increase as weather conditions improve seasonally. Given these dynamics, we expect a fairly balanced domestic log market and stable pricing for Douglas fir logs.

[David Wold, Senior VP & CFO at Weyerhaeuser Company]

That said, we anticipate our average domestic sales realizations will be slightly lower compared to the first quarter, largely due to mix. We expect our fee harvest volumes to be slightly higher, given seasonally favorable operating conditions. Forestry and road costs are expected to be higher as we enter the spring and summer months, and per unit log in haul costs are expected to increase slightly as we move to higher elevation sites. Briefly on our log export program to Japan, as Devin mentioned, shipments and inventories of imported European lumber have decreased, which has allowed our customers to take market share. As a result, we expect steady demand for our logs in the second quarter.

[David Wold, Senior VP & CFO at Weyerhaeuser Company]

That said, we anticipate lower sales volumes compared to the first quarter due to the timing of vessels. Our average sales realizations are expected to increase moderately. Turning to the South. On balance, we're expecting Southern log prices to be relatively stable during the quarter, and our average sales realizations to be comparable to the first quarter. Log inventories were ample at the outset of the second quarter, but we expect a slight improvement in sawlog demand as mills respond to the recent uptick in pricing and takeaway of lumber.

[David Wold, Senior VP & CFO at Weyerhaeuser Company]

In addition, we anticipate improving fiber demand through the quarter as mills transition from spring maintenance outages. Our fee harvest volumes and forestry and road costs are expected to be higher due to drier weather conditions that are typical in the second quarter, and we anticipate moderately higher per unit log in haul costs. In the North, our sales realizations are expected to be moderately higher compared to the first quarter, and fee harvest volumes are expected to be significantly lower given spring breakup conditions. Moving to our Real Estate, Energy, and Natural Resources segment. We continue to see solid demand for real estate properties and expect a consistent flow of HBU transactions with significant premiums to timber value.

[David Wold, Senior VP & CFO at Weyerhaeuser Company]

For the second quarter, we expect adjusted EBITDA will be approximately $50,000,000 higher and earnings will be approximately $40,000,000 higher than the first quarter of twenty twenty five due to the timing and mix of real estate sales. For the full year, we maintain our adjusted EBITDA guidance of approximately $350,000,000 for the segment, which includes our target to reach $100,000,000 of EBITDA in our Natural Climate Solutions business. We now expect basis as a percentage of real estate sales to be 30% to 40% for the full year. In our Wood Products segment, we expect second quarter earnings and adjusted EBITDA to be slightly higher than the first quarter of twenty twenty five, excluding the effect of changes in average sales realizations for lumber and OSB, as sales volumes increase seasonally across our wood products businesses. After a slower than expected start to the spring building season, I'll note that we are seeing signs of improving demand in certain end markets, particularly from the treater segment in The US South.

[David Wold, Senior VP & CFO at Weyerhaeuser Company]

In addition, order files for our EWP products have improved over the last several weeks. As shown on page 18, our current and quarter to date average sales realizations for lumber are moderately higher than the first quarter average. This is largely in response to the steady increase in pricing for Southern Yellow Pine lumber products. Conversely, for OSB, our current and quarter to date realizations are moderately lower compared to the first quarter average. For our lumber business, we expect slightly higher sales volumes and log costs compared to the first quarter.

[David Wold, Senior VP & CFO at Weyerhaeuser Company]

Unit manufacturing costs are expected to be comparable. For our oriented strand board business, we anticipate slightly higher sales volumes and fiber costs. Unit manufacturing costs are expected to increase due to more downtime for planned annual maintenance compared to the first quarter. Turning to our engineered wood products business, we anticipate slightly higher sales volumes for all products in the second quarter and comparable average sales realizations. Unit manufacturing costs are expected to be lower, primarily driven by increased production at our MDF facility in Montana, which has returned to more normal operating levels, and raw material costs are expected to be moderately lower.

[David Wold, Senior VP & CFO at Weyerhaeuser Company]

For our distribution business, we expect adjusted EBITDA to be slightly higher compared to the first quarter as sales volumes increase seasonally. With that, I'll now turn the call back to Devin and look forward to your questions.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

Thanks, Davey. Before wrapping up this morning, I'll make a few comments on the housing and repair and remodel markets, starting with housing. For the first quarter, housing held up reasonably well with total starts averaging nearly 1,400,000 units on a seasonally adjusted basis and single family starts averaging around 1,000,000 units in the quarter. However, homebuilder sentiment waned somewhat as the quarter progressed and prospective buyers turned more cautious in response to elevated uncertainty surrounding tariffs and the broader economy. This cautious sentiment continued into April as trade policy actions accelerated and markets experienced elevated volatility.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

Given these dynamics, the spring building season has gotten off to a softer start than we were expecting at the outset of 2025. Moving forward, the housing market will ultimately be determined by the state of the economy and whether the employment picture remains healthy. If The US economy and employment hold up reasonably well, there is no reason we cannot still experience a solid housing market in 2025. Further, if mortgage rates move down over the course of the year, we could even see some upside in housing activity. In the near term, however, I suspect we'll see some choppiness in housing activity as trade negotiations continue and the economy adjusts to these policies.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

But putting the current environment aside, we remain bullish on housing over the long term, supported by strong demographic tailwinds, a vastly underbuilt housing stock and historically low existing home inventories. Turning to the repair and remodel market. Despite the seasonal decrease in activity that's typical in the winter months, R and R activity held up reasonably well in the first quarter. Underlying demand fundamentals remain solid and we're seeing the typical pickup in activity as the weather improves. That said, we are still experiencing some headwinds in this market, namely higher interest rates and fewer existing home transactions due to the lock in effect and more recently weakening consumer confidence.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

As we look forward, while repair and remodel activity may experience a little turbulence here in the near term as the economy adjusts to tariff actions, we do expect demand to pick up as the year progresses. And as we look out over the medium to long term, many of the drivers for R and R activity are still very much in place, including significantly increased levels of home equity and an aging housing stock. In addition, we've largely worked through the pull forward of projects that occurred during the pandemic and in fact are now seeing project deferrals for R and R projects. So, this should be a tailwind for repair and remodel activity as the macro environment improves. In closing, we delivered solid results across our businesses in the first quarter.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

In addition, we increased our quarterly base dividend for the fourth consecutive year and recently reached an important milestone in our CCS agreement with Occidental in Louisiana. Looking forward, we're well positioned to navigate a range of market conditions in the near term, and we remain confident in the longer term demand fundamentals that support our businesses. Our balance sheet is strong, and we continue to focus on driving operational excellence, serving customers, capitalizing on strategic opportunities, and creating long term value for our shareholders through our disciplined and flexible capital allocation framework. With that, I think we can go ahead and open it up for questions.

[Operator]

Thank you. We will now be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to withdraw your question.

[Operator]

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question comes from Susan Maklari with Goldman Sachs. Please proceed with your question.

[Charles Perron-Piché, Analyst at Goldman Sachs]

Good morning, everyone. This is Charles Perron in for Susan. Thanks for taking my question.

[David Wold, Senior VP & CFO at Weyerhaeuser Company]

Good morning. Good morning, Charles.

[Charles Perron-Piché, Analyst at Goldman Sachs]

Good morning. Just first, I wanna talk a bit about what you're hearing on on demand for lumber as we enter building season. I think, you know, we've heard from the builders taking down their closing skies for the year and, you know, the choppy DIY demand in your prepared remarks. But what are you hearing from retailer demand, you know, through the spring and their willingness to ramp inventory given the demand uncertainty against you have the expectation for higher tariffs later this summer. And specifically, given the risks of tariffs on Canadian lumber, do you see any shift in order patterns between SPF and Southern New York pine that could sustain over time?

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

Sure. Yeah, let me unpack there. A few questions in there. You know, just in terms of overall lumber demand, you know, I would say it's steady right now. You noted there has been a little bit of pullback and you've seen that in the builder confidence levels here recently.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

And so, you know, I would say it's not maybe as strong as we had anticipated heading into the year. But the flip side of that is, you know, we saw somewhere in the neighborhood of 4,000,000,000 board feet of capacity come out of the system last year. And that did balance the supply demand a little bit and we're seeing that in today's environment even with a little bit more muted demand overall. But that being said, as we roll into spring, we're seeing the typical increase in demand and we're starting to see the R and R market move up a little bit. As Davey noted, we've seen a little bit more interest from the treater environment here of late.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

So, as we think about this in the broader sense, I do think with just the lack of clarity around warehousing is going to go, we've seen this in lumber, OSB, to some extent EWP. We're not seeing people build inventories to the same level you ordinarily would see heading And so, you know, I think that's partially uncertainty just around what's going to play out over the next several months. Right now, there is sufficient supply to meet that demand, so it's not causing any significant disruptions in the supply chain. I will just note, and we've seen this many times in the past, to the extent that you don't have meaningful inventories heading into this time of year and we do see an uptick in building activity, that typically will cause some short term supply shocks that will cause pricing to go up.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

So, you know, that's something that we're watching. There's a lot going on with tariffs and duties. Obviously, that's certainly on the mind of a lot of the buyers. I think there's, we're in this period of, you know, I think we're going to wait and see here for a little bit. The softwood lumber duties increase will not come until a little bit later this summer.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

And so I don't know that that's necessarily driving a lot of buying activity today. Obviously, there's a lot going on besides the softwood lumber duties with tariffs including the February investigation. But I'm not sure that's driving a lot of activity today. That probably will more so be the case as you get toward the end of the quarter. I will say, you know, just the whole dynamic with duties but also just with the amount of southern yellow pine production that's been put in place all across the South over the last several years.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

Southern yellow pine is a bigger percentage of the overall pie these days. And so you are starting to see more inquiries around transitioning from SPF to Southern Yellow Pine. Still early days I would say there, but we are getting somewhat more inquiries around that just in anticipation of what's to come.

[Charles Perron-Piché, Analyst at Goldman Sachs]

Got it. That's helpful, Devil. And then second, I want to talk a bit about EWP. It was encouraging to see that, you know, you were able to get a little bit of pricing lift sequentially across both, solid section and I joists this quarter, you know, despite the builders, trying to cut costs and find savings wherever they can, given the affordability issues. How do you see the outlook for your realization for EWP going forward?

[Charles Perron-Piché, Analyst at Goldman Sachs]

I know I think you guided for comparable for the second quarter, but considering the dynamics with the builders looking for savings against rising inflation in some of the raws and overall the market, what do you see the impact for realization and the expectations for volume for those products going forward as well?

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

Yeah. I mean, as we said, our view here in the near term is that pricing is more or less going to be comparable here in the near term. We are expecting to see volumes go up somewhat in the second quarter just primarily as a function of just the pickup in building activity as you get into the warmer months. As you look out over time, I mean, it all comes down to the value proposition for the home builders. And you know, we do provide a lot of support around our product.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

We have a very high quality product that's typically in pretty high demand. And so that's a conversation that's ongoing, you know at all times with our customers. You have to create value ultimately, if you're going to be satisfying your customer base. So to the extent that housing holds up reasonably well and or improves, you know that will be a tailwind for pricing and the converse is also true. But that'll be an ongoing discussion.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

Ultimately, it's about providing value and supporting your customers and that's what we're focused on every day.

[Operator]

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

[George Staphos, Managing Director at Bank of America Merrill Lynch]

Hi everyone, good morning. Thanks for the detail.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

Good morning.

[George Staphos, Managing Director at Bank of America Merrill Lynch]

How are you, Devin? So I guess the first question I had for you, given what's been the softer pickup to the summer building season, demand being a little bit soft just given the uncertainties that you mentioned, have you adjusted your harvest profile at all or should we still be expecting a 35,500,000 tons and can you give us a bit more color in terms of what you're seeing in terms of the profile and what you're gonna do relative to what you might have been looking two, three months ago?

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

Yeah, you know George, really outside of a very meaningful recession type environment, our harvest levels are what they are. We set those to really be within sustainable harvest levels over time. So I wouldn't anticipate any change to our full year harvest levels. You know, we don't typically have an issue moving volume. You know, sometimes around the margins there can be some pricing dynamics given what's going on in our end markets whether that's lumber, pulp and paper.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

But generally, you know, we set our harvest plans, you know, that are pretty stable over time.

[George Staphos, Managing Director at Bank of America Merrill Lynch]

Okay, fair enough. Appreciate that. And then you mentioned the Occidental Petroleum agreement. Can you give us a bit more color relative to what we should be expecting in terms of cash flows, milestones, timing in that regard? And I'll turn it over with that.

[George Staphos, Managing Director at Bank of America Merrill Lynch]

Thank you.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

Yeah, thanks for the question. We're really excited about this. As we've said for a number of years, I think CCS is gonna be a very big opportunity for us over time. It's progressed more slowly than we had originally anticipated. I think just as the industry is trying to figure out what are the economics behind some of these off take agreements, the permitting process has been much more extended I think than anyone had expected.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

This is a, I think, is a concrete data point that this is going to happen. We're really excited about this project. I believe this is one of the largest, if not the largest, off take agreement in the CCS space in North America. So really excited about that. Again, I'd just reiterate, that's why you pick partners like Oxy because sophisticated and they know how to do this.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

We're not providing the specific economics on a deal by deal basis, George, and really the rationale there is we're out trying to sign more CCS agreements, and we wanna make sure we're getting the best economics that we can. We will obviously provide more detail about that as these things start coming online. From a timing standpoint, you know, I think they're in the process of getting their permits through the process. I think it's making its way through the process is what we understand and you know, I expect they will start building out the infrastructure here over the next couple of years to be ready for first injection in 2029.

[George Staphos, Managing Director at Bank of America Merrill Lynch]

Okay, Devin. So, in terms of just the cash flows, recognize you're not gonna quantify, we're looking at sort of 29 and then next decade in terms of when we'll start seeing it actually show up in the P and L then?

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

Yeah, I mean I would expect it to start showing up in the P and L in 2029 once you have first first injection.

[George Staphos, Managing Director at Bank of America Merrill Lynch]

Okay, thanks. I'll turn it over.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

Yep.

[Operator]

Our next question comes from Matthew McKellar with RBC Capital Markets. Please proceed with your question.

[Matt McKellar, Vice President at RBC Capital Markets]

Hi, good morning. Thanks for taking my questions. Maybe first, if we do see some meaningful Section two thirty two tariffs on wood products announced, how do you think about the likely impact to timberland valuations over the medium term?

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

Yeah, mean, that's a great question. First, what I would say is just with respect to the two thirty two investigation, you know, really not a whole lot of clarity on how that's going to shake out, what products that's going to cover, what level of tariffs they would cover if that does, end up being the result. So, you know, hard to make any sort of real definitive determinations around that until we get more information. That being said, in terms of Timberland valuations, I don't expect that would have a meaningful impact in the near term. And that's just primarily because unless and until you have good clarity on how long those kinds of tariffs would be in place, I suspect people are not going to be building that meaningfully into the valuation of timberlands Cause again, it's just a very long term asset class and people tend to look out over the course of decades rather than in two and three year increments.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

So I don't know that it would necessarily have an impact on timberlands values or at least not anything material.

[Matt McKellar, Vice President at RBC Capital Markets]

Okay. Thanks for that color. And last for me, just in the OSB business, you mentioned some planned annual maintenance in the quarter. I recognize this is planned maintenance, but have you been intending to perform this maintenance in Q2 for some time?

[Matt McKellar, Vice President at RBC Capital Markets]

Or are you

[Matt McKellar, Vice President at RBC Capital Markets]

pulling forward maintenance maybe based on what you're seeing in the market?

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

No, mean, this was part of our annual plan. As a general matter, we plan the annual maintenance work well in advance if you have to order equipment, you have to schedule outside contractors, and so we typically come up with a plan to cover the year. Absent something really meaningful changing in the environment, we typically stick with those plans. It's just you typically incur some extra costs if you start moving that around late in the season.

[Matt McKellar, Vice President at RBC Capital Markets]

Okay. Thanks very much. I'll turn it back.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

All right. Thank you.

[Operator]

Our next question comes from Mark Weintraub with Seaport Research Partners. Please proceed with your question.

[Mark Weintraub, Senior Analyst and Head of Business Development at Seaport Research Partners]

Thank you. Few quick thoughts. One, on that OSB annual plan maintenance outage, order of magnitude, how much impact would you expect that to have in 2Q?

[David Wold, Senior VP & CFO at Weyerhaeuser Company]

Yes, Mark, not a meaningful impact. I mean, I think we're still expecting that operating rates would be in the kind of the low to mid-90s, which is consistent with where we were in the first quarter.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

So maybe $10,000,000 or something or less than that?

[David Wold, Senior VP & CFO at Weyerhaeuser Company]

No, no. Less than that.

[Mark Weintraub, Senior Analyst and Head of Business Development at Seaport Research Partners]

Less than that. Okay. And then, in terms of the EWP, the

[Mark Weintraub, Senior Analyst and Head of Business Development at Seaport Research Partners]

fire impact, so

[Mark Weintraub, Senior Analyst and Head of Business Development at Seaport Research Partners]

that was $11,000,000 in the first quarter. So does that $11,000,000 disappear in the second quarter? And then you actually hope to recoup some of it with stronger volumes in the back half of

[Mark Weintraub, Senior Analyst and Head of Business Development at Seaport Research Partners]

the year, all else equal?

[David Wold, Senior VP & CFO at Weyerhaeuser Company]

Yes, Mark. So, the $11,000,000 was the impact to the first quarter. We have largely returned to more normal operating levels at this point. There's going to be a small impact on the second quarter. But as we said, we do expect to get most of that volume back over the course of the year.

[David Wold, Senior VP & CFO at Weyerhaeuser Company]

So, of that will come back in Q2 potentially, but likely over the second half of the year.

[Mark Weintraub, Senior Analyst and Head of Business Development at Seaport Research Partners]

Okay. And then, lastly, just so you have a 16% tax rate in the first quarter, which I assume means that you are expecting a healthy share of your income to come from your TRS this year, which presumably would mean that you're still pretty optimistic on how the wood products business is going to turn out, for the rest of the year. Is that fair? If it ends up being a little bit weaker, does the tax rate go down for the balance of the year? Is that how it would, play out?

[David Wold, Senior VP & CFO at Weyerhaeuser Company]

Yeah, Mark. I think you're right on the mechanics. The full year projected tax rate, that's primarily driven by the mix between REIT and TRS earnings with the TRS earnings being most significantly driven by the Wood Products business. Of course, there's other items that go into that from time to time whether that be regional mix of earnings in Timberlands or Real Estate Energy and Natural Resources. Of course, always challenging to predict where commodity prices are going to move over the course of the year.

[David Wold, Senior VP & CFO at Weyerhaeuser Company]

In an environment like this, it gets even more challenging. So that's why we're not giving full year guidance there. But, yeah, mean, to your point, given the strength of lumber prices we've seen to date, prospect of increased duties later in the year, all the things that Devin walked through earlier. If the employment and broader macro environment holds on, there's no reason this can't be a solid year in Wood Products.

[Mark Weintraub, Senior Analyst and Head of Business Development at Seaport Research Partners]

Got you. Thanks a lot.

[Operator]

Our next question comes

[Operator]

from

[Operator]

Keaton Mamtora with BMO Capital Markets. Please proceed with your question.

[Ketan Mamtora, Director - Building Products Equity Research at BMO Capital Markets]

Good morning and thanks for taking my question. First question, can you talk a little bit about the channel inventories as you guys see it in lumber, OSB and EWP in the context of what we've discussed today, you know, with slower sort of, you know, start of the spring season, home builders sounding a little more cautious, how would you characterize inventories? Lean, more balanced, or probably little bit kind of more than balanced at this point?

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

Yeah. I mean, so relative to what you would normally see this time of year, I would say the inventories are a little lighter than you would expect. Now that being said, it's currently by and large the supply is meeting the demand. So there's not a tremendous urgency on the part of the buyer community to build meaningful inventories on balance right now. And so again, I think things are fine as long as building activity continues along the current path.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

If things were to pick up, as I mentioned earlier, I think what that typically results in is you'd see a little bit of a spike in pricing as people try to get out from under lean inventories.

[Ketan Mamtora, Director - Building Products Equity Research at BMO Capital Markets]

Got it, that's helpful. And then second question, good to see, you know, the progress on the CCS side. I'm just curious Devin, last quarter you talked about a pretty meaningful jump over 2024. Is that still on track for 2025?

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

It is. Yep. So we've got two projects that have already been approved. We've got seven more in the pipeline in various stages of review by either the third party auditors or several of those are in for final approval with ACR. So everything is progressing.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

I mean it's always hard to predict exactly when these things come through the process but we're still looking forward to a pretty meaningful increase in forest carbon this year somewhere in the 5x to 10x depending on how quickly we can get these things through the audits. But I think we're heading in the right direction. Seems to be good demand from the customers that we're talking to. So, should be a nice pickup in forest carbon this year.

[Ketan Mamtora, Director - Building Products Equity Research at BMO Capital Markets]

Perfect. That's very helpful. I'll jump back in the queue. Good luck.

[David Wold, Senior VP & CFO at Weyerhaeuser Company]

All right. Thanks.

[Operator]

Our next question comes from Hong Hang with JPMorgan. Please proceed with your question.

[Hong Yang, Software Engineer at JP Morgan Chase & Co]

Yes. Hey, thanks for taking my questions. I guess my first question, you've talked a little bit about the supply and demand dynamics that are causing weakness in OSB pricing. I guess in the near term, what do you think needs to change for us to see stabilization in prices?

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

Yes. I mean, I would say it's by and large pretty stable right now. It's obviously a little lower price than we saw a little while ago. But I think right now the supply demand dynamic is pretty balanced. We started the year in OSB with pretty light buying activity particularly from the home improvement warehouse segment and so that kept it pretty light.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

You saw that pick up a little bit over the course of Q1, but it's come back down here over the last several weeks. Feels like it's sort of stabilizing right now from a pricing standpoint. I would expect as we get deeper into the building season, remember even though we had 1,400,000 starts in Q1, that is on a seasonally adjusted basis. So, in terms of the actual number of units that are going to get built, it will be higher as we get into Q2 and summer months. And so, you'll see that activity pick up here and I think all things being equal, even on the current path, things are probably in a pretty stable range right now.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

Obviously, if you saw interest rates go down to have buying activity pick up, then obviously that would have some tailwind effect for pricing. But overall, it feels pretty stable right now.

[Hong Yang, Software Engineer at JP Morgan Chase & Co]

Got it. And I guess

[Hong Yang, Software Engineer at JP Morgan Chase & Co]

my second question, the administration signed a lot of executive actions trying to increase timber production as recently opened up, I guess, parkland for public land for timber harvests. How do you expect that to kind of play out in the in the timber market?

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

Well, yeah. So, you know, first, just a reminder here, we don't do any logging on federal lands with the exception of a very, very small amount of wood in Montana. We don't buy timber off federal lands. We procure logs from our own timberlands and other private landowners. So that's not an area that we really participate in.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

In terms of how this plays out, I think it's a little hard to say. I will say at the outset, and I think most people agree with this, there is an opportunity to make the federal forest more resilient to fire risk by doing some active management. And so to the extent that through these executive orders that helps the Forest Service be a little bit more proactive on some of these things to make sure that we don't see the number of acres burned every year. That's a positive for everyone, including Weyerhaeuser. Now beyond that, I'm not sure you're going to see a dramatic increase in logging activity on federal lands, at least not in the West, Because the mill infrastructure really isn't built for those larger logs, I think there's some other practical challenges that could limit a meaningful increase, just logging capacity, trucking capacity, etcetera.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

So, I'm not sure that's going to have a big impact here in the near term. Obviously the administration is focused on manufacturing jobs in The US. And so that's a positive overall and we certainly agree with the administration on that front. But whether the opening up federal forest means meaningfully more logs coming out in the near term, I'm not sure about that. But we'll watch it and others that are deeper in the space of logging on federal lands may have more insight there.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

That's just not something we typically do.

[Operator]

Got it. Thank you. Our next question comes from Hamir Patel with CIBC Capital Markets. Please proceed with your question.

[Hamir Patel, Executive Director - Equity Research at CIBC Capital Markets]

Hi, good morning. Devin, you mentioned more inquiries around transitioning to customers looking to transition to Southern Yellow Pine from SPF. Can you speak more to perhaps where you're seeing that interest? Is that more larger public builders versus a privates and any maybe differences across regions?

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

Yes. I mean, I would say regionally, it's kind of those Midwest regions where they've traditionally been SPF markets and you've had a little bit of Southern Yellow Pine moving in there but primarily in SPF market. So regionally that's kind of where you're seeing. It's across the board you know from dealers to even the home improvement warehouse customers. You know as you look forward it's clear that you know there is going to be less SPF on the market whether that's because of beetle infestations, fires, government policy, trade issues, etcetera.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

Know, that seems to be the case and obviously there's been a lot of southern yellow pine lumber capacity that's been coming into the market. So, you know, ultimately that is going to happen and I think people are seeing the future and realizing that, you know, this may be the time to start dipping your toe in the water and getting your arms around Southern Yellow Pine. Again, it's not I wouldn't say we're all that far down that road, but we're in the early innings I think and you're starting to see more inquiries on that.

[Hamir Patel, Executive Director - Equity Research at CIBC Capital Markets]

Thanks. That's helpful. And you also indicated you expected R and R activity to pick up later this year. Do you think that end market for Wood Products experiences growth this year just given the sluggish pace year to date?

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

Yes. I mean, it's puts and takes, right? Because from a housing standpoint, obviously, it's hard to know. We're still early in the year. But just given the general commentary that we've heard from some of the builders, whereas we were thinking initially maybe housing was up slightly, maybe that's perhaps down to flat or even slightly down overall.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

From an R and R standpoint, you know, I think where we're coming from is we've got massive amounts of home equity out there. I do think, you know, we've seen a little bit of a headwind from activity during the pandemic. That was a little bit of a drag, but I think we've worked through that pull forward and so that should open up a little bit more. And as interest rates particularly on the short end open up a little bit more financing activity, I think that could be another tailwind as well. And so, you know, we are expecting things to pick up, all things being equal, obviously if we're, you know, in a recession or there's some other, you know, meaningful impact to the economy, then of course that would impact our view.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

But if things stay relatively stable, then I think that can be some upside over the course of the year. You know, just whether that balances out slightly softer housing, I think it's hard to say. It really depends on how much uptick you get on R and R. But again, we're, you know, there's a lot of negativity out in the market right now. I understand that.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

There's uncertainty clearly, but sitting here today, I mean we're still looking at having a good year this year and so our views on that haven't really changed. There may be some bumps in the road along the way but businesses are operating well, the pricing environment is still reasonably good and so we're not maybe as pessimistic as some other folks.

[Hamir Patel, Executive Director - Equity Research at CIBC Capital Markets]

Okay, fair enough. That's all I had. I'll turn it over. Thanks.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

Thank you.

[Operator]

Our next question comes from Mike Roxanne with Truist Securities. Please proceed with your question.

[Michael Roxland, MD - Equity Research at Truist Securities]

Yes. Thank you, Devin, Davey and Andy for taking my questions. Devin, I just wanted to follow-up on the sense of what's driving the slight uptick in order files in EWP over the last several weeks. Is that you mentioned seasonality. I mean, have you seen a pickup in building activity?

[Michael Roxland, MD - Equity Research at Truist Securities]

Because it certainly doesn't sound for your comments that there's been much in the way of restocking. So is it seasonality of pickup in building activity that's led to better order files in EWP? And can you remind us the operating rate you ran out in EWP in 1Q and what you expect in 2Q?

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

Yeah, I mean I think it's largely seasonality, right? And it's what are you comparing it to? So Q1 is always the slowest season of the year just because of the weather and as the weather improves you see a pickup in building activity. And so maybe it's not, you know, as strong as we had thought it would be coming into the year but it's still stronger than Q1. And so that's, I think that's really what's driving the tick right now.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

From an operating rate standpoint on EWP, we were sort of in that low 70s, 70% range. We do expect that to improve as we go into Q2.

[Michael Roxland, MD - Equity Research at Truist Securities]

Got it. Okay. And then just, you know, congrats on the the Occidental progress, and and the progress overall for CCS. Just, you know, at a recent conference, mentioned that and you said it again today here that CCS is a big opportunity, but not as big as you originally planned. Can you give us a sense of the scale of the opportunity as you now see it and how that compares to your original outlook?

[Michael Roxland, MD - Equity Research at Truist Securities]

And why the change in expectations? Is that solely due to the permitting process? Yeah, so just I'm sorry, go ahead.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

Just to be clear, I do not view it as less overall opportunity. In fact, I think the opportunity set for CCS is fairly significant. So our views on the magnitude of the opportunity haven't changed. The only thing that's really changed is just the timeline. We had originally thought we would start seeing injections in kind of '26, '20 '7 timeframe and that's been pushed back by a few years.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

So, the timeline to get these things up and running, this is a brand new business for everybody involved and it's just taken longer to come to fruition. But the magnitude of the opportunity we still think is fairly significant. Any heavy manufacturing is going to need CCS if you're going to reduce your greenhouse gas emissions. There's just really no other way to do this cost effectively. So I think this is going to happen.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

It's going to happen in a big way. It's just going to come to fruition over a little bit longer timeline.

[Michael Roxland, MD - Equity Research at Truist Securities]

Got it. And I appreciate the clarity there. And then just one last thing is, in terms of CCS, does it tend to be higher margin relative to wind, solar, and and car carbon credits, mitigation banking? Is that the CCS typically the highest margin product that you have in in natural climate solutions?

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

Yeah. I mean, the margin is incredible, right, because you're leasing subsurface space. We're not putting any of our own money into building out the infrastructure. We're not really managing it. There are very little in terms of cost from our standpoint around employees.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

We've got people managing the program, but it's a really, really low cost. It's virtually all upside because it's on top of the timberlands above ground. So it's like wind in the sense that this is just pure upside to managing the land base.

[Michael Roxland, MD - Equity Research at Truist Securities]

Got it. Thank you very much.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

Yep. Great.

[Operator]

Our next question comes from Buck Horne with Raymond James. Please proceed with your question.

[Buck Horne, Managing Director - Equity Research at Raymond James Financial]

Hey, thanks. Good morning, guys. Just wanted to maybe zoom out a little bit, just take stock of where we're at in terms of the stock price performance and, obviously, the discount to NAV here, probably one of the widest discounts since the pandemic. Does that strategically give you any thoughts about are there any maybe non core timber positions you would think about monetizing or could monetize in the near term and maybe accelerate some share repurchase activity to, maybe close this NAV gap or take advantage of the dislocation?

[David Wold, Senior VP & CFO at Weyerhaeuser Company]

Yeah, Buck. I mean, look,

[David Wold, Senior VP & CFO at Weyerhaeuser Company]

we're we're always looking at levers to create shareholder value. We've been balanced in our capital allocation approach. So it's for us, it's not really a matter of having to choose between the various outcomes. We're not in a position where we've got to get to an appropriate leverage place or meet dividend requirements. We feel really good about those.

[David Wold, Senior VP & CFO at Weyerhaeuser Company]

So really, we're able to think about the various components and opportunities that are available to us separately. So on the Timberland side, as we've said, we've got a high degree of confidence that the value is going to go up over time, so we're going to continue to be active there. But that said, it is critical to be disciplined in our approach as look at those transactions so we don't overpay. And we haven't been afraid to make adjustments to our portfolio when we can find more efficient uses of capital, whether that be through the real estate program, whether that be through swap like transactions like we did late in 2023, really looking to improve the quality of our portfolio, the cash flow generation capability. And we've been active in share repurchase.

[David Wold, Senior VP & CFO at Weyerhaeuser Company]

We've nearly completed that billion dollar authorization. We'll continue to lean in and be opportunistic there. But as always, it's a matter of looking at all the opportunities that are available to us and allocating our capital in the way that creates the most value for shareholders.

[Buck Horne, Managing Director - Equity Research at Raymond James Financial]

Got you. Appreciate that. Thanks, Davey. And I just have a follow-up on solar leasing. Is there any update in terms of market momentum in terms of option conversions?

[Buck Horne, Managing Director - Equity Research at Raymond James Financial]

Or how do you view kind of the opportunity set for solar uptake in the next couple of years?

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

Yeah. Well, I mean, we're making great progress. So we've got our first operating solar site. At this point, we got two more that are currently under construction that I suspect will be online later this year or at the latest early next year. The pipeline continues to grow.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

We're continuing to sign new agreements. We're really focused on signing up with counterparties that are big and sophisticated and can navigate whether it's the permitting process or ultimately with some of the challenges here from a supply chain standpoint, the folks that can navigate that. So we feel good about the conversion rate in terms of the pipeline that we've developed and my expectation is we'll be adding several of these every year really over the next decade. So we're expecting this to continue to become a bigger and bigger component of our NCS business over time. So very positive.

[Buck Horne, Managing Director - Equity Research at Raymond James Financial]

Thanks guys. Appreciate it.

[Operator]

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

[George Staphos, Managing Director at Bank of America Merrill Lynch]

Thanks. A couple of quick follow ons just on tariffs. So to the extent you can comment and I know it's really hard to parse this Devin and Davey, do

[George Staphos, Managing Director at Bank of America Merrill Lynch]

you think

[George Staphos, Managing Director at Bank of America Merrill Lynch]

and recognizing that tariffs are a moving target, has there been much from what you see and what you talk to in terms of the field impact from tariffs built into lumber pricing as you see it right now? And the related question, given the fact that there's been so much capacity that's gone into The US over the last number of years and that gap between supply and demand has diminished, I recognize in a stronger housing market that gap would widen out again. Do you think tariffs would have had much effect, on lumber pricing as we sit here today? Thanks guys and good luck in the quarter.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

Yeah. In terms of today, I don't think it's having a meaningful impact on pricing. It can and I think we saw that, you know, around the April 2 announcement, there was clearly some impact to lumber pricing in anticipation of that. You kind of saw the run up and then when it was determined that wood products would be exempted from the across the board tariff, you saw those prices come back down. I do think, you know, as you get closer to the August timeframe where the new duty structure will come into place, I suspect you'll see some impact there.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

And you know, the wildcard too is, you know, what happens in the broader tariff environment, whether that's the February or just, you know, the broad based tariffs to the extent that those come into play, I mean it will impact pricing around the margins for sure. Is it going to have a material impact? I think that to your point George is really just a function of where we are in the demand cycle. If demand is strong, you know, that'll push pricing up. Tariffs maybe put a little bit on top of that.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

If demand is weak, you know, really what it does is just adjust where the cost floor is and so that ultimately can impact, you know, capacity decisions. So, I think this will play out over time. There's a lot of uncertainty around it and I think to some degree you may see some hesitancy, people building inventories not knowing necessarily what's going to happen on tariffs at least until we get closer to a more certain date on those new duties.

[George Staphos, Managing Director at Bank of America Merrill Lynch]

Thanks, Devin. Have

[George Staphos, Managing Director at Bank of America Merrill Lynch]

a good quarter.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

All right. Thank you.

[Operator]

There are no further questions at

[Operator]

this time. I'd like to turn the floor back over to Devin Stockfish for closing comments.

[Devin W. Stockfish, President and CEO at Weyerhaeuser Company]

Okay. Well, thank you, everyone, for joining us this morning. Thank you for your continued interest in Weyerhaeuser. Have a great day.

[Operator]

This concludes today's teleconference. You may disconnect your lines at this time, and we thank you for your participation.

Participants

Executives

• Andy Taylor, Vice President-Investor Relations
• Devin W. Stockfish, President and CEO
• David Wold, Senior VP & CFO

Analysts

• Charles Perron-Piché, Analyst at Goldman Sachs
• George Staphos, Managing Director at Bank of America Merrill Lynch
• Matt McKellar, Vice President at RBC Capital Markets
• Mark Weintraub, Senior Analyst and Head of Business Development at Seaport Research Partners
• Ketan Mamtora, Director - Building Products Equity Research at BMO Capital Markets
• Hong Yang, Software Engineer at JP Morgan Chase & Co
• Hamir Patel, Executive Director - Equity Research at CIBC Capital Markets
• Michael Roxland, MD - Equity Research at Truist Securities
• Buck Horne, Managing Director - Equity Research at Raymond James Financial