Weyerhaeuser Stock

Greetings and welcome to the Weyerhaeuser's Second Quarter 2026 Earnings Conference Call. [Operator Instructions]

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. Taylor. You may begin.

Thank you, Rob. Good morning, everyone. Thank you for joining us today to discuss Weyerhaeuser's second quarter 2026 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 Davie 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 second quarter GAAP earnings of $162 million or $0.23 per diluted share on net sales of $1.9 billion. Excluding a special item, we earned $91 million or $0.13 per diluted share. Adjusted EBITDA totaled $310 million for the quarter. Despite ongoing market challenges and inflationary pressures, we delivered solid results that underscore the resilience of our business and the strong operational performance of our teams.

Turning now to our second quarter business results. I'll start with Timberlands on Pages 6 through 9 of our earnings slides. Excluding a special item, Timberlands contributed $59 million to second quarter earnings. Adjusted EBITDA was $123 million, a slight improvement compared to the first quarter. In the West, adjusted EBITDA was $67 million, a $9 million increase over the prior quarter.

Starting with the Western domestic market, log demand and pricing improved in the second quarter as mills responded to a strengthening lumber market and built log inventories ahead of wildfire season. As a result, our domestic sales volumes and average realizations were higher compared to the first quarter. Given favorable operating conditions, our fee harvest volumes increased slightly and forestry and road costs were seasonally higher. Our per unit log and haul costs increased as we made the seasonal transition to higher elevation sites and in response to elevated fuel costs.

Moving to our Western export business. Log markets in Japan were relatively stable in the second quarter, albeit at lower consumption levels driven by ongoing headwinds in the Japanese housing market. That said, our customers remain well positioned relative to imported lumber from Europe, which continues to face challenges in the Japanese market. For the quarter, demand for our logs was steady and our sales volumes to Japan were comparable to the first quarter. Our average sales realizations increased moderately. Turning briefly to China. Our log shipments remain limited as we continue to focus on the more profitable domestic market. For the quarter, we delivered 1 vessel to strategic customers in the region and our average sales realizations were comparable to the prior quarter.

Turning to the South. Adjusted EBITDA for Southern Timberlands was $58 million, a slight decrease compared to the first quarter. Southern sawlog markets improved slightly in the second quarter, supported by strengthening lumber prices and log supply constraints resulting from wetter-than-normal weather conditions, particularly in the second half of the quarter. That said, sawlog demand was somewhat tempered as mini mills lowered production in response to elevated finished goods inventories that accumulated due to ongoing trucking constraints.

With respect to Southern fiber markets, demand and pricing softened in the second quarter as mills completed spring maintenance outages and continue to align log consumption with lower takeaway of finished goods. On balance, takeaway for our logs remained steady given our delivered programs across the region. Our average realizations increased slightly compared to the first quarter, largely due to a higher mix of grade logs. Given the wet weather conditions, our fee harvest volumes were comparable to the prior quarter and forestry and road costs were slightly lower, per unit log and haul costs increased moderately, largely due to increased fuel costs. In the North, adjusted EBITDA decreased slightly compared to the first quarter due to significantly lower sales volumes associated with seasonal spring breakup conditions.

Before moving to Strategic Land Solutions, I'll comment briefly on Timberlands -- on a timberlands transaction we completed in the second quarter. As we reported yesterday, we divested 29,000 acres of noncore timberlands in Oregon for $114 million. This transaction further demonstrates our ongoing commitment to active portfolio management and our disciplined approach to optimizing the quality and value of our timberlands over time. We'll continue to evaluate strategic opportunities that enhance the return profile of our timberlands while also balancing our broader growth strategy and other capital allocation priorities to drive long-term value for our shareholders.

Turning now to Strategic Land Solutions on Pages 10 and 11. In the second quarter, Strategic Land Solutions contributed $94 million to earnings. Adjusted EBITDA was $129 million, a $64 million decrease compared to the first quarter. The decrease was primarily attributable to lower Climate Solutions contributions following the sizable conservation easement transaction completed in the first quarter. This was partially offset by strong results from our real estate business as both acres sold and average price per acre increased compared to the first quarter. It's worth noting that we continue to benefit from strong demand and pricing for real estate properties resulting in high-value transactions with significant premiums to timber value.

Turning to our Climate Solutions business. Demand for large-scale solar development remains healthy and we are well positioned to capitalize on this opportunity as markets continue to expand. Notably, our second solar site commenced operations in the second quarter and we have 3 additional solar developments currently under construction with more expected to break ground later this year. Briefly on our new biocarbon business. We continue to advance the first facility adjacent to our lumber mill in McComb, Mississippi. We've received permits and are positioning to commence construction activity in the fourth quarter. In addition, the partnership is working towards additional sites across Weyerhaeuser's footprint. These are important steps in scaling our biocarbon platform and creating new pathways for growth across our integrated portfolio.

Now moving to Wood Products on Pages 12 through 14. Wood Products contributed $71 million to second quarter earnings. Adjusted EBITDA was $129 million, a $58 million improvement compared to the first quarter. This was largely driven by an increase in lumber pricing and higher sales volumes across all business lines, partially offset by higher costs.

Starting with lumber. Second quarter adjusted EBITDA was $73 million, a $46 million increase from the prior quarter. Benchmark prices for lumber strengthened in the second quarter, supported by a seasonal improvement in demand against a backdrop of supply constraints from previously enacted mill curtailments and closures. Lower European lumber imports have also contributed to tighter supply across the North American market. Further, transportation constraints and elevated fuel costs put upward pressure on lumber pricing in the second quarter. This was particularly acute in Southern lumber markets.

For our lumber business, average sales realizations increased by 15% compared to the first quarter, largely in line with the framing lumber composite. Although production and sales volumes improved sequentially, our results were impacted by transportation challenges in the U.S. South. Specifically, limited trucking availability contributed to elevated finished goods inventories at several mills, prompting temporary production adjustments to rebalance inventories. Given this dynamic, our unit manufacturing costs increased compared to the first quarter. Log costs were slightly higher. It's worth noting that while transportation remains constrained in the U.S. South, we've taken steps to improve capacity across our operations and expect minimal transportation disruptions in the third quarter.

Now turning to OSB. Second quarter adjusted EBITDA was a $6 million loss and a $9 million decrease compared to the prior quarter. This was largely driven by higher unit manufacturing costs resulting from planned annual maintenance as well as elevated resin costs. With respect to the broader OSB market, buyer sentiment remained cautious in the second quarter and supply continued to outpace demand. As a result, composite pricing decreased slightly in May and remained steady for the balance of the quarter, albeit at low levels. Our average sales realizations increased by 3% compared to the first quarter, which was favorable to the OSB composite. And this is largely due to the length of our order files, which results in a lag effect for OSB realizations. Our sales volumes increased slightly and fiber costs were slightly higher.

Adjusted EBITDA for engineered wood products was $54 million, a $15 million increase compared to the first quarter, largely driven by a seasonal increase in sales volumes for all products and higher sales realizations for most products. Our unit manufacturing costs increased slightly compared to the prior quarter, while raw material costs were slightly lower. In distribution, adjusted EBITDA increased by $2 million compared to the first quarter, largely due to higher sales volumes.

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

Thanks, Devin and good morning, everyone. I'll begin with key financial items, which are summarized on Page 16. In the second quarter, we generated approximately $400 million of cash from operations. We ended the quarter with approximately $530 million of cash and total debt of $5.4 billion. During the quarter, we funded the repayment of our remaining $250 million 4.75% notes at maturity through our commercial paper program. And in early July, we repaid an additional $122 million of debt maturities, which carried a weighted average rate of 7.59%, using cash on hand. Following these transactions, we have no remaining debt maturities in 2026. We have successfully navigated a number of financing transactions in recent years to smooth our maturity profile and lower our expense. Despite the higher rate environment in recent years, we have reduced our overall weighted average interest rate by over 130 basis points since the beginning of 2022.

We returned $152 million to shareholders through the payment of our quarterly base dividend and approximately $10 million through share repurchase activity in the second quarter. Capital expenditures were $139 million in the second quarter, which includes $63 million related to the construction of our EWP facility in Arkansas. As we've previously communicated, we anticipate approximately $300 million of investments for Monticello in 2026. It's worth noting that cash proceeds received this year from recent portfolio management activities including timberlands divestitures in Virginia and Oregon and the final proceeds from the sale of our Princeton mill more than cover our anticipated 2026 investment in Monticello. And as a reminder, CapEx associated with this project will be excluded for purposes of calculating adjusted FAD as used in our cash return framework.

Second quarter results for our unallocated items are summarized on Page 15. Adjusted EBITDA for this segment increased slightly compared to the first quarter. Looking forward, key outlook items for the third quarter are presented on Page 18. In our Timberlands business, though we typically see a seasonal decrease in third quarter, we anticipate earnings before special items and adjusted EBITDA to be slightly higher compared to the second quarter of 2026, as results from all regions are expected to improve sequentially.

Turning to our Western Timberlands operations, we expect domestic log demand to remain steady in the third quarter as mills respond to a stronger lumber market and maintain elevated log inventories. At the same time, log supply is expected to increase seasonally absent operational restrictions during wildfire season. As a result, our fee harvest and domestic sales volumes are expected to increase moderately compared to the second quarter with slightly higher pricing for our grade logs. That said, we anticipate slightly lower average domestic sales realizations due to mix. Our per unit log and haul costs are expected to decrease slightly and we anticipate seasonally higher forestry and road costs as we do a significant amount of this work over the summer months.

Moving to the Western export program. We anticipate steady demand from our customers and stable pricing for our logs in the third quarter. That said, sales volumes to Japan are expected to be lower sequentially due to the timing of vessels. In China, our shipments are expected to remain consistent with recent activity with one vessel planned in the third quarter.

Turning to the South. We expect log demand to improve in the third quarter as mills rebuild inventories following recent weather-related supply constraints. Demand should also benefit from higher sawmill operating rates in response to stronger lumber prices as well as improved fiber mill activity following spring outages. At the same time, regional log supply is expected to increase as weather conditions improve. Given these dynamics, we expect our average sales realizations to be comparable to the second quarter with higher fee harvest volumes. Our per unit log and haul costs are expected to decrease slightly, while forestry and road costs are expected to be seasonally higher. In the North, our fee harvest volumes are expected to be significantly higher as we have fully transitioned from spring breakup conditions and we anticipate moderately lower sales realizations due to mix.

Moving to our Strategic Land Solutions segment. Real estate markets have remained solid year-to-date and we continue to anticipate a consistent flow of transactions with significant premiums to timber value. Additionally, we expect to deliver steady growth from our Climate Solutions and Natural Resources business in 2026. As a result, we are increasing segment guidance for full year 2026 adjusted EBITDA to approximately $450 million, an increase of $25 million from prior guidance. We now expect basis as a percentage of total SLS sales to be between 15% to 20% for the year.

For the third quarter, we expect SLS adjusted EBITDA to be approximately $45 million lower and earnings to be approximately $30 million lower than the second quarter of 2026, primarily due to the timing and mix of real estate sales. For context, it's common for our real estate results to be more heavily weighted toward the first half of the year. For our Wood Products segment, we expect third quarter earnings and adjusted EBITDA to be slightly lower than the second quarter of 2026, excluding the effects of changes in average sales realizations for lumber and OSB. As for product pricing, the lumber composite entered the third quarter on an upward trajectory, supported by steady demand and ongoing supply constraints and transportation challenges.

For OSB, composite pricing has been generally range bound through July as supply continues to outpace demand. As shown on Page 19, our current and quarter-to-date average sales realizations for lumber are moderately higher than the second quarter average, while OSB realizations are slightly lower. As a reminder, in late June, we provided a temporary lumber EBITDA sensitivity to reflect the rapid increase in trucking costs incorporated into delivered realizations during the second quarter. While these costs may remain dynamic in the near term, we do not expect the same level of rapid increase in the third quarter. As a result, we expect to return to our typical lumber sensitivity where a $10 change in commodity prices translates to approximately $50 million of annual EBITDA. For our lumber business, as Devin mentioned, we have largely worked through recent transportation constraints. As a result, we anticipate higher production and sales volumes in the third quarter and slightly lower unit manufacturing costs. Our log costs are expected to be moderately higher, primarily for Western logs.

For our OSB business, we expect slightly higher sales volumes and comparable fiber costs in the third quarter. Unit manufacturing costs are expected to increase, primarily driven by more extensive planned annual maintenance and higher resin costs relative to the second quarter. For our engineered wood products business, we anticipate slightly higher sales realizations for all products as previously determined price adjustments take effect in certain markets. Our sales volumes are expected to increase slightly for most products compared to the second quarter and raw material costs are expected to be slightly higher. For our distribution business, we expect adjusted EBITDA to increase slightly compared to the second quarter, primarily due to higher sales volumes.

With that, I'll now turn the call back to Devin and look forward to your questions.

Thanks, Davie. Before wrapping up this morning, I'll make a few comments on the housing and repair and remodel markets. Starting with housing. Overall, housing activity remains largely stuck in second gear and continues to be influenced by weak consumer confidence and ongoing affordability challenges. More recently, mortgage rates have moved back up into the mid-6% range and the conflict in the Middle East has reignited concerns around inflationary pressures and added to the broader economic uncertainty. Given these headwinds, builder confidence remains subdued and housing activity has been softer than we anticipated at the outset of the year.

In the near term, I suspect we'll continue to see choppiness in the housing market, absent a noticeable improvement in consumer sentiment. Looking beyond current conditions, however, our outlook for housing fundamentals remains favorable. The U.S. continues to face a significant housing shortage, demographic trends remain supportive and there's a growing recognition that policies need to better facilitate housing development and improve affordability. On that point, we're encouraged by the recent passage of the 21st Century ROAD to Housing Act, which represents a positive step forward addressing housing availability and affordability over time. Turning to the repair and remodel market. Activity has remained relatively steady through the first half of 2026, albeit at somewhat muted levels, largely driven by many of the same pressures impacting the new residential market. In addition, turnover of existing homes remains well below historical levels given higher mortgage rates and the ongoing lock-in effect, which has reduced one of the traditional catalysts for remodeling activity.

Based on conversations with our customers, demand trends remain somewhat mixed across regions and channels. In general, the pro segment continues to hold up better than the do-it-yourself segment and we're seeing greater emphasis on smaller remodeling projects, which typically require less wood. Looking forward, we're optimistic that repair and remodel activity will gain momentum as the broader macro environment improves over time. In addition, we think the deferral of large discretionary projects over the last few years will ultimately serve as a tailwind as the macro environment improves. And longer term, many of the key drivers supporting R&R activity remain intact, including favorable home equity levels and an aging housing stock.

In closing, our teams delivered solid operating performance in the second quarter, notwithstanding ongoing macroeconomic uncertainty and near-term inflationary pressures. We also advanced key growth initiatives across our business and further optimized our Timberlands portfolio. We're encouraged by the recent increases in pricing for lumber and Western logs. And we remain focused on driving operational excellence, serving our customers and creating long-term value for our shareholders through our disciplined and flexible approach to capital allocation.

So with that, I think we can open it up for questions.

[Operator Instructions] Our first question comes from Susan Maklari with Goldman Sachs.

I want to start on the Wood Products side of things. Can you talk a bit more about the inventories that you're seeing across the products there? And I guess as we've gone through earnings season and a lot of these builders have taken down their guides for their full year closings, what does that imply in terms of the supply demand setup in the back half of the year and the potential for pricing and realizations as a result?

Yes. Thanks for the question, Sue. I mean, as you can imagine, it's going to be somewhat differential depending on product line. Maybe I'll start with lumber. I would say, in general, what we've seen this year has been a preference throughout most of the channel to keep a little bit leaner inventories. And so you really just haven't seen a whole lot of folks building up large decks of wood across the system. And so I think that's also been one of the dynamics that's maybe pushed pricing a little bit more this year. Obviously, the supply side is a big issue for demand and supply balance in lumber.

And so I'd say at present, inventories, probably just slightly below average, not super lean but certainly not on the heavy side. On the OSB side, similar story. I think just nobody really is inclined to build up large inventories. There's plenty of supply available and you can see that really across the system. And so it's been fine to just carry a just-in-time approach on the OSB side. And so I would say, similarly, OSB inventories are pretty balanced across the system, not heavy, not too light, but for the level of activity, pretty appropriate. And then EWP is, I would say, pretty normal given the level of activity.

And so in terms of your second question, builders bringing their guide down for the year. I mean, look, it's obviously better to have more demand and more building activity on the demand side of the equation. But overall, on lumber, it still feels pretty balanced in terms of the overall system even as we look out to the back half of the year. OSB, similar story to what we've seen here really over the last handful of quarters, which is, there's more than adequate supply available out there. And so I think that's just going to be a slog until we see either demand pick up or more supply come out of the system. And then EWP feels reasonably balanced given this level of building activity.

Yes. Okay. That's great color. And then turning to Timberlands. It's nice to hear about the Oregon transaction that came through. Given the rising backdrop for lumber prices, can you talk about what you're seeing in terms of transactions for timberland, the valuations and just the overall market conditions there?

Yes. You bet, Sue. I think in general, the Timberlands A&D markets are going to look through kind of near-term pricing and be thinking more about the longer-term trends that we've been talking about for some time. And so I think with that, we're not really seeing a significant change in the market. I think it's maybe been a little bit slow to the year in terms of the start based on the activity levels. But we started to see a few more transactions as the year progresses. And I expect, when all is said and done, the whole market will end up in that typical $2 billion to $3 billion range. Once again, it was kind of a similar story last year and we did end up coming in towards the upper end of that range.

So again, there's significant capital out there pursuing this asset class. Much of that's been raised over the past several years and has not yet been deployed. And so again, our experience is that demand remains very strong for high-quality timberland packages. And while we have seen some level of valuation disconnects on some of those lower quality packages, again, I think we continue to expect solid demand for quality assets over time.

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

I guess the first question I had is on lumber. So I was wondering, Davie or Devin, if you can quantify what the effect in 2Q on the slowbacks in the South might have been as you're managing inventory levels relative to transportation. Relatedly, if that was a measurable amount, why would we not necessarily see an increase in lumber and in wood EBITDA ex pricing?

Yes, you bet, George. So maybe just to start on the adjustment in the second quarter. We did reduce the guidance by approximately $20 million for Q2 as a result of really several factors impacting lumber. We had increased grade logs, reduced residuals takeaways in the West as a result of downtime at one of our larger customers. But the largest really was the transportation difficulties that you're referring to. And I'd say that was probably about half of the total reduction there. As we mentioned, we've largely worked through those transportation challenges. And so as we look ahead for the third quarter and we think about the lumber guide, we are guiding for higher sales volumes. So we do anticipate that improving. We are guiding for slightly lower unit manufacturing costs. And so those things, we do anticipate improving into the third quarter.

Okay. And that makes sense, maybe half of the $20 million. Lumber, well, maybe it's more seasonal but we have noticed some of the trade pubs are talking about a little bit of erosion. Is it just that? Or is there something else going on in terms of lumber realizations? My other question, then I'll turn it over. Can you talk a bit about the timber inventories? I think you mentioned, Devin, that they'll be building in the third quarter on the West. Is that just precautionary ahead of fire season? Or does it reflect less takeaway, if you will, than we'd like to see? And then last, on Climate Solutions, can you give us a quick update, I know it's maybe a little bit out there but on what you're seeing both in terms of your storage and your credit program?

Yes. So let me take the lumber piece first. What you're seeing in the South is what happens pretty much every year in the South. You're going to see a little bit of a seasonal slowdown in demand just because in many of these geographies, you're pushing 100 degrees every day and that always slows down building activity, R&R activity. So nothing that I would say is outside of the norm or anything unexpected. You see that largely every year. And then when things cool off a little bit as you get into the fall, activity will pick back up. So nothing unusual there. I think similarly, when you think about the Western log inventory, there's a seasonality to that as well. So this is pretty typical. As you get into that June time frame, generally speaking, you're going to see most mills build up some log inventories as an insurance measure for fire season. I think this year, in particular, because we entered the year -- entered the summer with such a low snowpack, there is a heightened, I think, anxiety about fire season in the Northwest. And so people build up some inventory.

Now look, if you have a few days of heavy fire activity and you shut down activity in the woods, people will chew through that pretty darn quickly. And alternatively, if it's a really, really light fire season, which frankly, seems a little unlikely at this point, that extra inventory will put a little bit of a headwind, at least through August, into early September on log pricing. And so that's, again, just kind of the normal seasonality. And in terms of your last question on the Climate Solutions business, we're still kind of early in the year from a forest carbon standpoint. The team is doing a great job on putting together high-quality forest carbon projects, working their way through the approval process, the auditing process. So that's all going very well. And they are in the heart of marketing carbon offsets. And so everything is tracking pretty much as we would expect for this time of the year.

And then lastly, I think you mentioned the carbon storage. So I think you're referring to CCS projects. I think that's just kind of moving along. The big project that's moving along is the one with Occidental Petroleum. They've got a large offtake agreement with CF Industries. I think the easements are now underway for the pipeline, for the CO2 pipeline. So things are moving along. We still expect that's probably going to come online somewhere around 2029.

Our next question comes from Ketan Mamtora with BMO Capital Markets.

Maybe first question on the engineered wood side, encouraging to see prices moving higher. Can you talk about what you have out there by way of any price increases? Or is this more of sort of higher cost pass-through? How should we be thinking about it?

Yes. So a couple of things I would highlight. When we look at the Q2 increase in pricing, I would say, to a large degree, that was mostly just a mix issue. We did a little bit more solid section, which has a little better realizations versus I-joists. So Q2 is more of a mix. As we roll into Q3, we are expecting to see the price increases that we rolled through in Q2 take effect. And I would say that is largely primarily just a reflection of passing along some of the increased resin costs and other input costs with higher fuel overall. So that's really what that is. It's still a competitive market out there. And so it's really not a demand issue. It's more of a passing along some of those costs and that's really what's driving that.

Understood. No, that's helpful. And then just switching to OSB. Devin, I'm curious to get your updated thoughts around sort of what is your approach to managing sort of production and capacity given an extended slump in new residential construction. I mean 3 out of the last 4 quarters have been EBITDA negative for you guys. I'm curious sort of -- how are you sort of approaching this if sort of new residential continues to remain weak here in the back half.

Yes. I mean, this has been a -- it's been a tough environment for OSB here recently for us and really everyone in the industry. I'd say it starts with a strong focus on cost management. I do think we are the lowest cost producers across the OSB industry. So that's where it starts. We certainly focus on product quality. We do lean a little bit heavier to flooring, which is generally a little bit better margin opportunity. And then it's all about what can you do for the customer to create value and that's how you win business in this market. Look, over time, as you think about this industry and you can see a great example of this in lumber. You can have stretches that are like this. Ultimately, supply and demand balance out, it can be a painful period getting from here to there.

But ultimately, we're going to see either more demand come or more capacity rationalized. And generally speaking, how that works is, folks that are a little bit further down on the cost cut curve are the ones that will ultimately rationalize that capacity. We obviously can't speak to what other people are going to do or not do. They're going to make their own decisions. But for us, it's about making sure that we have our costs low, making sure that we're serving customers and just navigating what is a pretty challenging environment right now.

Our next question comes from Kurt Yinger with D.A. Davidson.

Davie, I was hoping we could just go back to kind of the Wood Products outlook. Just kind of considering the higher volume across all the categories, EWP pricing distribution, I mean it seems like there's a lot working in your favor in terms of kind of sequential profitability. So could you just maybe talk about some of the big offsets there? I know you mentioned some OSB maintenance, maybe some pieces on the cost side as well. So can you just help us understand kind of those big offsets there?

Yes. You bet, Kurt. So you're right. There's some favorable outlook guide on the volume side, across the products. The big ones that I would point you to would be in OSB, the unit manufacturing costs. We do have a similar amount of maintenance in the third quarter, although higher costs in terms of what we're -- what the activities are that we're doing. And so there is a little bit more cost associated with that in the third quarter. And then we do also expect to see the increase in resin costs, just be slightly higher in the third quarter in that space as well as in EWP. And then as we're looking across lumber, we do see some increase in log costs, which is obviously favorable to us on the timberland side. So that's kind of all in when you weigh all that together, that's how you get to the slightly lower ex price.

Okay, okay. I appreciate that. And then Devin, I was hoping we could talk a little bit about kind of what you're seeing or thinking second half of the year into the early part of 2027, even on kind of lumber imports, just with kind of the pricing environment we've seen plus presumably finalized Canadian duties moving lower. How are you thinking about incremental supply from Canada? And then what are you also hearing in terms of shipments coming over from Europe as well?

Yes. Maybe I'll take that in 2 parts. From Canada, which is obviously the bigger of the two, we are going to see with AR7, we're going to see the duties come down by 10%. So the all-in duty rate with tariffs is going to be around 35% versus 45%. So that does provide a little bit more breathing room on the downside from a pricing standpoint. My own personal view is, I wouldn't expect to see a meaningful amount of additional volume coming in from Canada based on that 10% reduction, 35% is still a healthy number.

And I'd say the other thing, too, right, is we've seen a bunch of Canadian capacity come out of the system. I don't anticipate that those mills that have been shut down are going to come back. And so there's a certain amount of volume that's just out of the system. So there may be a little bit of noise once the implementation date is set. And as a reminder, that can be anywhere from August to October. Maybe around the margins, you'll see people kind of moving shipment dates to try to navigate that change. But I don't see that resulting in any sort of meaningful increase in lumber coming across the border.

Now with respect to Europe, now that's always -- just as a reminder, that's always been a relatively small piece of the overall demand. I do see that continuing to trend down over time. I mean you may have a few monthly spikes here and there. But with the transportation and logistics costs these days, getting that wood across the pond, together with the fact that just log costs have gone up in many of these key producing regions in Europe. And so it just -- it strikes me as unlikely that you're going to see European imports really get back to more of those peak levels.

And I would just remind you that when we really saw the peak in imports coming over from Europe, part of that was because they were working through salvage with wind blown, pest, fire, et cetera. And for all intents and purposes, those logs are free. And so that just gives you a lot of flexibility to take on the transportation cost, to get it over. Now log prices have gone back to market levels and they've been going up. So that's going to be, I think, a bit more challenging for European volume to really spike up meaningfully.

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

Devin, a pretty big picture question. Normally, housing is the drivers for you for sure. Right now, we're going through this massive spend. But it's on AI infrastructure. Are there ways that you are participating at all? And are there ways that you could possibly increase participation from this massive spend going on?

Yes, absolutely, Mark. And so I'll highlight a few different areas. So in the very near term, one of the areas that we're going to benefit is from our solar and renewables business. I think when you look across all of North America, certainly in the U.S., the amount of energy demand is just spiking. And so that's causing a significant degree of interest in developing, in particular, solar because that's the fastest to market. So that's going to be a nice tailwind for us for a very long time, is just the incremental demand for electricity and we'll get that in the renewables business. You're already starting to see some of that.

I'd say the second one is with our land position. We're obviously the largest landowner in North America. We have a number of sites that we feel are very well suited for data center build-outs. And so we are actively marketing a handful of sites and we're building that pipeline. So that's another area where I think in the relatively near future, we could see some upside. As you would expect, the price per acre from data centers is pretty significant and just an extraordinary margin above timber values. And so we're actively pursuing that. And then the other piece, which I would say is probably a little bit more in the early stages, although we, Weyerhaeuser, and we, as an industry, are actively working this is, utilizing more wood-based construction in the build-out of data centers. I think there's a really nice sweet spot for us in this space in that most of the folks that are building data centers also have pretty significant climate pledges and greenhouse gas reduction commitments. Building with wood is substantially better from an environmental standpoint.

And so we're out there working with the data center developers trying to get wood more extensively utilized in this build-out. And so the early indications, I think there is certainly an openness to it. But in all candor, today, it's all about speed. And so what we've got to do is we've got to convince the developers that you can get mass timber up more quickly than the alternative building product. So we're working that. I do think we'll get some momentum here, the softwood lumber coalition, a whole bunch of other industry associations are working this. So it's a big opportunity and we're going after it.

Right. [indiscernible] are they primarily using like steel and concrete currently?

Steel and concrete, yes. Steel and concrete.

Yes. And maybe there's a little bit of relationship to this next question, too then. And it's on Monticello. And so one thing that's been very apparent out there is the cost to build things has increased very substantially in the last several years. Is the $500 million budget still good? I mean were you out in front and have things locked down so that we can stay there? And then relatedly and this again might tie into the last question a little bit, any update or read on look forward demand for the product?

Sure, Mark. This is Davie. I'll take the budget question on Monticello. So big picture, construction is progressing really well. We are on track as we had indicated for a start-up in the first half of 2027. For this year, we do anticipate approximately $300 million in spend. We've said that. Yes, we are seeing some amount of cost pressures particularly when you think about areas like labor, steel, concrete, really, those are the areas, to your point, that are seeing competition in larger scale construction activities impacting those dollars. Also seeing some pressure from tariffs. But as always, our teams are working to minimize the impact of these pressures through things like value engineering. So at this point, I think it's hard to say whether and how much that would increase. But regardless, I think even if we did see some level of overall budget increase, the return profile remains very attractive.

And maybe I'll take the second part of the question, Mark, which is the early demand signals for TimberStrand, just very strong across a whole host of different opportunities. Just the baseline utilization of TimberStrand, what we're currently making out of Kenora, there remains a lot of demand for that product. It's a great product at a good price point. We are looking at a whole host of additional opportunities to add on to that. So things like AeroStrand, which is a new product that we're very excited about, that's based off of the TimberStrand technology. I think there's a really interesting application in the mass timber space and we've had a bunch of conversations about TimberStrand being utilized in that building capacity. And just general industrial. I think there's a -- we've got a good strong anchor customer already in the South who's expanding. I think there's a variety of opportunities there. So we're really excited about this product. Our sales folks are very excited about this product. So we're looking forward to getting this mill up and running so we can start moving product out of Monticello.

Super. And just one last confirmation since we're on the topic of [ OS ], so is it correct to say that the new Canadian tariffs are not applicable to Kenora's products?

That is correct, yes.

Our next question comes from Hamir Patel with CIBC Capital Markets.

On the biocarbon initiative, how should we think about timing of the build-out of additional sites beyond the first one?

Yes. So we are actively looking at the footprint. We have a handful of additional sites that we've identified and we're working through those with Aymium. One of the challenges with the first site is, there's just a lot of groundwork you have to do to make sure that the product, the residuals, the pulpwood, the chips, the process, those are all working to get to the end product of biocarbon that the buyers want. And so as you would expect, that takes a fair bit of testing. That should get easier as we go forward because a lot of this work has been done. So at this point, really, we have a pretty good line of sight on what wood baskets would be best for new facilities. And that's a function of the growth-to-drain in these various markets, our ability to serve with both our sawmill residuals as well as our pulp logs, the transportation and logistics.

So there's work to be done but we're making good progress. We hope at some point later this year or early next year to be able to announce some additional sites. But the focus right now is, we want to get this first facility outside of McComb mill. So we're getting -- permits all in order and land purchase and doing all the groundwork. So we're really excited about this. We've had our team, Paul and a few of his folks were earlier this summer all across Europe, meeting with potential customers for biocarbon. We still think this is a really big opportunity for us over time. So we're getting after it.

Our next question comes from Anthony Pettinari with Citi.

You raised the full year guide for Strategic Land Solutions. And in terms of Climate Solutions and the contribution there, I think if you back out the big conservation easement in 1Q, it seems like Climate Solutions EBITDA was like $14 million in 1Q, $13 million in 2Q. Is that like a decent run rate as we think about the second half? Or is that just -- is that number going to be very volatile and spiky? Or any kind of way that you can help us sort of frame Climate Solutions contribution in the back half and maybe kind of on a run rate basis?

Yes. Sure, Anthony. It is going to be pretty lumpy as we move forward. That's kind of the nature of these businesses as we are building them out and investing in the long-term growth in each of those areas. You're going to see that move around quarter-to-quarter. So I don't think that reading too much into the current quarter amount as a run rate is a good thought moving forward. I think we're continuing to focus on growing that business up to the $250 million target through 2030. So I think we'll continue to update you as we progress along the way to that.

Yes. I would just add, that's definitely true today. It is going to be lumpy. I will say, though, over time, you're going to see this become more of a run rate business. So when we get to full scale on renewables, when you get to growth on the construction materials, when you see the CCS project come into play, some of these businesses are a little bit more run rate and won't be quite as lumpy as, say, some of the conservation mitigation deals that we're doing today.

Got it. Got it. That's helpful. And then, Devin, at the Investor Day, you identified $180 million in enterprise initiatives for the company. Obviously, that comprises a lot of individual projects and programs. But I'm just wondering if you could give any sort of update there. And I guess the context of the question is, since the Investor Day, housing market has been a bit weaker than expected. Some of the product prices have been a little bit weaker than expected. Do you sort of prioritize some of those projects? Do you cut back? Do you accelerate? I'm just wondering how you think about that and how those are progressing.

Yes. I mean the good news about those enterprise initiatives is that for the most part, they're not really expensive to move forward with. So look, if I kind of look at the different buckets there, I'm really pleased with how this is coming along. We've got a lot of activity going on, on the AI front. We're starting -- I mean we're in the early stages of some of these things, or we're starting to see a little bit of the money flow in from that. We got a whole host of projects in the AI space that we're really excited about. And so I'd say that is progressing at or even perhaps better than we expected pace.

When we think about some of the cost initiatives, Davie and his team are doing a great job together with the businesses, really looking for every penny. I think the last count is, we have 53 separate cost initiatives underway at the company. We're starting to see some benefit there. I think next year, we'll really start to see some meaningful benefits from some of that activity. The procurement folks are doing a great job driving spend and being very thoughtful about how we organize the spend.

We've got new initiatives from the integration excellence team, things like our contractor loyalty program, which is really starting to gain some traction, really just kind of working, making sure that we're getting every conceivable possible dollar from the integrated nature of our platform.

So I'm really excited about that. We're going to do that regardless of what's going on in the market. And you could almost say that tough markets make that a little easier. Cost initiatives sometimes are a little easier to sell to the organization when times are tight. So it's all going according to plan, if not better than planned. So we're just moving forward full force on those enterprise initiatives.

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

Just on transportation, can you just give a bit more color on the steps you've actually taken to improve capacity around transportation for lumber? It was just a bit unclear to me to what extent the market has improved and maybe to what extent you've taken steps yourselves to remedy the issue.

Yes. I mean, so really, what happened in Q2 is, we just had kind of a perfect storm of events all happening at more or less at the same time. Now I would say, if you look back over time, it's not unusual to see markets tighten and loosen over time. And I think our team does a good job ordinarily of managing through that. So it's not necessarily going to be impactful to our operations. But when you had the higher fuel costs from the Iran situation, we've also had some regulatory changes here that unfortunately have reduced the number of available truck drivers. And I'd say just overall trucking capacity and the usage just created a very challenging dynamic in Q2. Fast forward to today, I would say maybe things are slightly better but not meaningfully. The overall market, particularly for flatbed trucks in the U.S. South is still pretty tight.

Our commentary on why we don't think it's going to be as impactful in Q3 is because our team has taken a number of steps to help navigate that. And that covers a lot of different areas, things like maybe moving a little bit more volume to rail versus truck, things like adding additional loading days at the mills, things like there's ordinarily an option for customers to arrange pickup of their product from our mill versus us managing that transportation. We've taken a little bit more of that management on our team to help manage that a little bit better. So we're doing a whole variety of different things to try to navigate this more challenging environment. And I would expect it to continue to be tight here for the foreseeable future.

Our next question comes from Buck Horne with Raymond James.

I'll try to keep this brief. Just wondering if you've got any thoughts on the Canadian wildfire situation this year and either in terms of the longer-term impact on fiber supply, or if there's any near-term potential salvage inventory impact? Or how do you think about what's happening with the wildfires in Canada impacting overall North American flows?

Yes. I mean, first of all, just say that fortunately for us, the wildfire in Canada really hasn't impacted our operating areas too much. Alberta really is a key region for us and they just -- they had a lot of rain early in the year, so it hasn't been quite as bad. In some of the other geographies, I think the fire activity has probably been a little bit further north. So it hasn't been quite as impactful to date. And it's fire salvage opportunity, I suppose, even if it's far north but sometimes the logistics cost to get after that just make the economics a little tricky. So sitting here today, I'm not sure I see a massive influx of salvage logs hitting the Canadian system. I mean there may be a few spots where that may be the case. But generally speaking, to date, I don't know that I see that as being a huge issue for us.

Our next question comes from Hong Zhang with JPMorgan.

I guess how do you think about share buybacks in your capital allocation priorities, just given where the stock trades today?

Yes. You bet, Hong. It's -- our approach there really remains disciplined and consistent. We designed our capital allocation framework to ensure it aligns with the cyclical nature of our business. So we start with that commitment to returning significant amounts of cash back to shareholders. And then beyond that, we can allocate additional capital to value-add activities, whether that be investing in our businesses, debt paydown or incremental share repurchase. So this year, of course, we've got the significant amount of Monticello spend. So we're focused on that. But beyond that, we'll continue to evaluate opportunities for share repurchase. We like it. We've been active in that space. We closed out our $1 billion authorization last year, announced a new one. So I think that's a good indication of the value of that lever that we see. But of course, we're going to weigh that with all the other long-term investment opportunities that we have and maintaining an appropriate capital structure.

Got it. And then on the OSB side, so what we saw with lumber last year was that producers are willing to operate under negative margins for a surprising amount of time. Do you think that could -- we could face a similar situation on -- in OSB this year? Or do you think the market will correct a little bit more faster?

Yes. To be perfectly frank, I think that's very hard to predict. I mean each individual organization is going to have their rationale for how they operate and I just don't know that we have visibility into that to make a good prediction.

Our last question comes from Mike Roxland with Truist Securities.

Just two quick ones for me. Devin, in OSB, can you give us a sense of what's happening with the start-ups for those new mills? Do you expect them to start on schedule? Do you think that they could be delayed given the persistent housing weakness we're currently seeing as well as OSB oversupply? And then just secondly, Devin, in EWP, if conditions remain steady, do you think that you guys could be poised for another increase in early '27?

Yes. I mean, so with the 2 new OSB mills, like, what I know is what we've read in the press. And so the latest I've heard is those have been pushed out to the end of this year, early next year. I don't know that we have any insight other than what's been publicly reported on that. On EWP, it's very hard to predict what you're going to do from a pricing standpoint that far out. The reality is, it's just going to depend on what does the demand environment look like, particularly if you're talking about early next year. It's going to also depend on what the general confidence level is of the builders as they're putting together their buy program. So I'd say at this point, it's a little bit hard to say what that pricing environment is going to look like as you get into '27.

There are no further questions at this time. I'd like to turn the floor back over to Devin Stockfish for closing comments.

All right. Well, thanks, everyone, for joining us this morning. Thank you for your continued interest in Weyerhaeuser and have a great day.

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

Good morning. I'm Anthony Pettinari with Citi, and we're very pleased to welcome Devin Stockfish, CEO of Weyerhaeuser; and Davie Wold, CFO, to kick off the morning session here.

I think Devin is going to start off with some introductory comments, and then we're going to jump right into the Q&A.

Yes. All right. Thanks, Anthony. Thanks, everyone, for being here. Always appreciate the opportunity to talk about some of the exciting things that Weyerhaeuser Company is doing. I'm going to keep my remarks fairly brief so that we have lots of time for Q&A. I will just note, we do have a more fulsome deck and set of materials that are available on the REITweek app also on our website. So I'm going to cover just 3 basic topics here today. First, a brief introduction on Weyerhaeuser for those that aren't as familiar with our story.

I'll touch on some results from Investor Days, both the one we did back in 2021, update you on our performance against those and more importantly, to recap some of the new growth targets that we set out at our December Investor Day just a few months ago. And then I'll conclude with a few thoughts on our capital allocation approach.

Just starting off with the investment thesis. We're really focused on 4 key levers to drive value for our shareholders. Three of those have been core tenets of our philosophy for a number of years. And it starts with an unmatched portfolio of assets, it's focused industry-leading performance, and a disciplined approach to capital allocation. And the fourth growth lever -- fourth lever, which we outlined at our Investor Day, is accelerated growth. And this is all underpinned by our high-performance culture, a strong track record of operational excellence and innovation, portfolio management as well as sustainability. And it really just -- it separates Weyerhaeuser from our competition. And ultimately, it's what drives superior returns for our shareholders over time.

So for those that aren't as familiar with Weyerhaeuser, we are the only large-cap integrated forest products company that operates throughout North America with a foundation that's really world-class. Core to the company is our Timberlands business. We have over 10 million acres of high-quality, high-performance timberlands across the U.S. Additionally, we manage another 13 million acres in Canada under long-term license agreements. We're also one of the largest producers of wood products in North America. We have 33 facilities where we produce lumber, oriented strand board, a variety of engineered wood products. We also have 22 distribution facilities across key markets in the U.S.

And then lastly, our Strategic Land Solutions business is really focused on capturing the maximum value across all of those acres we own. And we do that through our Climate Solutions business, our real estate business and our Natural Resources business. All of these businesses have significant scale, industry-leading margins, and they're managed within a tax-efficient REIT structure. In fact, we are one of the largest REITs in the U.S.

So just a quick recap on the goals and targets that we set out back at our Investor Day in 2021. We set some ambitious growth targets, and we updated the Street in December. The good news is, as always, we delivered on those. That includes the $1 billion timberland acquisition program that we were able to complete last year. Importantly, we did pay for a lot of those new timberlands through the sales of nonstrategic timberlands, effectively recycling a lot of that capital. We were able to exceed our goal of $100 million of EBITDA in our new Climate Solutions business last year, and that really set us up with a strong pipeline that will lead into our next growth target, which I'll touch on here momentarily.

We continue to invest in our Wood Products facilities. We continue to focus on cost management and operational excellence. We delivered on our multiyear OpEx targets, which really was quite an achievement given the inflationary pressures that we experienced over that time period.

And finally, in terms of our commitment to returning cash to shareholders, from 2021 to 2025, we returned over $6 billion of cash back to shareholders that included 4 increases to our quarterly dividend each year over that period as well as closing out a $1 billion share repurchase program and putting a new $1 billion program in place. So just really incredibly proud of all of the accomplishments in a time that was not without its challenges across COVID and inflation and supply chain challenges.

Having achieved those targets back in 2020 -- that we set out in 2021, we laid out a new growth program that was really focused on driving growth across the entirety of our platform. And what we laid out in December was our plan to grow our EBITDA by $1.5 billion through the end of 2030. And that really includes ambitious targets across each of our businesses and the enterprise as a whole. The good news is the vast majority of those initiatives are already underway. Most of those are under our control. And so we're really excited about some of the opportunities out there. I'm sure we'll touch on some of those during the Q&A. But that really just -- it sets us up to really deliver for our stakeholders. And so we're excited about that.

Lastly, I'll just wrap up with some comments on capital allocation. We continue to view that as a critical lever for driving value for our shareholders. We have 3 key priorities, which remain unchanged, and that is returning cash to our shareholders through a combination of dividends, both quarterly and supplemental as well as share repurchase. It includes investing in our businesses, and that's one of the things that's driving our growth program, all while maintaining an appropriate cash structure -- capital structure, which is essentially making sure that we retain our investment-grade debt profile.

I will just remind everyone, our cash return framework is really based on a foundation of returning 75% to 80% of our funds available for distribution back to our shareholders every year, again, through a combination of dividends and share repurchase.

When we think about our balance sheet, it's strong. We've been spending a lot of time and effort over the years, really, to strengthen the balance sheet. We've paid down debt. We've materially reduced our annual interest payments. We've got a lot of flexibility with our liquidity. And so really well positioned as we move forward to deliver on some of the opportunities that out in front of us.

So just in closing, I'd just reiterate, Weyerhaeuser really does stand apart from anyone else in our industry in terms of our ability to deliver on our accelerated growth program. Our scale is unmatched in the industry with our Timberlands, Wood Products assets, the quality, the diversity, the focus on operational excellence and innovation. We have a proven track record of delivering across all of these, and we're really excited about what next.

So I think with that, Anthony, why don't we just go ahead and open it up for Q&A.

Great. Great. Thank you. Very helpful overview. Maybe just going through some of those in a little bit more detail and starting off with Timberlands. Can you talk about your Southern footprint versus your Western footprint in terms of how those are differentiated, maybe what differentiates your holdings versus other timberland owners? And then just maybe touch on current log price trends and market trends.

Sure. When you think about our Timberlands portfolio as a whole, the thing that really differentiates us from everyone else is the scale and the quality and the diversity. Each individual wood basket is going to have its own supply-demand dynamics. And so you may have periods of time where you have one area that's a little stronger than the other. But when you look across the totality, of our holdings, really, just no one else has the scale. We are, as I said, over 10 million acres in the U.S. Our next largest competitor has about half of that. But it's not just about the number of acres, it's about the quality of those acres, and we've really been focused over the last several years on selling off the lower-performing assets and redeploying that capital into higher-performing assets.

And we've got some materials in our investor deck that really kind of highlight how that's benefited us. But really, to the tune of just buying and selling in terms of dollars, comparable amounts, but driving an incremental $60 million of EBITDA from just constantly upgrading that portfolio. When we look at the West, one of the key attributes that we've seen there for a very long time is the access that we have to export markets. About 1/3 of the logs that we send to the market every year in the Northwest go offshore, primarily to Japan, but also to China and Korea. And that's provided an extra tensioning in that market that's really put a floor on log prices and made that a very tension wood basket.

So it's a very profitable place to own timberlands. We are recreating that in the South. We are one of the only, if not the only timberlands owner that is actively shipping logs out of the U.S. South via break bulk. And so when you think about shipping via break bulk versus container, there are substantial cost improvements that you can get in doing that. And so when we think about just some of the opportunities in the South, we really think growing that export business, we doubled it from '24 to '25. We're looking at doubling that again from '25 to '26. That creates a tensioning in those wood basket and provides us with additional opportunities for those logs. So we're excited about that.

In terms of log prices, the U.S. South has been pretty stable for a long period of time, and that remains the case today. In the Pacific Northwest, you see log prices and lumber prices tracking a little bit more closely. And so as we've seen Western lumber prices improve recently, we've seen Western log prices doing that as well.

Great. Great. And then maybe moving to Wood Products. You have a number of businesses there, lumber, OSB, engineered wood products distribution. Can you talk about those businesses in a little bit more detail? And can you also touch on the Timberstrand investment?

Yes. Maybe I'll start with Timberstrand. That just -- that's one of the more exciting things that we're working on at the company. We announced a little while ago, we're building a new EWP facility, engineered wood products, in Monticello, Arkansas that will produce timber strand. And that is a very unique product. It is a proprietary product that takes low-grade timber and turns it into a high-performance, high-value beam product. It's a product that is the highest margin product that we currently produce across our Wood Products business. Currently, we have one facility in Canada that manufactures that. It's a $500 million investment. When that mill comes online, we expect that to generate over $100 million annually of EBITDA. That's making good progress. It's really -- the construction is going well. We expect that to come online in 2027 and ramp up from there. So we're really excited about the product, the diversity of end markets that we can serve. It's also really a platform technology that we're looking to use to drive innovation with new product development. So really excited about that.

On the lumber side, we have continued to invest in that business really to have the low-cost mill set across the industry. You can see that over the last 5 years, on average, we have the highest EBITDA margins in the industry. We're continuing to focus on that, improving efficiency, driving productivity, reliability, taking costs out of the system. That's something we've been doing year after year for a very long time, and we'll continue to do that. We really do have a very strong platform.

We've seen lumber prices picking up. Last year, just was a very difficult year with what was going on with housing, but we have seen improvements both in Q1 and now quarter-to-date in Q2 with lumber prices. And that's a big driver of cash flow for us. And so that's a nice little tailwind.

On the OSB side, the market has been a little bit more challenged here recently. Again, the U.S. housing, particularly single-family housing is a big driver for OSB demand. And so that's been, I would say, lackluster of late in terms of single-family housing. And so that's put some pressure on that.

On the EWP side, that is an area where you just don't see as much volatility in pricing. It's come down a little bit, but we're actively working on pushing price to offset some of the increases in fuel costs, and I think that's, to date, going well. And so overall, we've been investing in what I think is the premier wood products manufacturing business in the industry. We've got a lot of additional opportunities that we laid out in our growth program to continue to drive earnings growth and cash flow growth across that business.

And of lumber, OSB, EWP, what is most exposed to new housing construction versus repair and remodel?

Yes. I would say OSB is the most directly exposed, about 25% across the industry of OSB demand comes from single-family housing. And so you see that most directly aligned. Now I would say EWP, too, is very focused on single-family, although there are some opportunities in industrial, multifamily, et cetera, there. Lumber has about 40% of demand is repair and remodel. So that's probably a little bit more of the demand coming from repair and remodel versus 30% to 35% from single-family.

Right. And maybe just finally, can you touch on the distribution business? It's a smaller business?

Yes. So our distribution business, we've been growing that business. We've added 3 new distribution facilities here over the last couple of years. The primary purpose originally for our distribution business was really as a channel for our engineered wood products business. About 50% of our EWP sales go through our internal distribution. And that's an opportunity, I think, for us to continue to penetrate in some markets where we don't have as much uptake with our EWP product. But over and above that, we think there's additional growth opportunities just in terms of some of the things that we can do from a distribution standpoint.

We've got good relationships with some of the other specialty manufacturers, so think Trex, think AZEK, think some of the siding products, et cetera. So we're excited about that. It's a relatively low capital growth opportunity for us. And so we're looking to continue to build out our footprint across our distribution business, but it's going well so far.

And you talked about lumber price improvement that you've seen year-to-date. There's obviously a dynamic there with import duties on Canadian lumber Section 232. Can you just talk about that dynamic from a tariff and import duty perspective and sort of what that does to the market?

Sure. I'll give maybe just a really brief recap, so everybody's grounded. This is all going back over 50 years. There's been a long-running dispute between the U.S. and Canada on softwood lumber. The way that land is owned in Canada, the government owns it, you pay ground duties for the wood that you get off of the provincial lands. And the way that mechanism works, the U.S. industry has long said that's essentially a subsidy for manufacturing lumber in Canada. And so there's been a long-standing dispute, and what that typically results in is duties on softwood lumber coming from Canada into the U.S. For most of '26, those duties were at about 35%. And so there's a 35% duty on every stick of lumber that comes into the U.S.

On top of that, under the Trump administration, they added an additional 10% for essentially national security reasons. And so that all-in duty tariff right now is 45%. Now as you can imagine, adding 45% to the cost in making lumber in Canada coming into the U.S., which is the primary market for lumber that's manufactured in Canada, really has put some pressure on Canadian manufacturers. And it has taken a significant amount of lumber supply coming from Canada into the U.S. off of the which has had the effect of pushing lumber prices up somewhat here in the recent past. That duty is going to go down from 45% to 35% later this year. It's an annual mechanism that looks at a variety of variables. But nevertheless, even with the 35% all-in duty tariff, that still puts a lot of pressure on the Canadian producers. And it's one of the reasons I think you've seen a lot of Canadian mills that have been shut down over the last few years.

When you look across North America as a whole, so Canada as well as the U.S., there have been probably 55 mills that have been closed over the last 3 years to the tune of about 7 billion board feet. So a pretty significant amount of supply has come out of the market here, just given some of the challenges the industry has seen lately. And that's had the effect of essentially balancing out supply/demand, which is why you've seen lumber even at a stagnant housing environment move up quite a bit this year relative to last year.

And just to be clear, you have operations in Canada, you leased timberlands. You had a mill there, you sold it. Net-net, this is positive for...

Net-net, it's positive for us. So we did sell 1 mill in British Columbia. We still have 2 lumber mills in Alberta. We also have OSB and EWP mills in Canada, but those are not subject to this. I mean it's a difficult place to do business. If you are going to operate profitably in Canada, you have to be very, very good with very low cost, which fortunately for us, we are. And so our Alberta mills are still profitable even with all of the headwinds. But it is a challenging place to do business right now.

Great. If there's any questions from the floor, there's a mic there, but maybe just...

So Canada is still harvesting or they just...

No, they're still harvesting. Yes, they're still harvesting. Although the backdrop in Canada, in addition to the duty dynamic, they've also had years of beetle infestation and forest fires that have really taken a lot of the timber supply out of production, and that's not going to come back during our lifetime. And so they're still harvesting. There's still harvesting activity going on. But there's overall, when you look across most of the provinces, less available timber for manufacturers. And so timber availability, regulatory challenges, the duty structure just makes it -- it's some tough sledding right now.

Great. Maybe just pivoting to strategic land solutions. It's becoming kind of increasingly important business. Can you talk about what's covered in that segment and kind of the broader strategy for land?

Yes. I mean this is an area I think we really differentiate ourselves. If you're going to own 10 million acres of land, I think it's incumbent upon you to make sure that you are maximizing the value of every acre you own. And so what that looks like is across most of our acres, we're going to continue to manage those for timber outcomes. We're very good at that. It's the core of the company. But when you look across the portfolio, there is a lot of optionality that is embedded into a landholding like that. And that can include things like natural resources. And so we have, call it, 40-some agreements with construction materials companies like Vulcan, like Martin Marietta that can generate steady revenue. The beauty about that business is prices go up every year. It can include things like climate solutions. And so that's everything from solar and wind and forest carbon, our newest business, biocarbon. There's a significant amount of climate solutions opportunity across that.

And then real estate, and that runs the gamut from Peter or Jan wants to buy 200 acres to build a new cabin out in the woods at 3x, 4x what it's worth to us to manage it for timber, all the way up through selling land to a data center or to a Walmart where they're going to pay a substantial over what it's worth to us to manage timber. And so between those 3 businesses, we've developed a significant set of internal capabilities to go out and execute on that program. And it's one of the reasons that you've seen our Strategic Land Solutions business, which was up until recently named our Real Estate, Energy and Natural Resources business, just continue to grow year after year, and we expect that to continue. That's a big part of our 2030 growth program is some of the growth in the Strategic Land Solutions business.

Can you talk a little bit more about what's included in Climate Solutions?

Sure. Yes. So we've got things like the renewables. And I will just say there has been a significant amount of interest. The amount of activity in solar and even wind, there's not a lot of support at the administration level for wind but we've just signed up 2 new wind agreements here recently. The demand for power is overwhelming. That's primarily, for us, focused on solar. We now have 2 operating solar facilities, 3 more under construction. We expect 3 or 4 to come online every year really for the foreseeable future. And that is -- that's a substantial premium to what we can generate in terms of cash flow and earnings for managing timber. So you've got the renewables. We've got the forest carbon, which is for someone that owns a lot of timber, there's a significant amount of opportunity there. I think we've really developed a leadership position in forest carbon for all of these companies that have net zero goals. Forest carbon is by far, by a wide, wide margin, the least expensive option to tackle some of those climate commitments that they've made. And so we're seeing good interest there.

It includes things like carbon capture and storage. The biggest carbon capture storage project that's going on, I believe, in all of North America is our project in Louisiana with Occidental Petroleum. They've signed up with Enbridge to start building the pipeline. So we're excited about that. And it also includes things like mitigation banking. Anytime you're going to do construction that impacts wetlands, you need mitigation banking credits. And so with our landholding position, we're the third largest mitigation banking organization in the U.S., and we're continuing to look to grow that. So it covers a wide swath of activities. But again, all of those are just optionality that's built into the land base, and we've built out the expertise to execute on those opportunities.

And if we think about that list in terms of renewables, forest carbon, CCS, mitigation banking, what's contributing the most today? And if you think to 2030 or maybe beyond, what do you think has the most upside longer term?

Yes. I mean today, it's conservation, mitigation banking and renewables that make up the majority of our Climate Solutions business. As we get out over the next 5 years, forest carbon is going to become a bigger portion of that. We haven't really spent a lot of time talking about biocarbon. We think that's one of the biggest opportunities in our industry, maybe in a generation. Essentially, what that is, we're working with a company called Aymium. They have a proprietary process that converts low-value wood, whether that's residuals from a sawmill or pulp wood chips, they run that through a process and turn it into a very dense carbon, what we call biocarbon material that can be used as a drop-in replacement for metallurgical coal.

This is, we think, a really significant opportunity. It's part of our 2030 growth program to build out up to 7 million tons of production or 7 million tons of fiber usage, which would convert into 1.5 million tons of biocarbon to sell to steel, silicon manufacturers. There's a lot going on globally, particularly in Europe and Japan, where they're putting new taxes on carbon-intensive industries. That is going to become increasingly expensive for manufacturers, and this is an opportunity to play in that space. And so we think that's a really big opportunity. Ultimately, when you get to 2030 and beyond, that could be by far the biggest opportunity for us. And so we're excited about that. And CCS, it's taken a lot longer than we expected, but ultimately, those projects as they do eventually come online will be very lucrative for us.

Right. Everyone is trying to build data centers. I don't know if you have any -- they take a lot of land. I don't know if you have any direct exposure to data centers. Do you see it through maybe energy projects or?

Yes, it's a combination. So I'd say 2 things. On the data center front, we have a team that is specifically focused, as you would imagine, on selling land projects to developers of data centers. There are a few things that are really important when you're developing a data center. Power, obviously, I mean, that is one of the key drivers. You need the land, depending on the impacts on wetlands, may need mitigation credits. But one of the key issues that today is becoming really a prohibiting factor for a lot of data centers is the relationship with the local community. You're starting to see a lot of local pushback on some of these data centers. And that's an area where I think we can bring something interesting to the table. And most of these rural communities, we've been there for a very long time.

Our employees -- it's not unusual for one of our employees to be the mayor of one of these small communities. And so we have a team that's actively looking to really grow our sales into that channel. And that is -- there's really nothing that is more lucrative than selling land to data centers. So we're very focused on it. We've got a pipeline of different properties that we're out actively marketing today to that space.

And then on the energy side, I think there's an opportunity there working with some of our long-term partners like NextEra, those types of folks to really work together to come up with -- we've got the land position, we maybe can work with them on some renewables, maybe do some behind-the-meter power to get speed to execution on some of these data centers. So we've got a team of folks looking at that as well.

Great. We're kind of coming close to time. But I'm just curious, if you take a step back and look at market values for timberlands in public and private transactions. And then when we look at your portfolio, I mean, it seems like the discount to NAV has really sort of gapped out. And I'm curious what you think is driving that and if there are catalysts to kind of close that gap, some maybe you can control, others maybe you can't, but...

Yes. Look, so obviously, we're aware of the views on the disconnect there. I think it's pretty clear that we're trading at a pretty good disconnect to our NAV. When we think about the ranges at which timberland packages are trading, even some average quality timberland packages and compare that to the buildup of our NAV, it's pretty clear there's a disconnect. But I think right now, we're operating in an environment where the reality of the commodity prices have put us in a place where we're trading in cyclical lows given that environment. So I think as you see the housing environment improve, we'll see some improvement in where we trade. That's kind of the reality of where we have traded historically is that the valuation tends to be driven by the projections of the next 12 months cash flows. And so really going back to what we can do to close that gap, our whole 2030 growth strategy was designed around the fact that, hey, we like commodity businesses. We're in those businesses. We're going to make a lot of money in those commodity businesses when pricing is strong.

But we also have a lot of other things that we can do, whether it be the Timberstrand facility, whether it be expanding all the alternate uses across our timberland space, whether it be thinking about export growth, whether it be thinking about new product development that may not be as sensitive to some of those commodity price swings with the ability to add $1 billion of EBITDA ex-price, excluding any sort of improvement in price, ultimately, that's going to be something that really raises the floor on the cash flow, and we think will drive meaningful value creation over time.

And share repurchase, we bought back a fair bit of stock here over the last several years as well. And so that's part of the equation also.

Great. Great. Well, Devin, Davie, thank you for your time.

All right. Thank you. Appreciate it.

Greetings, and welcome to the Weyerhaeuser First Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce Andy Taylor, Vice President of Investor Relations. Thank you. Mr. Taylor, you may begin.

Thank you, Rob. Good morning, everyone. Thank you for joining us today to discuss Weyerhaeuser's first quarter 2026 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 Davie 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 first quarter GAAP earnings of $156 million or $0.22 per diluted share, net sales of $1.7 billion. Excluding special items, we earned $77 million or $0.11 per diluted share. Adjusted EBITDA totaled $308 million, a 120% increase over the fourth quarter. These are solid results, and I'd like to thank our teams for their continued focus and operational performance. Through their efforts, adjusted EBITDA improved across each of our business segments compared to the prior quarter, a notable achievement against the backdrop of elevated macroeconomic uncertainty. Before getting into the business results, I'll provide a quick update on previously announced actions to optimize our portfolio. In February, we completed the divestiture of non-core timberlands in Virginia for $192 million. And in April, we received $22 million in proceeds following the transfer of our timber licenses in British Columbia to the buyer of our Princeton Mill. This represents the final proceeds associated with the Princeton transaction.

I'll also highlight some recent advancements associated with our Wood Products growth strategy. First, we were excited to preview two new products, AeroStrand and Pro Panel at the International Builders Show in February. We're committed to delivering products that meet the evolving needs of our customers, and these represent the first of many new and innovative products that we intend to introduce over the next several years. Feedback thus far has been overwhelmingly positive, and we expect strong demand for both products as we bring them to market. And finally, we expanded our distribution footprint in the first quarter, opening a new location in Billings, Montana, and announcing a new facility in Gallatin, Tennessee, near Nashville, which will be operational by year-end. Both sites support our strategy for continued growth of Weyerhaeuser's proprietary products in strong and underpenetrated markets. With these new facilities, our distribution network expands to 22 locations. And as we laid out at our Investor Day, we see opportunities for additional growth through 2030.

Turning now to our first quarter business results. I'll start with Timberlands on Pages 6 through 9 of our earnings slides. Excluding a special item, Timberlands contributed $57 million to first quarter earnings. Adjusted EBITDA was $120 million, a 5% increase compared to the fourth quarter. In the West, adjusted EBITDA was $58 million, a $13 million increase over the prior quarter largely driven by higher sales volumes and seasonally lower costs. Starting with the Western domestic market, log demand and pricing improved in the first quarter as mills responded to strengthening lumber prices and seasonally lower log supply. As a result, our average domestic sales realizations increased moderately compared to the fourth quarter. Our fee harvest volumes were slightly higher and per unit log and haul costs decreased as we made the seasonal transition to lower elevation and lower-cost harvest operations. Forestry and road costs were seasonally lower.

Moving to our Western export business. Log markets in Japan were muted in the first quarter in response to ongoing consumption headwinds in the Japanese housing market. As a result, our customers' finished goods inventories remained elevated and log prices decreased. Despite this dynamic, our customers remain well positioned relative to imported European lumber, which continues to face headwinds in the Japanese market. For the quarter, our average sales realizations for export logs to Japan were moderately lower and our sales volumes were moderately higher, largely due to the timing of vessels.

Turning briefly to China. We remain in the early stages of reestablishing our log export program to strategic customers in the region. However, our shipments have been limited to date, largely driven by ongoing weakness in the Chinese real estate sector and the seasonal slowing of construction activity around the Lunar New Year holiday. For the first quarter, we delivered one vessel to China, which was comparable to the prior quarter.

Turning to the South. Adjusted EBITDA for Southern Timberlands was $62 million, a $7 million decrease compared to the fourth quarter. Despite improved pricing and takeaway of lumber, southern sawlog markets remain subdued in the first quarter as log supply outpaced demand given drier-than-normal weather conditions. With respect to Southern fiber markets, demand and pricing moderated in the first quarter as mills reduced consumption ahead of spring maintenance outages and in response to lower takeaway of finished goods. On balance, demand for our logs remained steady given our delivered programs across the region, and our average sales realizations were comparable to the fourth quarter. Our per unit log and haul costs were also comparable and forestry and road costs were higher. Our fee harvest volumes were slightly lower in the first quarter. In the North, adjusted EBITDA was comparable to the fourth quarter.

Turning now to strategic land solutions on Pages 10 and 11. As a reminder, this is the new name for our Real Estate, Energy and Natural Resources segment. Starting this quarter, we're expanding our disclosure for this segment to three business lines: Real Estate, Natural Resources and Climate Solutions. The new name reflects our broadening scope and growth focus across these businesses, and the new reporting structure enhances the cadence of disclosure for our Climate Solutions activities. In the first quarter, Strategic Land Solutions contributed $169 million to earnings. Adjusted EBITDA was $193 million, a $98 million increase compared to the fourth quarter. This reflects a very strong quarter for the segment, largely driven by the timing and mix of real estate sales and the completion of a $94 million Conservation Easement transaction in Florida. As we discussed last quarter, the conservation transaction conveyed approximately 61,000 acres of Weyerhaeuser Timberlands to a larger wildlife corridor, restricting future development and protecting habitat for a variety of species.

Notably, the easement allows Weyerhaeuser to retain ownership of the land for continued sustainable forest management. As for the rest of the segment, 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. For the quarter, our results reflect a sizable increase in real estate acres sold, which is a typical trend for this business in the first quarter. Our average price for real estate sales declined from the record level achieved last quarter, which benefited from several high-value development transactions in South Carolina.

Now moving to Wood Products on Pages 12 through 14. Excluding a special item, Wood Products contributed $14 million to first quarter earnings. Adjusted EBITDA was $71 million, a $91 million improvement compared to the fourth quarter, largely driven by an increase in lumber and OSB pricing. Starting with lumber. First quarter adjusted EBITDA was $27 million, an $84 million increase from the prior quarter. The framing lumber composite strengthened in the first quarter as buyers work to replace lean inventories into the spring building season, but face supply constraints from previously enacted curtailments and closures. While this dynamic was felt across the North American market, it was most acute in Southern Yellow Pine, which experienced a significant price increase during the quarter.

For our lumber business, average sales realizations increased by 15 -- by 13% compared to the fourth quarter. Our production volumes increased as we return to a more normal operating posture following market-related production adjustments in late 2025. As a result, our sales volumes increased slightly and unit manufacturing costs were lower. Log costs were comparable to the prior quarter.

Now turning to OSB. First quarter adjusted EBITDA was $3 million, a $13 million increase compared to the fourth quarter. OSB composite pricing entered the year on an upward trajectory as demand improved slightly leading into the spring building season. By February, pricing stabilized and remained steady for the balance of the quarter. As a result, our average sales realizations increased by 8% compared to the fourth quarter. Our production and sales volumes were slightly lower, largely driven by temporary winter weather disruptions early in the quarter. Unit manufacturing costs were slightly lower and fiber costs were slightly higher. Adjusted EBITDA for engineered wood products was $39 million, a $10 million decrease compared to the fourth quarter primarily due to lower average sales realizations for most products and higher raw material costs, most notably for OSB web stock.

Our sales volumes for solid section products increased slightly, while I-joists volumes were comparable to the prior quarter. Unit manufacturing costs were also comparable. Although EWP sales volumes and pricing held up reasonably well, demand was softer than our initial expectations early in the first quarter. That said, we saw a slight uptick in order files in March, and we 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 improved by $7 million compared to the fourth quarter, largely due to higher sales volumes.

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

Thanks, Devin, and good morning, everyone. I'll begin with key financial items, which are summarized on Page 16. We ended the quarter with approximately $300 million of cash and total debt of $5.4 billion. During the quarter, we repaid our $150 million, 7.7% notes at maturity. We returned $151 million to shareholders through the payment of our quarterly base dividend and approximately $10 million through share repurchase activity in the first quarter. Capital expenditures were $112 million in the first quarter, which includes $30 million related to the construction of our EWP facility in Arkansas. As we previously communicated, we anticipate approximately $300 million of investments for Monticello in 2026, and as a reminder, CapEx associated with this project will be excluded for purposes of calculating adjusted FAD as used in our cash return framework.

During the first quarter, we generated $52 million of cash from operations. It's worth noting that first quarter is usually our lowest operating cash flow quarter due to seasonal inventory and other working capital build. First quarter results for our unallocated items are summarized on Page 15. Adjusted EBITDA for this segment decreased by $27 million compared to the fourth quarter primarily attributable to changes in intersegment profit elimination and LIFO. Looking forward, key outlook items for the second quarter are presented on Page 18. In our Timberlands business, we expect second quarter earnings before special items and adjusted EBITDA to be comparable to the first quarter of 2026.

Turning to our Western Timberlands operations. We expect steady log demand in the domestic market in the second quarter as mills respond to improving lumber takeaway through the spring building season and build log inventories ahead of fire season. At the same time, log supply is expected to increase as weather conditions improve seasonally. On balance, this should translate to a fairly stable domestic log market. We anticipate our average domestic sales realizations will be slightly higher than the first quarter as price increases in April are expected to hold steady through quarter end. Given seasonally favorable operating conditions in the second quarter, our fee harvest volumes and forestry and road costs are expected to be higher, and per unit log and haul costs are expected to increase as we move to higher elevation sites and in response to elevated fuel costs.

Moving to our Western Export Program. We anticipate log markets in Japan and China will remain relatively stable in the second quarter, albeit at reduced levels. As a result, our log shipments and pricing are expected to be comparable to the first quarter. That said, export costs have increased in response to the Middle East conflict.

Turning to the South, log inventories were elevated at the outset of the second quarter, and log supply is expected to increase seasonally. As the quarter progresses, we anticipate relatively stable sawlog demand, while fiber demand remains soft in response to spring maintenance outages and lower takeaway of finished goods. On balance, takeaway for our logs is expected to remain steady given our delivered programs across the region, and we anticipate our sales realizations will be comparable to the first quarter. 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 and haul costs, largely due to increased fuel costs. In the North, our average sales realizations are expected to be moderately higher than the first quarter due to mix and fee harvest volumes are expected to be significantly lower given spring breakup conditions.

Moving to Strategic Land Solutions, or SLS. We continue to expect full year adjusted EBITDA of approximately $425 million. And given our new segment disclosure framework, basis is now provided as a percentage of total SLS sales and is expected to be between 20% to 30% for the year. Real estate markets have remained solid year-to-date, and we expect a consistent flow of transactions with significant premium to timber value as the year progresses. Additionally, we expect to deliver steady growth from our Climate Solutions business in 2026. For the second quarter, we expect SLS adjusted EBITDA will be approximately $70 million lower and earnings will be approximately $80 million lower than the first quarter of 2026, driven by the sizable conservation unit transaction in the first quarter.

We expect this to be partially offset by stronger results from our real estate business due to timing and mix. For our Wood Products segment, we expect second quarter earnings before special items and adjusted EBITDA to be comparable to the first quarter of 2026, excluding the effect of changes in average sales realizations for lumber and OSB. Notably, we expect improved sales volumes across all Wood Products businesses as we get deeper into the building season. This will be offset by higher costs in the second quarter, largely driven by inflationary pressures related to transportation and certain raw materials as well as planned annual maintenance outages at three of our OSB mills. As for product pricing, we're encouraged by the recent upward momentum in lumber. As shown on Page 19, our current and quarter-to-date average sales realizations for lumber are significantly higher than the first quarter average, while OSB realizations are slightly higher.

For our Lumber business, we anticipate higher sales volumes and slightly higher log costs in the second quarter. Our unit manufacturing costs are expected to be comparable to the prior quarter. For our OSB business, we expect higher sales volumes and moderately higher fiber costs in the second quarter. Our unit manufacturing costs are expected to increase, largely due to the previously mentioned planned outages and higher prices for resin. For our Engineered Wood Products business, we anticipate higher sales volumes for all products in the second quarter and comparable average sales realizations. Raw material costs are expected to be slightly higher. For our Distribution business, we expect adjusted EBITDA to be slightly higher compared to the first quarter as sales volumes increased seasonally.

With that, I'll now turn the call back to Devin and look forward to your questions.

Thanks, Davie. Before wrapping up this morning, I'll make a few brief comments on the housing and repair and remodel markets. Starting with housing. After a lackluster 2025, the housing market remains largely stuck in second gear. Based on conversations with our homebuilder customers, the biggest issues continue to be weak consumer confidence and ongoing affordability challenges. And more recently, the conflict in the Middle East has reinvigorated inflationary pressures and elevated uncertainty around the economy. Further, after briefly dipping below 6%, mortgage rates have ticked back up to around 6.3% here recently. Given these headwinds, the spring building season has gotten off to a somewhat softer start than we were expecting at the outset of 2026. However, we're still fairly early in the year. So there's certainly time for the housing market to pick up some momentum, especially if we see a resolution in the Middle East or if mortgage rates trend lower. I'd also note a few positives on housing. First, we did see a much better March starts number than we were anticipating. Plus, we've seen a slight pickup in mortgage applications here recently. Additionally, there have been some positive developments on the policy front with recent executive orders and the potential for bipartisan legislation on housing, which could be an additional tailwind over time. But that all being said, in the near term, I suspect we'll continue to see choppiness in the housing market as consumers navigate ongoing affordability challenges and uncertainty around the economy. Our longer-term outlook on housing fundamentals, however, remains favorable, supported by strong demographic trends and a vastly underbuilt housing stock.

Turning to the repair and remodel market. Activity has been steady, but has lacked a clear catalyst, largely driven by many of the same factors impacting the residential construction market. We do expect to see the typical pickup in activity as we get deeper into the building season, and more broadly if interest rates move lower, and we get some improvement in existing home sales. In addition, we think the dynamic around deferrals of large discretionary projects over the last few years, will ultimately serve as a tailwind, particularly as the macro environment improves. But similar to the housing market, a material pickup in repair and remodel activity likely will require an improvement in overall consumer confidence. Putting the near-term uncertainty aside, our longer-term outlook continues to be positive as many of the key drivers supporting healthy repair and remodel demand remain intact, including favorable home equity levels and an aging housing stock.

In closing, we delivered solid results across our businesses in the first quarter. In addition, we advanced key growth initiatives in our Wood Products business and made progress on actions to further optimize our portfolio. We're encouraged by the recent increase in lumber prices, and we're well positioned to navigate a range of market conditions, and we remain focused on serving our customers, driving operational excellence and advancing our strategy to accelerate growth and deliver significant long-term value for shareholders.

With that, I think we can open it up for questions.

[Operator Instructions] Our first question comes from Susan Maklari with Goldman Sachs.

My first question is looking at the Wood Products. It's nice to see how the margins there came back specially in lumber. Can you talk about your ability to continue to drive profitability really across your wood products. As you think about the potential for prices to hold maybe flat sequentially, especially with lumber, and how the changes in supply and demand are -- and your positioning relative to that will come into play?

Thanks, Sue. I think that's a really good question, particularly with respect to the supply demand dynamic. Obviously, we have been operating in a challenging housing environment over the last several years. And that's put a lot of pressure on pricing across most of our products, and that's true across the industry. One of the things that I think it's really important to understand about our business and the potential for profitability is that -- of course, we would like to see housing improving, and I do ultimately think that will happen for a variety of reasons, and we've discussed that in previous calls. But ultimately, what drives profitability in our business is the supply-demand dynamic across our product lines. And I think you saw a really good example of that in the lumber business in Q1. We would love to see housing starts at $1.5 million. But as you look back over the last several decades, there have been plenty of moments in time where we've made significant profits with housing starts well below 1.5. It really comes down to what is the supply-demand dynamic in each individual product line. As we saw lumber prices really at on an inflation-adjusted basis, historic lows last year, we saw the market respond by shutting down and curtailing mills. And that supply impact is really one of the key drivers for what happened with lumber prices in Q1. And so I think that's just a really important thing to keep in mind is that, yes, we think housing will improve, but ultimately, it's about supply-demand dynamics in each product line. Of course, we've been very focused on all the things that we're supposed to be focused on cost, OpEx, we've layered in innovation. We've got really strong brand recognition, customer support, so we're out there battling every day. We've got a lot of upside as you see pricing improve, and you started to see some of that in lumber in Q1. And certainly, at some point, when we see the housing market really return to a more normalized level, there is just a tremendous amount of upside across our businesses and wood products.

Okay. That's great color, Devin. And then maybe sticking with Wood Products, it's great to hear the innovation and the new products that you launched the Builder Show this year. Can you talk a bit about pipeline that you have there. And as AeroStrand and some of these other offerings, momentum, what that means just in terms of your ability to drive above-average growth? And as Monticello comes online, how you can fill that volume, and what that will mean for the business as well.

Sure. One of the things that we've really been focused on over the last few years is better leveraging the resources and capabilities that we have around new product development, particularly in our Wood Products business. We've always had just remarkably strong wood scientists. We've got some brilliant people here in the wood products space, I would say, arguably, we've underutilized them over the last decade, but we've really ramped up that effort. And the new products that we brought out at the Builder Show, Pro Panel and AeroStrand are really the first big ones that we're bringing to market, but we've got a long pipeline. And at the end of the day, it's really all about how do we serve our customers? How do we solve problems for our customers, reducing costs, improving efficiencies helping deal with all of the issues around weather and code. We're in business to serve our customers. And I think one of the ways that we can do that going forward, and I think really distinguish ourselves in the market is through this new product development. So we've got a healthy pipeline, and we're expecting to continue to bring out new products and, I would say, accelerate that as we move forward. But we're really excited about these two. AeroStrand, in particular, that's based off of our timber strand technology. We're going to have a lot more opportunity as we bring Monticello up next year. And so that's just another example of how broad-based the opportunity set is for that timber strand technology. And one of the reasons we're really just so excited about Monticello coming up next year.

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

So I was wondering if you could update us on your view in terms of how tariffs and duties will play out over the course of the year relative to your business, Devin. And then relatedly, just -- it's nice to see lumber pricing higher. And certainly, you had a very, very strong operating quarter across from our vantage point across all your businesses. There's been a little bit of a pullback in Southern Yellow recently. What do you think is driving that?

So maybe I'll hit the lumber piece, and then Davie can touch on some of the impacts from the tariffs on the business. From a lumber standpoint, we obviously saw a nice run in Southern Yellow Pine and really across the composite, but mostly in Southern Yellow Pine in Q1. I think that was really driven primarily by two key things. Number one, we just saw a lot of supply come out of the system last year. As we've said over the past couple of years, probably 50-ish mills have been shut down or curtailed. And so part of that was just less supply, and that was against the backdrop of coming into 2026. I think just for risk mitigation, a lot of the dealer networks and customers, generally speaking, were carrying pretty lean inventories. And when we moved into the spring building season, there was just a bit of a scramble to get product. You've seen that level off a little bit here in Southern Yellow Pine. It's been a little volatile over the last few weeks. But ultimately, between treaters and multifamily, I think Southern Yellow Pine should hold up reasonably well going forward. I would note, we've also, at the same time, seen a pretty nice run-up in Douglas fir prices. And so obviously, we benefit there. But ultimately, it's really just about, as I said earlier, supply and demand. And we still, I think, have some opportunity for repair and remodel to pick up a little activity, particularly as we come out of some of the colder months in Northern region. So our view is lumber prices at the aggregate level should hold up reasonably well. There may be a little bit of volatility here in the near term with Southern Yellow Pine. But still view that as an opportunity, particularly as you see less SPF coming into the U.S., that's just an opportunity for Southern Yellow Pine. Davie, do you want to speak to tariffs?

Yes, sure, George. So with respect to tariffs and how that impacts the kind of the cost and procurement on our end. It's another inflationary pressure. Obviously, we've been living in an environment where there's been some level of inflation, a little bit elevated over the last several years. So it's another thing that our teams have to be focused on. Most notably, that's going to affect us in our CapEx program, whether it be steel and aluminum, thinking about the cost inputs there and a variety of other elements across the supply chain in that realm. But ultimately, we've been aware of the tariffs for well over a year, incorporating that into our capital pipeline and the analysis on how we think about the return profile particular project. So like any other inflationary pressure, it's something that we're dealing with, but our teams are focused on disciplined cost execution, ensuring we can minimize the cost there, and we're still looking to get very favorable returns across our capital program.

Davie, I appreciate that. Just on duties, what's your view, Devin and Davie, on where duties may reset come late summer versus where they're at right now?

Yes. The preliminary results from the AR7 have dropped the duties about 10%. So if that comes in more or less on track where the preliminary duties were set, that would mean the all-in duties would come down from about 45% down to 35%. So that's both softwood lumber duties as well as the 232 10% tariff. And then that should come in somewhere around August, oftentimes, that gets pushed back a little bit into the fall, but that's the general time frame.

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

Congrats on a good quarter.

Thank you.

Thank you.

Maybe to start with Devin or Davie, can you talk a little bit about the inflationary pressures you are seeing and specifically thinking about resin for OSB and in general freight transportation costs. Is there a way to quantify either in some sort of sensitivity or just sort of ways to think about what the potential impact could be.

Yes. You bet, Ketan, it's Davie. I'll take that one. We are, of course, as you'd expect, we're seeing the impacts of higher energy costs as a result of the conflict in the Middle East in several places across our business. In Timberlands, most notably, that's going to be in log and haul costs, fertilizer, transportation as well as ocean freight for our export business. On the Wood Products side, to your point, yes, we are going to see that in resin and additive costs as well as transportation as we think about getting products to customers. Right now, when you take all of that together across the businesses the headwind on a gross basis is about $10 million a month. But that said, we're able to offset a majority of that headwind. As always, we're focused on leveraging our procurement, logistics expertise, to minimize the cost and really focusing on disciplined execution, but we're also able to share some of those costs with vendors and customers, whether that be through log and haul rates or via the delivery costs that are typically passed along to customers. So the net effect of that that's incorporated into our guidance for the second quarter. Of course, we're going to continue to monitor how the macro environment evolves, while continuing to be focused on disciplined execution and cost control.

Understood. Very helpful. And then just switching to capital allocation. Leverage has climbed to sort of 5%, a little over 5% recognized at Q1 as a working capital use quarter, but to the extent we are in this higher for longer environment thousands remains depressed, you've got Monticello investment this year as well. How are you thinking about, one, just sort of the level of leverage and sort of potential options that you could look at to lower it over time, maybe? And would that involve potentially kind of selling from timberlands?

Yes. Look, as we've said, maintaining that investment-grade credit rating, that's foundational for us. We're going to leverage, or we're going to manage our leverage to a mid-cycle target and we have a lot of flexibility and levers across a wide range of market conditions. I think just to put this in perspective, we're clearly operating at a cyclical low in earnings, and that's going to impact our trailing leverage metrics, particularly when you think about the very low pricing environment we saw over the second half of last year, that's still heavily weighed on that ratio. So again, that 3.5x net debt to EBITDA target is designed to be evaluated over the cycle, not at the trough. And so when we look at leverage through mid-cycle ends, we remain very comfortable with our balance sheet and expect leverage to improve naturally as that EBITDA normalizes. I mean you can do the math on, it doesn't really take that much improvement from current levels to get back to the the 3.5x target. And then just as we think about the capital allocation priorities for the year and how we're navigating that our approach is really going to remain consistent and disciplined. As you know, we're going to evaluate every dollar that we spend and ensure it's allocated in a way that creates the most value for shareholders. We do have approximately $300 million teed up for Monticello this year as well as we're going to continue to invest in our business on a programmatic basis. specifically to that Monticello [indiscernible], and I think it's worth noting that the timberland divestiture, the Princeton proceeds we received in the first quarter, that alone would offset a significant portion of the expected Monticello spend over the course of 2026. So again, we feel really good about the strength of our balance sheet, the work that we've done over the last several years to strengthen and improve the portfolio, and we've got a lot of levers as we navigate these conditions.

Our next question is from Kurt Yinger with D.A. Davidson.

I was hoping to start off on the wood products side. Can you just talk a little bit about demand patterns you saw with home center customers over Q1? And maybe specifically looking at March and April, whether the seasonal pickup that you might typically expect occurred or perhaps is just delayed a little bit and pushed back a little bit later.

I'd say, overall, the -- it's a mixed view here. When we talk to our customers, I'd say crossed R&R generally, but that includes home centers as well. There's been different views depending on geography, and I do think you've seen the professional segment holding up better than DIY, probably also seeing a little bit more focus on smaller remodeling projects, which typically use a little less wood. So it's been sort of mixed, I would say it's solid. But certainly, we haven't seen as meaningful a pickup because maybe sometimes you do this time of the year. But nevertheless, we still think we're still in the heart of pair and remodel season, some of the colder areas are really just starting to get into the warmer season, and we have a while to go before the South really dialed it back for kind of mid-summer heat. So again, sort of a mixed story to date on R&R thus far.

Okay. That makes sense. I appreciate that. And then on EWP, realizations have come in a little bit the last two quarters. Some folks have kind of talked about a bottoming having been found on price in the last couple of months or so. How would you just describe the market balance today in early Q2. Are there any kind of green shoots you're seeing either from a demand or kind of competitive dynamic perspective?

Yes. I mean at a high level, a lot of what's been going on with EWP is really just the story of what's happening with family housing. And as we've said, it's just been a more challenging single-family environment here recently, and that's created some downward pressure on pricing. As we think about seasonally, we are seeing a bit of an uptick as you expect. We've seen order files pick up a little bit as we got into March and April, and so that's certainly a positive. I would say just from a pricing standpoint, again, it's very regional in terms of the dynamic. And so that's sort of how we're managing demand and pricing across our portfolio is really market by market. Ultimately to see a meaningful pickup in EWP demand and ultimately, pricing. I think you're just going to have to see improvement in single-family housing, unlike lumber and OSB, where you see a little bit more R&R demand on the EWP side, it's really residential construction primarily. And so we view it as being stable. As we guided for Q2, we think we're going to see comparable pricing with upside on sales volumes, but that's kind of really where we are right now.

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

Devin, first, just a question on the very strong or what looks to have been very strong cost performance, particularly in lumber, OSB as well in what presumably was an inflationary environment. I mean, by my numbers, and they could be wrong, it looked like your lumber cost per unit were the lowest they've been for several years. Anything that you want to call out to help us understand, and how sustainable that is, or was it more onetime-ish?

So overall, Mark, I think this is really just the continuation of the OpEx and cost focus that we've been working on for a number of years. One of the -- obviously, there are some inflationary pressures, particularly with the Middle East. That's going to be a cost headwind that we have to overcome. But what I would say is just given the tougher operating environment, it's just yet another reason for us to be really clamped down on costs. And so I think from a controllable cost standpoint, the team in Wood Products, and this is really true across the whole business, but they have just been very, very focused on every dollar they spend and making sure that we're being just really, really vigilant on the cost side. You combine that with -- as we moved into Q1, we were able to operate at more normalized rates. For the back half of last year, we were operating a little less than we ordinarily would just because of market conditions. When our business can run full, we are in a very, very strong cost position. And so I think it's just a combination of continued vigilance on controllable costs and really operating the mills at normal levels, that really puts us in a good cost position. So there's no reason to think that, that can't continue going forward.

Okay. Great. And I'm just curious because I thought I heard you said volumes were a little bit weaker than you had expected, but you were -- but at the same time, you just said you were running full. Did you build some in? I guess we could see this in your financials, et cetera, but had you built inventory in the first quarter, or how do we square...

I'd separate that. So I think what I said was really just with respect to the back half of last year, we were operating a little below normal because of market conditions. We did build a little inventory separately on the lumber side and OSB for that matter just because we typically build a little bit of inventory in Q1, just so that we are prepared for the full building season, which is pretty typical. So nothing outside the norm on inventory build.

Got you. And then shifting gears, what might you be seeing on like the solar leasing front, et cetera? Obviously, with energy costs having gone up a lot, is that trading any added impetus for people to start having conversations with you? And any color you can give us on how things feel is, we're getting closer to times where some of those options should be coming up for potential exercise.

We're seeing some really nice momentum across the renewables business, both in terms of converting leases into operating solar facilities. We've got one operating now. The next one should be operating any day now. We've got three currently under construction. By the end of this year, we could have 4 to 6 under construction. So the pipeline is developing nicely. And I think interestingly, we've just seen a whole lot of activity on the new option front. We've had a whole wave of solar options that we've signed up here recently and even on wind. Now those will come -- the wind will come along a little later just because the time line to put wind facilities up is a little longer. But overall, the interest level in renewables has been very strong this year.

Our next question is from Hamir Patel with CIBC Capital Markets.

Devin, there were two new OSB mills supposed to start up later this year. Just given the relatively sluggish demand backdrop. Do you think we'll see supply additions being delayed into 27?

It's hard for me to speculate on that. I have seen some articles written on delays there, but I don't have any specific knowledge of that. That's really going to be something they'll have to decide against the current market backdrop. I'm not sure I have a whole lot to add there.

Fair enough. And just the last question I had on your Log Export business, how is the initiatives to grow Southern Yellow Pine exports progressing?

It's going really well. Now obviously, the transportation costs associated with the Middle East conflicts are going to be a headwind that we have to move through. But overall, I'm just really pleased with how that's developing, particularly in the India market. We've really gotten some nice traction with the customer base there. I think there's a lot of opportunity to continue to grow that. We're continuing to work on really driving costs out of the supply chain. That's particularly the case with our break bolt program out of the Gulf South, I think we have some near-term opportunity to take out some meaningful costs there, which will just make us even more competitive from a cost standpoint. So we're excited about it. We're looking to grow the India program. And again, we're going to have to overcome some additional costs from a freight standpoint, but I think we can do that. And even beyond India, just the opportunity in Cambodia, Vietnam, Thailand, we've seen some good strong customer interest there. I think ultimately, there may be some opportunity to export into Europe. We've had some initial conversations with some sawmill customers there. So I think there's a lot of opportunity, and we're going after it.

Our next question comes from Anthony Pettinari with Citi.

If I look at Timberland's results in the 2Q outlook, it seems like first half Timberlands EBITDA could be down year-over-year, maybe 25% from the first half of '25. And if you think about kind of big picture earnings improvement drivers for Timberlands going forward, is it just really about lumber recovery flowing through the Western log prices, or do you see kind of meaningful scope to improve log prices in the South or reduce costs or any kind of idiosyncratic items around weather that we should keep in mind? Just wondering kind of big picture as you think about Timberlands earnings improvement really going forward. What are the building blocks?

Sure. I'll give you a few comments on that. So first and foremost, what's been happening in the Timberlands business. And I would say this is mostly a Western comment, is with lumber prices being at historic lows, that put a lot of downward pressure on log prices. And you can see that really over the last few quarters. Now we saw log prices start to improve in Q1, and they've continued to improve into Q2, but there's still -- if you look back over the last several years, they're still at relatively low levels. So really, as we think about the near term, particularly as you've seen Doug fir prices going up here recently, that gives us a little bit more room to push log prices in the West. And so I would expect that to happen. It's still a very tensioned wood basket. So I would say, number one, it's been a pricing issue primarily in the West. Number two, from a volume standpoint, if you look back over the last couple of quarters, particularly in the West, but a little bit in the South because of some weather issues volumes have been down a little bit. If you look at 2026 as a whole, what we said is, in the South, volumes will be up slightly, harvest volumes and in the West are going to be comparable. So when you sort of chart that out over the course of the year, there's some upside from a volume standpoint. I'd say the other piece that's really of late been an issue is on the cost side. Obviously, as Davie mentioned, with some of the issues with the Middle East, that has put some incremental cost pressures are, and we're going to have to figure out a way to overcome those. I don't think that is structural going forward. But look, ultimately, if transportation costs are up, we're going to have to find a way to push that through on the price side, and we'll work that. There may be a lag. But ultimately, that's certainly something that we can work through. And I would say even beyond that, when you look out into the future, as we said at our Investor Day, we do think there's a significant amount of volume increase coming in the West. And so it's been a little bit more challenging on the Timberland side over the last couple of quarters, but we certainly see that improving over time.

Okay. That's very helpful. And then just switching gears, with distribution understanding it's not the biggest part of your business. But with the greenfields, is the goal there really to enter new markets where you're not present or underpenetrated or to sell more of kind of high-value EWP and new products. I'm just wondering if you could talk about what you're trying to accomplish with the greenfields versus just leveraging existing distributor relationships?

Yes, you hit it. I mean the principal rationale there is we sell currently about 50% of our EWP through our distribution business and what we found in and really trying to dial this into key growth markets and really important building markets is that when we have our own distribution sales force on the ground in those markets, we're able to push more volume and gain market share for our EWP products. So that is the primary rationale. I would say over and above that, there's also opportunity. We obviously sell commodities through our through our distribution businesses as well. And so there's another channel that we can move that product. And the team has done a really nice job building out vendor partnerships with decking and siding, and so there's a sales profit opportunity there, too. But the primary rationale is really to drive EWP sales and growth in markets that we feel like we're currently under-penetrated.

Our next question comes from Hong Zhang with JPMorgan.

I guess my first question, with the runoff in lumber prices, are you seeing any changes in valuations volumes [indiscernible]?

Sorry, you cut out there a little bit on -- do you mind repeating that question?

Yes. With the run-up in lumber prices, are you seeing any changes in valuation or just the amount of product coming to the market when it comes to Timberlands transactions?

No, not really. The timberland market really don't change a whole lot quarter-to-quarter, week to week. It's just really more long-term price appreciation. So you don't necessarily see timberland values moving with lumber prices not in the near term. Now obviously, if there was a longer-term structural change in lumber prices, that ultimately could flow through, but you don't typically see that in the near term.

Got it. And I guess just sticking to the higher lumber prices. Are you seeing any operators that previously shut down mills start to restart the mill in response to pricing.

As a general matter, no, once the mill has shut down versus taking extended 2-, 3-week outages when a mill goes through the process of actually closing down and laying off their employees, it's pretty unusual for them to come back. And so we really haven't seen that. I will say around the margins, we've seen it a little bit, and this is really a southern statement. I do think, particularly as you were in the back half of 2025, we saw a lot of mills that were not operating full out. So maybe at a reduced posture, certainly not running over time. And so there was a little slack capacity in the system for mills in many instances across South. You probably have seen a little bit of pickup there as Southern lumber prices have picked up. But I wouldn't say it's significant, at least not from our vantage point.

Our next question comes from Mike Roxland with Truist Securities.

First one, just on the SLS guide. Based on your 2Q outlook for EBITDA, if I -- what age should be around $320 million, but you're guiding 2026 to $425 million, implying a significant step down into. So realizing that you had some one-off benefits from real estate in 1Q, but you also got to a pretty strong Q2, what gives you the confidence that you could have such a step down in the back half of the year?

Yes, Mike, thanks for the question. It's pretty typical for us to be fairly front-loaded in our Strategic Land Solutions business. I think if you look at it over the last several years, you'll see that pattern. That's some timing and mix. We -- so as I think about the second half of the year, we'll see a little bit of that mix play out over the second half, but nothing unusual there in terms of the trends that we're expecting as always if we continue to see strong real estate markets, we can look to adjust. But for now, I think that $425 million is a good guide on what we were thinking about for the year.

Got it. Okay. And then Climate Solutions, you had sales of $100 million -- $111 million in 1Q, a big increase year-over-year, quarter-over-quarter. Davie, what drove that?

Yes. It's the conservation easement that we pointed out in the first quarter, large transaction, $94 million. So that's the biggest component of that.

Got it. Perfect. And last question real quick. Just following up on an earlier question in terms of EWP. Margins in EWP are now at about to over 17% in 1Q. It seems like prices may have declined more than you expected. I think you were calling for last quarter, modestly down, price was down about 4% to 5% sequentially. So I'm just wondering I understand the backdrop in find me, but have your competitors been more aggressive trying to drum up business? Or has the competitive landscape changed such that there's increasing competition to drive sales, which has negatively impacted pricing more than you expected.

Well, I would say just as a general statement, our competitors are always aggressive in trying to get business. That's no different now than it's ever been. Obviously, when you have housing starts down a little bit relative to where they were a few years ago. There's less pie to go around, so people are battling it out. Where we compete, obviously, we have to be thoughtful about price, no question about that. But I think where we try to compete in the market is we have a service model that I think, is valuable to our customers. We have high-value products. We're continuing to innovate to make sure that we're trying to solve our customers' needs. So we're not necessarily battling it out for the lowest price opportunities. We're trying to serve long-term strategic customers with the value proposition. So the competitive dynamic is tough. It's always going to be tough, and you just have to find a way to win regardless of where you are in the cycle.

Our last question will be from Ketan Mamtora with BMO Capital Markets.

Just a couple of quick questions. What is driving the strength in Douglas fir prices here recently?

Yes. I think we've just seen primarily an uptick in demand coming out of California. We've seen a little softening last year, I'd say, broadly speaking, the California market. That's picked up here recently, and that's a lot of where that Doug fir product goes. And so I think that's been a big driver. And it's -- generally speaking, there's only so much opportunity for supply. You hadn't seen that supply, maybe dial back as much as we've seen in some other geographies. And so there's just not as much incremental supply to meet that demand as it improves.

Understood. Okay. And then just one last one. Are you seeing any signs of increased use of Southern Yellow Pine in new residential construction, I'm thinking about profits and those kind of things.

We are. I think there are a few things going on here. First and foremost, there's just a lot less SPF coming into the U.S. today. And that's a function of some long-term trends with beetle infestation, regulatory dynamics that have made it very challenging to make lumber or in Canada. That's also a function of the duty tariff dynamic that we have in place. So there's just overall less SPF coming into the U.S., which creates an opportunity for both Douglas fir, but also for Southern Yellow Pine. I think additionally, at least in the recent past, there was an opportunity because of the delta between SPF and Southern Yellow Pine prices to go out and really market value. But I would say, just broadly speaking, as you look at where supply is increasing, and where supply is decreasing, there's just going to be more Southern Yellow Pine. So that's a trend that is going to continue. I think you've seen probably a little bit more traction here recently, I would say, for Weyerhaeuser specifically, we've been active on that front. We've got some products or warp stable products. That's a really nice transition product for folks that have historically used SPF to move into Southern Yellow Pine. So I think you picked up some momentum there, and I would expect that trend to continue really as we move forward.

There are no further questions at this time. I'd like to turn the floor back over to Devin Stockfish for closing comments.

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

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

Welcome to Citi's 2026 Global Property CEO Conference. I'm Anthony Pettinari with Citi Research, and we're very pleased to have with us Weyerhaeuser and CEO, Devin Stockfish.

This session is for Citi clients. Disclosures have been made available at the corporate access desk. If you want to ask a question, you can raise your hand or go to liveqa.com and enter code GPC26 to submit questions. Devin, I'm going to turn it over to you for an introduction of the company, and then we'll get into Q&A.

All right. Great. Thanks, Anthony. I appreciate the opportunity to be here, talk a bit about Weyerhaeuser. I'm going to keep my prepared remarks pretty brief so we have lots of time for Q&A. I will note that we do have a recently updated and fairly expansive deck available on our website if folks have additional questions or want to look into any of this information more closely. We'll be making some forward-looking statements. So as always typical cautionary language applies there.

So really 3 things I want to cover before we jump into the Q&A. First, just a brief introduction of Weyerhaeuser for anyone that's not as familiar with our story. Just touch briefly on the results from our 2021 Investor Day and some of the multiyear targets from that and then really hit on some of the growth targets that we set out at our recent Investor Day.

So just quickly on the thesis, really 4 key levers that we focus on to drive value, three of which have been core components for our investment thesis for a number of years and then one new one that we've recently added. And really, it's focusing on an unmatched portfolio of assets across our businesses. It's about industry-leading performance and it's about disciplined approach to capital allocation. And then the fourth lever, which we rolled out at our Investor Day back in December is accelerated growth, and we'll touch on that a little bit here today.

All 4 of these are really underpinned by the high performance culture that we've built at the company, the deep expertise across the value chain. We've got a very strong record of portfolio management that we've been demonstrating for a number of years. And then it's really just foundational strengths around operational excellence, innovation, and sustainability.

And I guess just briefly, for those that don't know the company well, we are the largest private owner of timberlands in North America. We have roughly 10 million acres of timber in the U.S. We manage another 13 million acres in Canada under long-term license agreements. We're also one of the largest producers of wood products in North America. We have 33 mills across the U.S. and Canada, where we make lumber, oriented strand board, a variety of engineered wood products. We also have 21 distribution facilities in key markets across the U.S. as well.

And then lastly, we have a Strategic Land Solutions business, which is recently renamed, used to be our Real Estate, Energy and Natural Resources business. That's focused on capturing the value from every acre that we own by leveraging the optionality that's just inherent in a real estate portfolio such as that.

All of these businesses have significant scale industry-leading performance, and we manage them within a tax-efficient REIT structure. In fact, we're one of the largest REITs in the U.S. Just briefly, back in 2021, we did set out a number of multiyear targets that we close out in 2025. The good news is we reached or exceeded all the targets that we set out, including our target to acquire over $1 billion worth of timber, which we effectively did in 2025 to grow our Climate Solutions business to $100 million of EBITDA. You'll recall, we just launched that business back in 2021 and also to continue to drive industry-leading performance across our businesses.

So really pleased with our ability to reach those targets. We can touch on any of those. But I think it's another example of the company setting aggressive multiyear targets and meeting those expectations. And we're all incredibly proud of the team for being able to accomplish that. Having achieved the targets that we set out in 2021, we did host an Investor Day back in December, where we set out some, I think, pretty ambitious growth targets across the entirety of our portfolio to really significantly grow the value and cash generation capabilities of our company and really further strengthen our competitive position and ultimately, position Weyerhaeuser to deliver industry-leading shareholder returns.

Specifically, the growth target laid out a path to delivering an incremental $1.5 billion of adjusted EBITDA by 2030 measured against our 2024 baseline. That includes $1 billion of specific targeted growth initiatives across the company as well as $500 million of uplift from pricing. We'll refer you to the Investor Day materials. If you'd like further details on any of those, I'm sure Anthony will hit on some questions in this space as well.

And then just lastly, I'll wrap up with a few comments on our capital allocation approach. We always have viewed capital allocation as a critical lever for delivering shareholder value. We have 3 key priorities: returning cash to shareholders, investing in our business and maintaining an investment-grade credit rating. We remain focused on all of those things. As many of you know, we have a cash return framework that targets returning 75% to 80% of our funds available for distribution back to shareholders through a combination of dividends and share repurchase. We've been active on both.

In fact, we've raised our dividend 5% a year over the past 4 years. We have closed out a $1 billion share repurchase program. We put another $1 billion program in place and we'll continue to be active in returning share -- returning cash to shareholders. And so I guess just in closing, I'd say we are the only large-cap integrated investment opportunity in the forest product space. We're poised for accelerated growth. When you put that on top of the unmatched scale, quality, diversity of our portfolio, I think we're really well positioned to deliver on this growth program. And so I think with that, Anthony, we'll probably just go ahead and open it up for questions.

Great. Thanks, Devin. That was a very helpful overview. And maybe if we can start and go into your individual businesses in a little more detail. Maybe starting off with kind of the core timberlands business. You recently gave your kind of '26 outlook for harvest volumes. Can you talk about market conditions in maybe the southern timberlands in terms of pricing activity and then maybe we'll touch on the growth initiatives later.

Yes. I'd say on balance in the South, things are pretty steady and stable. We have seen -- a little bit over the last year, we saw a little bit of reduction in sawmill capacity across the U.S. South, both in terms of some mills closing down as well as a number of sawmills lowering their production levels just given the more muted demand environment. We've seen some improvement there, I would say in the South, you don't see the log pricing tracking as closely to lumber pricing as you do say in the Northwest, where you have a little bit more of a tension wood basket.

Obviously, when we think about the U.S. South, there are lots of individual markets. We really think about it in terms of individual wood baskets. And I would say on balance, in areas where you've seen new mill capacity come in, you've seen some tensioning and a little bit of uplift in pricing. But on balance across the South, pretty stable overall is how I would frame it.

Great. And exports are a big part of your Pacific Northwest business, but you've talked about maybe the potential for exports out of the South. Can you talk about that in a little more detail? And then maybe a related question, in terms of what regions of the South, whether it's sort of coastal versus inland, where are you seeing maybe a little more strength versus less strength?

Yes. I mean that's an area that we're really excited about. It's 1 of the key growth initiatives in our Timberlands business on the $150 million growth target. We have been working on building out an export program out of the U.S. South for a number of years. We have been exporting primarily until recently, off of the Eastern seaboard, South Carolina, little North Carolina historically down into Georgia. We have recently added break-bulk shipping capabilities out of the Gulf South and that's a really interesting opportunity for us because when you're shipping break-bulk versus containers, the opportunity to lower cost is pretty dramatic. You can get up to 15% reduction on a per unit cost basis, which is we're continuing to grow our export business into India, Thailand, Vietnam. There are a whole host of opportunities as you're entering those markets.

If you have that extra margin to play with, it helps you get in as you're building out a program. So we're really excited. The India program is going very well. We have grown that break-bulk program, which is primarily focused on India right now from one break-bulk container in '24 to 4 container -- break-bulk containers in '25. We're targeting 8 in 2026 and continuing to look to grow that. So India seems like a really good opportunity. We're also, as I said, looking at a number of other options across Southeast Asia. And we're actually even looking at exporting Southern logs into Europe, as you've seen a lot of the European log prices going up dramatically. We think that's an opportunity as well.

The beauty about the export program, and we've seen this in the Pacific Northwest, when you have a viable option for the wood, it does create more opportunity in the domestic market as well to move prices up, and we've seen that a little bit already in Southern Mississippi as we've grown that export program. So we're really excited about it, something we're going to continue to focus on.

Great. Great. And maybe a little overlap here. But the $1 billion in growth initiatives by 2030, if you just think about the timberlands piece of that, can you talk about some of the activities that you're pursuing there?

Yes. And so about $150 million of that is in timberlands. And I will just even step back and say, broadly speaking, when you look across all of the different initiatives that make up that $1 billion, there are a couple of comments I'd make. Number one, the vast majority of these initiatives are already underway. Most of these are largely within our control.

And so we can go into any of these individually. I'll start with Timberlands. When you look at what's making up the timberlands growth, there are a few components. There's the ongoing A&D activity. And if you look back at over the last 4 years, we have bought $1.3 billion worth of timberlands, and we've sold around $1.2 billion worth of timberlands. And so we're pretty active on both the buy side and the sell side.

And the whole thesis behind this program is selling off our lower quality timberlands and buying into higher quality timberlands. And what that allows us to do is on a lower number of acres to generate more cash flow from this portfolio. And collectively, over the last 4 years with all of that buying and selling, we have increased our EBITDA generation around $60 million from that buying and selling.

And again, that's on fewer acres but higher quality. So a portion of that is the A&D activity. We're going to continue to be active. Over the long term, we'll probably be net buyers. But in any particular year, we may be net sellers, we may be net buyers. It just depends on what opportunities come up.

The second component is Western Timberlands volume growth and it may seem like many, many years ago, and it was, but back in 1980 when, Mount St. Helens erupted, a lot of the land surrounding that volcano was owned by Weyerhaeuser. And so we replanted hundreds of thousands of acres all at the same time, right after the volcano erupted. Those forests are now coming to harvestable age. And so as we get into kind of '28 and '29, you're going to see a meaningful step-up in harvest activity in the Pacific Northwest. That's pretty straightforward. We've got new demand outlets, product uplift. What I would highlight there is one of the opportunities for us in terms of selling logs into the utility pole market. And so when you look around, all of those wooden utility and distribution poles that you see, many of them are beyond their useful life. And so there's a lot of replacement activity that's going to have to take place.

On top of that, as you see all of the new energy demand from AI data centers and expanding the grid, there's just a tremendous amount of demand for utility pools. Those are typically kind of 2x margin relative to what you would otherwise be selling those sawlogs into a mill for. We think we can increase the amount of poles that we're selling, and that's part of this as well. And then we touched on the Southern export opportunity, again, all of those, we have pretty good line of sight. I think we're pretty well positioned to deliver on each of those initiatives to get to that $150 million.

Great. Great. And then just rounding out the regions. You talked about kind of the outlook for the South for '26 and current market conditions. Can you just do the same for Pacific Northwest and maybe touch upon sort of the current state of export markets?

Sure. Yes, the Northwest is a little different, much more tension market. And so typically, you'll see sawlog prices in the Pacific Northwest really track lumber prices a lot more closely. And we have seen lumber prices on the West Coast moving up so we're seeing a little bit more energy around log prices in the Pacific Northwest as well. And so starting to feel that market recover a little bit. The export market pretty stable. Our biggest market off of the Northwest is really into the Japan market. And that has stayed pretty stable.

We're lined up with really the top mills in Japan. And so that market, it may fluctuate from a pricing standpoint, depending on what's going on in domestic markets, but the demand level stays pretty consistent. We did recently reopened the China market out of the Pacific Northwest here recently, we shipped our first vessel into China back in Q4, we'll be shipping -- in fact, I think we have shipped our first vessel in Q1 after the Lunar New Year into China. So we're excited to be reopening that market as well.

Great. Great. So we've talked a lot about logs. I'm wondering if you could talk about kind of the current market for timberlands themselves in terms of kind of the interest level that you're seeing for good quality industrial timberlands in the South, are there any trends on sort of volume, dollar per acre values that you'd call out? And just how have the last few years been?

Yes. Well, I think typically, you see somewhere in the neighborhood of $2 billion to $3 billion of timberlands transact each year. And that's been fairly typical over the last several years. I think last year, we were somewhere in that $2.8 billion in terms of total transaction volume. I would expect us to be in that general vicinity this year kind of $2 billion to $3 billion is good -- I think a good place to think that market is going to go. I would say the quality timberland packages, so when you talk about the high-quality timberland packages that come to market, there is a lot of competition for those. Those are very highly regarded, a lot of capital looking for those kinds of deals. And so on the higher-end properties, you're still seeing a lot of competition for those. I will say unlike during the pandemic, where it was maybe a little less differentiation between high quality and mid-tier.

That has, I think, kind of gone back to a more historical norm where there's a little bit more critiquing of the lower-quality packages that come to market. And so you've seen a little bit of a price variation between the high quality and the lower quality, again, probably back to more historical norms. Typically, whether you're talking to the South or the Pacific Northwest, both are very good strong markets. Again, if you bring a quality package to market, you're going to have a lot of people at the table bidding for those, and we continue to see that being the case in 2026.

Got it. Is there a way to think about sort of the level of real returns that people buying timberlands in the U.S. South are targeting? And has the components of that return maybe changed over time?

Yes. I mean, so I think interestingly, discount rates in this space stay pretty consistent. We didn't really see them move up dramatically when interest rates went up. We haven't seen them really move down as interest rates have come down. This is a -- this is a space where people have a pretty long-term view. And so discount rates kind of stay somewhere in that 4.5% real. They don't really vary that much. For us, the way we look at it, we target a 4% to 6% cash-on-cash return from our timberland acquisitions, and then we layer value on top of that through some of the work that we do with silviculture and seedling sealing genetics to get on a timber basis kind of in that high single-digit range. And then on top of that, we'll add what we can do with real estate climate solutions and some of the other value that we can bring synergies with our export program or synergies with our internal manufacturing. So that's how we see it.

I do think you're seeing some participants in the market that are underwriting more of the Climate Solutions type alternatives. It's hard to say how universal that is at present. I would say for us, we really only underwrite what we have very clear line of sight on in a short period of time. And so what that means is we're probably a little on the conservative side when we're underwriting, but on the flip side of that, in pretty much every large acquisition that we've done over the last 5 years, we found significant other value that we didn't necessarily underwrite. So I'm not sure how much others are underwriting some of those alternative values. I do think some are, you can see that in some of the deals that have happened over the last several years.

Great. Maybe shifting to Wood Products. You're the largest U.S. lumber producer. We're kind of getting into the -- really the spring building season. Can you talk about current market conditions, pricing, what you're seeing into the spring?

Yes. I mean, so typically, you're not going to have a great view on how the spring building season is rolling until you get to you later March, early April. So I think it's still a little early to have a beat on how the spring build season is going to go. I will make a few comments, though, broadly speaking. We have seen over the last, call it, 12 to 24 months, a fair amount of capacity coming out of the system.

So across North America, call it about 50 sawmills have shut down. And it's been a pretty challenging environment over the last couple of years. And that's really just a function of during the pandemic, housing activity picked up. I think there was maybe an expectation that building levels would remain higher, more in line with what we all think we need to keep up with population and demand that hasn't transpired.

And so that process from getting where the industry built out to support, call it, 1.5 million housing starts to where we are now, which is 1.35 in that general vicinity. That can be a painful journey. And certainly, we did see that in 2025. You could see that in what happened with lumber prices. But over time, people will not lose money indefinitely, and you see sawmill shut down, and that has happened to a large degree.

I think what you're seeing today, and we've seen this with our realizations, we're up about $50 a $1,000 relative to Q4. And that is, by the way, in January and February, which are not typically very strong building months. That is more than a demand function. It's really more related to the supply that's come out of the system. So I think regardless of what we see with housing, whether we see it flat or up, I think really, as supply and demand have gotten better into balance, you should be -- you should see a much better pricing environment in 2026 from lumber than you saw in '25.

Great. And can you remind us the impact of import duties, Section 232 on Canadian lumber and kind of where that stands?

Yes. So it's a pretty complex duty tariff dynamic that affects our industry. So the main one that is impacting the lumber industry relates to the softwood lumber dispute that's been going on between the U.S. and Canada on and off for 50 years. Currently, under that dispute, there is a 35% duty on lumber coming into the U.S. from Canada. On top of that, there is another tariff at 232, which is a national security-related tariff of 10% on lumber coming into the U.S. from Canada. So well, that's on lumber coming into the U.S. from anywhere is the 10%.

So Canadian lumber coming into the U.S. is facing about a 45% tariff duty headwind. And you've seen that impacting the market in the sense that, a, we have seen a number of Canadian sawmill shut down; and b, getting lumber from Canada into the U.S. with that kind of duty is pretty challenging. And so you've seen less Canadian lumber volume coming into the U.S., which for us is helpful in the sense that it allows us to take Southern Yellow Pine lumber and move into markets that have historically been Canadian lumber markets. So think Midwest, some of the northern regions. And we're having some good early success in transitioning some of those markets.

You talked about lumber. I'm wondering if you could just touch briefly on OSB because it's been kind of a meaningful earnings driver in recent years.

Yes, I'd say similar to lumber, OSB over the course of 2025 got to a pretty challenged pricing environment to a place where really as an industry, you couldn't be profitable. That can happen from time to time, but typically resolves itself when you see capacity come out. And we have seen that. So several large mills in Canada have shut their mills down. So I think you found a little bit better balance. We've seen that here, even just over the last few weeks, you've seen OSB prices start to move up a little bit. I think we can see with some of the customer orders, people getting a little anxious about being able to get OSB supply heading into the build season. We've seen our order files extend out a little bit. So I think that's come back into a little bit better balance here recently. And so we should see a better pricing environment as we kind of move forward into the spring building season on OSB.

Great. And we talked about the $1 billion growth initiatives by 2030. You talked about the timberlands piece of that. I think the Wood Products opportunity is even larger. Can you talk about what those activities are?

Yes. So I'll hit on just a few of them. One, we have been investing in our lumber manufacturing. That is, to a large degree, focused on cost reduction and efficiency, but it does come with additional lumber production. We have intentionally held some of that back just given the more challenged environment here recently. As lumber markets improve, we can shift into fourth gear and there's some production that's in the system that we can take advantage of. That's pretty straightforward. The interesting one there on Monticello, that is a timber strand technology, which is a really exciting building material. We have 1 mill in Canada currently. We're building another mill in Arkansas that will come online in 2027.

The great thing about this product, it's our highest margin product in all of wood products. And it's a structural beam product that you can get really good, strong pricing for, but the feedstock is a lower-value product. So in the South, we're building this with Southern Yellow Pine. You're using Southern Yellow Pine pulp logs, which are fairly low price to make a high-end structural beam products. So we're really excited about this. We expect this to produce over $100 million of EBITDA once we bring it up and get it fully ramped.

That's just on the Wood Products side. There are also benefits as you would expect. We put this in a geography where we have a lot of timber. And so the vast majority of the logs that go into this mill to make the product will come from our timberlands, which will provide some transportation benefits as well as some pricing benefits on the log side to our Timberlands business.

So we're really excited about that. We're growing our distribution footprint. We've already done -- started doing that. We've added 3 here recently, and we'll be churning out several more in the years to come. One of the things I'm most excited about is new product development.

If you look back in time, Weyerhaeuser historically was an industry leader in innovation around products. Coming out of the Great Recession in '08, '09, we sort of pulled back on that a little bit. For some good reasons, we had to get the cost structure of the company in line, but we're really reenergizing the new product development arm of our company. At the recent builder show, we rolled out 2 new products, one of which I think is really going to be transformational in the industry, a product called AeroStrand that's built off of our Timberstrand technology was very, very well received at the builder show and so we've got a whole pipeline of new products that we're going to be bringing to market in the years to come.

And I think that's going to -- both from a financial standpoint and the benefits that, that brings from margin, et cetera, but also just a competitive dynamic in the marketplace as we really get this engine rolling. So we're really excited about that. And again, just like all these other initiatives, these are underway, and we have pretty good line of sight on bringing these to fruition and helping deliver on the $440 million of growth in Wood Products.

Great. Maybe pivoting to strategic land solutions. You have the kind of real estate and natural resources component. You have the Climate Solutions component. Can you kind of frame your '26 guidance? And maybe we can start off talking about sort of the assumptions around real estate and natural resources.

Yes. So the guidance for 2026 is a little higher than last year, and that is, to some degree, because the Climate Solutions business continues to grow. One key driver of that for 2026 is our conservation business has actually been rolling pretty well lately. In fact, in Q1, we did a conservation deal in the state of Florida for $94 million. These conservation deals are really just incremental because the way they work, essentially, you're preserving that land, generally speaking, for wildlife, but we get to continue to manage the timber. So it's just an incremental $94 million on top of the portfolio.

Now we're not going to be doing projects of that size every year. That's a pretty big one, but we have a good conservation pipeline of deals in the years to come. I would say, as we think about this business in general, I'll cover real estate briefly. Our HBU program, which is essentially, if you want to build a cabin or somebody wants to build on our land, we have a really good line of sight on demand in all the different regions. That business is just a well-oiled machine, and it turns out HBU deals.

One of the components of our growth program is real estate development. When we look at our land portfolio outside of Charleston, Savannah, Atlanta, New Orleans, coastal North Carolina, there is a lot of development that is coming right at our ownership. Historically, we have sold to people that want to do real estate development, low level of input cost for us, but we're giving away most of the economics to others. And so we're exploring, perhaps doing a little bit more of the entitlement work ourselves, even some light infrastructure to really increase the real estate returns that we get from some of that land. So that's a part of it.

But the big opportunity really is around Climate Solutions. And that's a business where I think we clearly are the leader in this space. We've done a lot of work. We've built out a really strong internal team. Forest Carbon, maybe I'll just kind of tick through these quickly, really exciting area for us. We have, I think, solved 2/3s of the equation, figuring out how to develop high-quality projects, that's very complicated and technically challenging. We've solved that. We know how to do that. We were able to get 630 credits issued last year -- 630,000 credits issued last year, getting them through the approval process and the audit process, again, challenging to build out the infrastructure. We've done that. We're now working on just building out long-term offtake agreements with big customers, tech companies, financial institutions, so we're really excited about that. That will be a good part of our growth story here in the years to come.

And I would just say that the last one I'd highlight is biocarbon. This is a really big 1 for us. So when you think about our industry as a whole, one of the big challenges that companies face is all of the pulp and paper mills that have closed down across the U.S. South. That's a really important outlet for both pulp logs out of the forest, but also residuals coming out of a sawmill. If you're in an area where the pulp mill shuts down, you have to find an alternative home. Now Weyerhaeuser because of our scale, the diversity of our business, we're typically able to do that. But over time, this is going to be a real issue for the industry. This biocarbon opportunity where we're partnered up with a company called Aymium.

It takes wood fiber, it runs it through a thermochemical process and creates a very dense carbon product that can be used as a drop-in replacement for metallurgical coal. As we roll this out, and we've got our first project targeted for McComb Mississippi, which is right next to one of our sawmills. But we've got a plan, and we -- in fact, the Aymium team is in Seattle with our folks this week working to grow this program to build it out to ultimately 1.5 million tons of biocarbon, which require 7 million tons of wood fiber. That's essentially like creating about 3 paper mills worth of demand, but the beauty is we get to place those facilities next to our sawmills and in wood baskets where we own a lot of timber. This, as we roll this out, there's a nice EBITDA component. So half of the Climate Solutions grow target is this. But on top of that, if you have a stable outlet for pulp logs and mill residuals, this will be a meaningful competitive advantage for us as a company over time.

Great. Devin, maybe if we can just kind of finish off on capital allocation and talk about optimal leverage, capital needs of the business and then sort of the dividend structure given you have relatively depressed wood product prices here?

Yes. I mean the capital allocation approach really hasn't changed. We have target leverage over the cycle of 3.5x. And we know because there's some cyclicality to our business, when prices are strong, your leverage is going to be below that. And when prices weaken, you're going to be a little bit above that. And you see that particularly when you hit the low point in the cycle, which I think 2025 was. And so -- but that being said, as prices come up, it's not a debt issue, it's an EBITDA issue, and we have pretty good line of sight even with a modest amount of price improvement, which again, we've already started to see in Q1, that finds its way back to kind of where we want it to be. On the cash return framework standpoint, our view hasn't changed.

We're going to continue to return the vast majority of cash that we generate back to shareholders through dividends and share repurchase. Now the base dividend is kind of the core component of that. And then any increment above that, we can decide whether we do supplemental dividends or share repurchase probably not surprising for most of you with where the stock price is today, we're going to lean towards share repurchase versus a supplemental dividend at these share prices.

Great. And maybe one last one, and we get this from investors. In terms of timber REITs, I think, historically trade at some discount to NAV, but I mean, that discount has really widened over the last 2, 3 years. If you agree with the premise of the question, what do you think helps close that valuation gap? Or what are the drivers there?

Yes. I mean, yes, I do agree with that, that we are trading below NAV. And I think the reality is, unlike maybe many other REITs, we don't trade on a NAV basis. We trade on a next 12-month cash flow basis whether that's right or wrong, I think that is largely the case. And so when you see commodity prices go to where they went in 2025, obviously, that impacts our near-term cash flow. And I think that's really what has driven that delta. So there are a few things that can close that gap. Number one, obviously, we're going to buy back stock. We bought back stock last year. We'll continue to do that. That's one component. You'll see that close up as the commodity pricing normalizes, that will be a driver. And then I think lastly, we've laid out a pretty ambitious, aggressive growth target, and we're going to execute on this -- and one of the things I found over my career is if you can improve cash flow per share, that has a way of solving problems like that. And so that's what we're focused on.

Great. Well, we're coming up on time, but thanks again for the time, and we'll keep the conversation going at the conference. So thank you.

Thank you. Appreciate it. Thank you.

Greetings, and welcome to the Weyerhaeuser Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] 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. Taylor, you may begin.

Thank you, Rob. Good morning, everyone. Thank you for joining us today to discuss Weyerhaeuser's fourth quarter 2025 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 Davie Wold, Chief Financial Officer. I'll 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 $324 million or $0.45 per diluted share on net sales of $6.9 billion. Excluding special items, full year 2025 earnings totaled $143 million or $0.20 per diluted share, and adjusted EBITDA totaled $1 billion for the year. For the fourth quarter, we reported GAAP earnings of $74 million or $0.10 per diluted share on net sales of $1.5 billion. Excluding special items, we reported a loss of $67 million or $0.09 per diluted share for the quarter. Adjusted EBITDA was $140 million.

I'll start this morning by thanking our employees for their solid execution and resilience in 2025. Notwithstanding extremely challenging market conditions, we delivered on the multiyear targets we established back in 2021 and launched an ambitious company-wide growth strategy through 2030. Specific to 2025, we further optimized our Timberlands portfolio, expanded our Climate Solutions offerings, [ broke Brown ] on our new Timberstrand facility in Arkansas and captured additional operational excellence improvements. We also increased our base dividend by 5% and returned $766 million of cash to shareholders, including $160 million of share repurchase. These are notable accomplishments given the headwinds our industry based in 2025, and they demonstrate the power of our integrated portfolio, deeply embedded OpEx culture and flexible capital allocation framework.

Looking forward, we remain constructive on the longer-term fundamentals that support our businesses. And as we outlined at our Investor Day in December, we're uniquely positioned to accelerate growth and drive significant value creation for shareholders through the balance of the decade.

Before getting into the business segments, I'll provide a brief update on recent actions to further optimize our Timberlands portfolio, all of which were previously announced. During the fourth quarter, we completed two divestiture transactions covering non-core timberlands in Oregon, Georgia and Alabama for total proceeds of $406 million. In addition, we entered into an agreement to divest approximately 108,000 acres in Virginia for $193 million, and we expect this transaction to close next month.

Moving forward, we will continue to evaluate capital-efficient opportunities that enhance the return profile of our timberlands, while balancing other growth initiatives and levers across our capital allocation framework to drive long-term value for our shareholders.

Turning now to our fourth quarter business results. I'll begin with Timberlands on Pages 7 through 10 of our earnings slides. Excluding special items, Timberlands contributed $50 million to fourth quarter earnings. Adjusted EBITDA was $114 million, a $34 million decrease compared to the third quarter, largely driven by lower sales volumes and realizations in the West, starting with the Western domestic market.

Log demand and pricing softened in the fourth quarter, as supply remained ample, and mills continue to carry elevated log inventories and navigate a very challenging lumber market. As a result, our average domestic sales realizations decreased moderately compared to the prior quarter. Our fee harvest volumes were lower, largely due to fewer working days in the fourth quarter and the pull forward of volume over the summer months, given a relatively light wildfire season. Per unit log and haul costs decreased. Forestry and road costs were seasonally lower. Despite a challenging fourth quarter, it's worth noting that regional log markets are trending towards a more balanced state as supply moderates into the winter months, and mills work through elevated log decks. As a result, we expect stable domestic log pricing in the first quarter with upside potential if lumber prices further improve from current levels.

Moving to our Western export business. In Japan, finished good inventories remained elevated in response to ongoing consumption headwinds. As a result, demand for our logs softened in the fourth quarter, and our sales volumes decreased compared to the prior quarter. That said, our average sales realizations for export logs to Japan were moderately higher, largely driven by freight-related benefits.

Looking forward, we expect demand for our logs to improve over time as inventories normalize in the Japanese market and as our customers continue to take market share from competing imports of European lumber.

Turning briefly to China. In November, the ban on log imports from the U.S. was lifted. As a result, we're in the early stages of reestablishing our log export program to strategic customers in the region. However, we expect limited shipments in the near term, given the weakness in the Chinese real estate sector and the seasonal slowing of construction activity around the Lunar New Year holiday. For the fourth quarter, we delivered one vessel to China and expect to send a second vessel in the first quarter.

Turning to the South. Adjusted EBITDA for Southern Timberlands was $69 million, a $5 million decrease compared to the third quarter. Southern sawlog markets remained muted in the fourth quarter as dry weather conditions kept log supply ample and mills continued to align capacity with lower takeaway of finished goods. In contrast, southern fiber markets were relatively stable outside of a few localized regions impacted by recent mill closures. 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 third quarter, largely due to a higher mix of grade logs and export volumes to India. Our fee harvest volumes were moderately lower compared to the prior quarter, primarily driven by fewer working days. Per unit log and haul costs increased and forestry and road costs were seasonally lower. In the North, adjusted EBITDA was comparable to the third quarter.

Turning now to real estate, energy and natural resources on Pages 11 and 12. In the fourth quarter, Real Estate and ENR contributed $84 million to earnings. Adjusted EBITDA was $95 million, a slight increase compared to the prior quarter and approximately $19 million higher than our fourth quarter guidance. This outperformance was largely driven by the timing of transactions, including the completion of a conservation easement in May. Notably, our average price for real estate sales reached a record high in the fourth quarter at over $8,200 per acre. This was mostly attributable to some high-value development transactions in South Carolina. For the full year, real estate and ENR generated $411 million of adjusted EBITDA, moderately higher than our revised full year guidance and $61 million higher than our initial outlook. These results were largely driven by strong 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 Climate Solutions business.

As shown on Page 19, full year adjusted EBITDA for Climate Solutions was $119 million, a 42% increase compared to 2024, primarily driven by strong contributions from our conservation, mitigation banking and renewables businesses. Importantly, we exceeded our multiyear target to reach $100 million of annual adjusted EBITDA by year-end 2025. And at our Investor Day this past December, we announced a new target to grow the business to $250 million of annual EBITDA by 2030.

I'll briefly discuss some recent highlights today and would refer you to our Investor Day materials for a comprehensive overview of each Climate Solutions business, including growth projections through the balance of the decade. In the fourth quarter, we received approval for our fifth forest carbon project and have four additional projects in the development pipeline. In 2025, we generated approximately 630,000 credits, a significant increase relative to the prior year, and we sold 120,000 credits in the voluntary market. We continue to see growing demand and solid pricing credits given our commitment to developing projects that meet high standards for quality and integrity.

And finally, on Climate Solutions, we announced an exciting new business opportunity at our Investor Day in December. We're partnering with Aymium, a global leader in biocarbon technology to produce and sell up to 1.5 million tons of biocarbon annually by 2030. We're advancing the first facility adjacent to our lumber mill in McComb, Mississippi; and the companies are working to identify additional sites to construct new facilities across Weyerhaeuser's footprint over the next 5 years. At full scale, the platform of biocarbon facilities will have the potential to convert over 7 million tons of wood fiber on an annual basis to be provided primarily by Weyerhaeuser. This is an excellent example of how we can leverage our scale and expertise to go on offense and create new pathways for growth across our integrated portfolio.

Now moving on to Wood Products on Pages 13 through 15. Earnings for Wood Products was a $78 million loss in the fourth quarter, and adjusted EBITDA was a $20 million loss. These results reflect extremely challenging lumber and OSB markets in the quarter, with pricing hovering near historically low levels on an inflation-adjusted basis. Starting with lumber. The framing lumber composite began the fourth quarter on a slight upward trajectory, largely supported by improving Western SPF pricing and broader concerns around the Section 232 tariffs, which took effect in October. As the quarter progressed, ample product supply and seasonally softer demand drove composite pricing lower through early December. By quarter end, the market improved slightly as buyers replenished lean inventories and lumber volumes from Canadian producers declined noticeably. Collectively, these dynamics supported increased pricing recently, albeit from a low starting point. In particular, Southern yellow pine prices have steadily improved over the past two months. For our lumber business, fourth quarter adjusted EBITDA was a $57 million loss. Production volumes decreased 14% compared to the third quarter. And this reflects our election to moderate production across our mill set in response to the softer demand environment as well as the volume impact associated with our Princeton sawmill, which we sold late in the third quarter. As a result, our sales volumes were lower in the fourth quarter and unit manufacturing costs were slightly higher. Our average sales realizations decreased 3% compared to the third quarter, which was favorable to the framing lumber composite, and our log costs were moderately lower.

Looking forward, we are encouraged by the recent increase in lumber pricing and expect demand to improve into the spring building season. As a result, we anticipate stronger performance from our lumber business in the first quarter.

Now turning to OSP. Fourth quarter adjusted EBITDA was a $10 million loss, primarily driven by weaker product pricing in response to the seasonal reduction in residential construction activity. I'll note that composite pricing stabilized in December after decreasing for most of the fourth quarter. And we've seen pricing move slightly higher here over the last several weeks. For our OSB business, average sales realizations decreased by 6% compared to the third quarter, largely in line with the composite. Our production and sales volumes were slightly higher and unit manufacturing costs were comparable. Fiber costs were slightly lower in the fourth quarter.

Engineered Wood Products adjusted EBITDA was $49 million, a $7 million decrease compared to the third quarter. This was driven by a seasonal decline in sales volumes across products and slightly higher unit manufacturing costs. We continue to align our production with customer demand and single-family homebuilding activity, both of which moderated into the winter months. Notably, our average sales realizations were comparable to the third quarter. Raw material costs were also comparable. It's worth pointing out that both third and fourth quarter results included a small benefit from insurance proceeds associated with the early 2025 fire at our MDF facility in Montana. In Distribution, adjusted EBITDA decreased by $2 million compared to the prior quarter, largely driven by lower sales volumes for most products.

With that, I'll turn the call over to Davie to discuss some financial items in our first quarter and full year 2026 outlook.

Thank you, Devin, and good morning, everyone. I'll begin with key financial items, which are summarized on Page 17. For the full year, we generated $562 million of cash from operations. Excluding the $200 million contribution related to pension liability management, cash from operations would be $762 million for the year. We ended the year with just under $500 million of cash and total debt of $5.6 billion. As Devin mentioned, we returned $766 million of cash to shareholders during the year. This includes quarterly base dividends, which we increased by 5% in 2025 and $160 million of share repurchase activity. It's worth noting that we completed our prior $1 billion share repurchase program and announced a new $1 billion authorization in 2025. This provides capacity for future opportunistic share repurchase activity and represents a meaningful lever for driving long-term value for our shareholders. Notwithstanding the challenging market backdrop in 2025, we continue to operate from a position of strength. In addition to returning a meaningful amount of cash back to shareholders, we made significant enhancements to our Timberlands portfolio, grew our Climate Solutions business, deployed capital towards strategic growth opportunities and launched an ambitious multiyear growth strategy. As we've demonstrated over the last several years, we have a strong and proven track record of disciplined capital allocation and a cash return framework that's aligned with the cyclicality of our businesses. Looking forward, our balance sheet, liquidity position and financial flexibility remains solid, and we are well positioned to navigate a range of market conditions and execute our accelerated growth plan.

In the fourth quarter, we took advantage of a favorable opportunity to complete the purchase of a group annuity contract that transferred approximately $455 million of our U.S. pension liabilities to an insurance carrier. This was funded with $440 million from our U.S. pension plan assets and resulted in a noncash $111 million after-tax settlement charge, which was included as a special item in our results. As previously mentioned, we also made a $200 million voluntary cash contribution to the plan in conjunction with this transaction. These liability management activities represent the latest in a series of actions we've taken to reduce our pension obligations, minimize the costs associated with servicing liabilities and lower volatility. Since we began these efforts in 2018, our gross pension plan obligations have decreased approximately $5 billion to $1.9 billion as of year-end 2025, and we've improved our funded status by more than $1 billion as well.

Key outlook items for the first quarter and full year 2026 are presented on Pages 21 and 22. In our Timberlands business, we expect first quarter earnings before special items and adjusted EBITDA to be comparable to the fourth quarter of 2025. Starting with our Western Timberlands operations. As Devin mentioned, domestic log markets are trending towards a more balanced state, largely driven by a seasonal reduction in log supply, which is typical in the winter months. As a result, we expect increased demand for our logs and slightly higher domestic sales volumes compared to the prior quarter. Our average domestic sales realizations are expected to be comparable to the fourth quarter, but could see upside if lumber takeaway and pricing improve into the spring building season. Absent weather-related disruptions, fee harvest volumes and forestry and road costs are expected to be comparable, and per unit log and haul costs are expected to decrease given the seasonal transition to lower elevation harvest operations.

Moving to the export markets. In Japan, we anticipate steady demand from our customers and stable pricing for our logs in the first quarter. That said, we expect higher sales volumes compared to the prior quarter due to the timing of vessels. Our average sales realizations are expected to decrease slightly, largely attributable to freight-related impacts.

Turning to China. As Devin mentioned, we are in the early stages of reestablishing our log export program and expect to deliver one vessel to China in the first quarter. As a result, our sales volumes will be comparable to the prior quarter, and we expect slightly higher average sales realizations.

Moving to the South. Southern log markets are expected to be fairly stable in the first quarter. Mills continue to carry elevated log inventories and navigate lower pricing and takeaway of finished goods. That said, demand signals could improve as the quarter progresses, particularly if weather conditions limit log supply or if we see a strengthening lumber market into the spring building season. On balance, we expect our average sales realizations to decrease slightly compared to the fourth quarter, largely driven by a higher mix of fiber logs and lower export volumes to India. Our fee harvest volumes are expected to be slightly lower due to wet weather conditions that are typical in the first quarter. Forestry and road costs are expected to increase moderately compared to the prior quarter, and we anticipate slightly lower per unit log and haul costs. In the north, our fee harvest volumes are expected to be slightly lower compared to the fourth quarter, and we anticipate comparable sales realizations.

Turning to our full year harvest plan. For 2026, we expect total company-wide fee harvest volumes of approximately 35.5 million tons. From a regional perspective, we anticipate the South will be slightly higher than last year. The West will be comparable and the north will be slightly lower.

Moving to Strategic Land Solutions. As we announced at our Investor Day in December, this is the new name for our Real Estate, Energy and Natural Resources segment. Beginning with first quarter results, we will expand our disclosure for the segment to three business lines: real estate, natural resources and climate solutions. The new name reflects our broadening scope and growth focus across these businesses and the new reporting structure enhances the cadence of disclosure for our Climate Solutions activities. For the segment, we expect full year 2026 adjusted EBITDA of approximately $425 million. Basis as a percentage of real estate sales is expected to be between 25% and 35% for the year. Entering 2026, we anticipate steady demand and pricing for our real estate properties resulting in a consistent flow of transactions with significant premiums to Timber Valley. Additionally, we expect to deliver steady growth from our Climate Solutions business in 2026. The First quarter earnings for the segment are expected to be approximately $75 million higher than the fourth quarter of 2025, while adjusted EBITDA is expected to be approximately $90 million higher. This reflects a very strong first quarter for our Strategic Land Solutions segment, largely driven by the timing and mix of real estate sales and the completion of a sizable conservation easement transaction in Florida. This transaction closed in January and involved approximately 61,000 acres of Weyerhaeuser Timberlands. We received nearly $94 million of proceeds to convey our acreage into a permanent conservation easement, the largest of its kind in the state of Florida. The easement adds acreage to a larger wildlife corridor, protecting the land from future development. Importantly, the easement allows Weyerhaeuser to retain ownership of the land for continued sustainable forest management. This is an excellent example of how we can leverage our size, scale and sophistication to drive material value uplift opportunities across our timber holdings while also demonstrating our commitment to sustainable land stewardship and long-term conservation outcomes.

Turning to our Wood Products segment. Excluding the effect of changes in average sales realizations for lumber and OSB, we expect first quarter earnings and adjusted EBITDA to be slightly higher compared to the fourth quarter of 2025. Benchmark prices for lumber have increased steadily over the last couple of months, and we've seen OSB composite pricing moved slightly higher in January. As the quarter progresses, we expect demand for both products to improve seasonally into the spring building season. It's worth noting that a $10 change in commodity prices translates to approximately $50 million of annual EBITDA for lumber and approximately $30 million for OSB. For our Lumber business, we expect higher production and sales volumes in the first quarter and lower unit manufacturing costs as we return to a more normal operating posture. Log costs are expected to be slightly lower. For our oriented strand board business, we anticipate slightly higher sales volumes and slightly lower unit manufacturing costs compared to the fourth quarter. Fiber costs are expected to increase slightly. In our Engineered Wood Products business, we continue to anticipate close alignment between product demand and single-family homebuilding activity. As a result, we expect relatively stable sales volumes for most of our products in the first quarter with some slight seasonal improvement as the quarter progresses.

Our average sales realizations are expected to be slightly lower and raw material costs are expected to be comparable. For our distribution business, we expect adjusted EBITDA to increase compared to the fourth quarter, largely due to improved sales volumes.

I'll wrap up with some additional full year outlook items highlighted on Page 22. In 2026, we expect our interest expense to be approximately $255 million. For taxes, we expect our full year effective tax rate to be between 8% and 12% before special items, based on the forecasted mix of earnings between our REIT and taxable REIT subsidiary. Our noncash nonoperating pension and post-employment expense is expected to be approximately $60 million. We do not anticipate any required cash contributions to our U.S. qualified plan in 2026, but expect approximately $20 million of required cash payments for all other plants.

Turning to capital expenditures. We expect our typical programmatic CapEx to be between $400 million and $450 million in 2026, in line with our new multiyear target. This excludes the investment required for the construction of our new EWP facility in Arkansas, which we expect to be approximately $300 million in 2026. As we've 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, Davie. I'll make a few brief comments on the housing and repair and remodel markets. Starting with housing. Overall, housing activity was lackluster in 2025, but we don't yet have the most recent housing data. We do expect total starts to come in somewhere around 1.3 million units, and single-family starts a fair bit below 1 million units. The combination of weak consumer confidence and ongoing affordability challenges continue to be headwinds for housing activity. While mortgage rates have declined in the low 6% range here recently, many potential homebuyers remain on the sidelines, given elevated uncertainty about unemployment and the economy.

Based on conversations with our homebuilder customers, we've heard some modest optimism for 2026 in response to the administration's recent actions and commentary to support the housing market, most notably their decision to purchase $200 billion of mortgage-backed securities. While it's too early to gauge the full impact of federal housing-related policies, they should be directionally positive, especially if we see mortgage rates trend lower. And aside from federal policies, we're also seeing state and local governments, expressing an increased level of interest in supporting the housing market. All of this should create some tailwinds for housing activity, but it will likely take some time to play out. In the near term, I suspect we'll continue to see choppiness in the housing market as consumers navigate ongoing affordability challenges and uncertainty around the economy. That said, our longer-term outlook on housing fundamentals remains favorable, supported by strong demographic trends and a vastly underbuilt housing stock.

Turning to the repair and remodel market. Activity decreased somewhat in 2025, largely driven by many of the same factors impacting the residential construction market, namely lower consumer confidence, higher interest rates and concerns around the trajectory of the economy. And to some degree, the repair and remodel market continues to be impacted by the lower turnover of existing homes as a result of the lock-in effect.

Looking out into 2026, we could see an uptick in R&R activity, especially if interest rates move lower, and we get some improvement in existing home sales. In addition, the deferral of large discretionary projects over the last few years should ultimately serve as a tailwind, particularly as the macro environment improves. But similar to housing, a material pickup in repair and remodel activity likely will require an improvement in overall consumer confidence. Putting the near-term uncertainty aside, our long-term outlook continues to be positive as many of the key drivers supporting healthy repair and remodel demand remain intact, including favorable home equity levels and an aging housing stock.

Finally, I'll make a few comments regarding the multiyear targets we set in 2021 and touch briefly on the accelerated growth strategy we outlined at our recent Investor Day in December. As highlighted on Page 19, we successfully delivered on the ambitious multiyear targets we announced at our previous Investor Day back in 2021. Starting with our portfolio. With the transactions we completed and advanced in 2025, we achieved our multiyear billion-dollar Timberlands growth target. In the process, we offset a substantial portion of our acquisitions with divestitures of noncore acreage, effectively recycling capital to enhance the quality and value of our portfolio. In Climate Solutions, we exceeded our 2025 growth target by $19 million. We've built a world-class team. We've expanded our offerings and have a strong pipeline of future opportunities to drive incremental growth. In lumber, we made disciplined investments to reduce costs across the mill set and these investments will ultimately enable production growth as market conditions improve. In terms of our operations, we maintained strong relative performance across our businesses and met our multiyear OpEx targets, a notable achievement given the inflationary and market-related headwinds we faced during this period. And finally, we continue to demonstrate our commitment to returning meaningful amounts of cash back to shareholders, through four consecutive annual increases to our quarterly base dividend and over $6 billion of cash return from 2021 through 2025, including nearly $1.1 billion of share repurchase. I'm incredibly proud of these accomplishments, all of which enhance our strong foundation and position us for our next chapter, which has accelerated growth.

Page 20 summarizes the key takeaways from our Investor Day in December, which is a target to deliver $1.5 billion of incremental adjusted EBITDA by 2030 measured against the 2024 basis. Over the next 5 years, we intend to catalyze growth initiatives across the entirety of our integrated platform to significantly grow the value and cash generation capabilities of our company and further strengthen our competitive position. I'll note that most of our growth initiatives are, to a large extent, within our control and already underway. These actions will enhance our ability to maximize cash flow per share while maintaining a stable foundation across market cycles and ultimately, position Weyerhaeuser to deliver industry-leading shareholder returns. I'm very confident in our ability to achieve our 2030 growth plan and excited to deliver on this transformational program for our stakeholders.

So in closing, our performance in 2025 reflects solid execution across our businesses, notwithstanding the persistent and significant headwinds in many of our end markets. Entering 2026, our foundation is strong, and we're well positioned to capitalize as market conditions improve. We remain focused on serving our customers and advancing our strategy to accelerate growth and drive significant long-term value for shareholders.

So with that, I think we can open it up for questions.

[Operator Instructions] Our first question comes from Hamir Patel with CIBC.

Devin, on the pricing front, do you think the improvement we've seen so far this year for both lumber and OSB is largely a reflection of curtailments, or is underlying demand actually picking up?

Yes. I mean I think the reality is it's primarily driven by curtailment activity. I think on the lumber side, piece two, just the reduction in the volumes coming across the border from Canada. That being said, as we continue to approach the spring building season, you do typically start to see some level of pickup in demand. Obviously, across the South, we've had a pretty significant weather event here. So I'm not sure there's been a lot of construction activity, but that being said, every week that you progress towards spring building season, people are starting to ramp up. And so that's probably a small piece. But I do think at present, it's largely a supply side-driven increase.

And then just given how much Southern prices have moved, it looks like they're quite comfortably above breakeven for the industry. Are there any constraints that would stop us seeing a more meaningful production response?

Yes. I mean a couple of things I would highlight. I mean I think you're right. Obviously, you've seen a nice run-up in Southern lumber prices, and that's probably most of the industry above cash flow breakeven, whether it's all of the industry or not, open question, I suppose. But you can see some level of increase in production. I think overall, the industry has been pretty restrained in terms of running overtime shifts, running a full operating posture. So there's probably a little bit of flex in the system. But that being said, I do think you're going to continue to see less volume coming across the border from Canada. So part of this story is really about how quickly we can convert some of these traditional SPF markets to Southern Yellow Pine. And I will say on that front, I mean, we're encouraged by some of the early activity that we've been involved in making that happen. So there's a little bit of additional volume that we could see if the producers really start ramping up production. But I still think, particularly as demand picks up into the spring building season, it feels like there's still probably some room to run on Southern lumber prices.

Our next question comes from Susan Maklari with Goldman Sachs.

This is actually Charles Perron in for Susan. I just wanted to follow up, Devin, on the last question that was asked about the demand. Considering the commentary and the increased optimism that we've seen over the past few weeks from the builders. I was wondering if you can talk about the thoughts on inventory, and how you approach the spring and busy season here? And especially any thoughts on the retailers and how they're approaching this market given the potential for some inflation in commodity prices?

Yes. When you're talking about inventory, are you talking about home inventory or lumber and OSB inventory?

Sorry, lumber and OSB inventory?

Yes. I mean I think on balance, inventories across the channel are in a pretty reasonable state for this time of the year. I wouldn't say for the most part, they're either lean or heavy. The one1 maybe minor exception to that would be in certain regions with OSB. I do think towards the end of last year, a lot of folks really ran their OSB volumes and inventory is pretty pretty low. And so that might be a minor exception. But on balance, I think the inventory levels across the channel in all of the products are adequate for the level of building activity. Now clearly, as the weather improves and we start getting deeper into the spring, people will have to start building inventory because the demand just seasonally picks up regardless of what you think is going to happen in terms of overall housing improvement. So I think we're pretty well set, and a lot of this will just depend on when people start building inventories when the building season really starts ramping up, there's a weather component to that. But I think we're optimistic that we could see some nice pickup in demand as we hit the seasonal spring building season.

Got it. That's helpful color. And then switching to the Timberland portfolio. How are you approaching your A&D decisions into 2026 considering the strong appetite that you noted for HBU properties in this environment.

Yes, Charles, you bet, this is Davie. I'll take that one. I mean right now, I think you're right, we continue to see a very solid market right now, I guess, just reflecting on the the market as a whole. We typically think about that being in somewhere the $2 billion to $3 billion range on the timber acquisitions and divestiture market came in towards the upper end of that range for 2025. And I think as we move into 2026, expect to see a similar normal level of activity. There's plenty of capital that's pursuing these transactions, a significant amount raised over the last several years with a mandate to invest in this asset class. So I think we continue to expect to see that demand with the growing appreciation for all the alternative land-based value opportunities that are inherent. And I think you also see that in our HBU transactions over the course of the fourth quarter, our real estate team did a great job capitalizing on a couple of transactions in the Charleston area. We talked about some of our real estate development opportunities at our December Investor Day, and those were some great opportunities for capitalizing on some high-value acreage really unlocking the value of our portfolio. And so we're really pleased to be able to see that.

And just to follow up on the last comment. Is there any other opportunities you could see to make similar deals to the large conservation easement transaction that you've done in Florida? Is this something like that could happen again across your portfolio?

Yes, certainly. I mean, we have a dedicated team that's focused in this area. Really, the transaction that we executed on in December was a really unique opportunity that our scale, sophistication, the talent that we built up uniquely positioned us to be able to execute on a transaction like that. And similarly, in the future, we'll evaluate all sorts of opportunities to do transactions such as those.

Our next question comes from Anthony Pettinari with Citigroup.

I was wondering if you could -- I was wondering if you could talk about operating rates in lumber and OSB. And then in the spirit of black at the bottom, what kind of steps you've taken to improve profitability, ex product price improvement. And if we stay 1.3 million starts, maybe single-family $1 million or below $1 million, if that were to continue for a few years, just kind of how you think about the footprint and the size and just sort of general thoughts there.

Yes. Well, first, on the operating rates. In Q4, in lumber, we were sort of in that mid-70% operating rate. As we noted, we took some steps to intentionally dial that back just given the dynamic in the market. OSB kind of in that mid-90% range was pretty typical for us. As we think about the overall market, obviously, the Q4 pricing environment for lumber and OSB was about as tricky and challenging as we've seen in a very long time. And so while we're certainly not pleased to have been underwater in Q4, we weren't alone. I think that was something that impacted the industry as a whole. I think over time, what you'll see is that we have navigated this better than the rest of the industry. We're always focused on OpEx, certainly in a market where you're at sort of trough pricing that becomes pretty challenging. But over time, it all comes down to where are you on the cost curve relative to the rest of the industry and the work that we've been doing over the past decade, the focus that we've had on OpEx, I think, has positioned us very well on the cost curve, and that will show up over time. The reality is you're not going to see pricing at levels where the majority of the industry is underwater. We've seen that play out perhaps for a little bit longer period than we had expected. But you've seen a fair bit of mill closure announcement. You've seen no capacity curtailments. You're starting to see the results of that activity and some of the pricing uplift. So I know it's tricky when you are at that trough. But when you look out over a broader period of time, certainly, I think we're going to be positioned well relative to the rest of the industry, and I expect us to get back to profitability here in the very near term.

Got it. Got it. That's very helpful. And then just switching gears on EWP and Monticello, like given the weakness in single-family housing construction, if you had all that capacity with Monticello if it was online today, is the the performance of the product as such in the market -- kind of the share gain such that you'd be able to kind of be sold out? Or I'm just trying to understand like if single-family starts continues to be kind of tepid and Monticello comes online, is the demand for the product such that you're just going to sell it out anyways? Or would the ramp be slower? Or just how should we think about that in the context of sort of different levels of single-family demand?

Yes. I think a couple of things to keep in mind with respect to Timberstrand specifically. Number one, we do think we can take market share from other products with the Timberstrand product line. it's got a cost structure and performance structure that we think we can effectively go out and take market share from other products, whether that's lumber or other EWP products. Second, it is a pretty broad end-use opportunity, whether you're talking about single-family, multifamily, I think there's opportunities in commercial in mass timber. So it's got a pretty broad set of opportunities beyond single-family. And so we're feeling very optimistic about this mill coming online and our ability to sell it out relatively quickly. Now obviously, when you're starting up a new mill, it's not going to come out of the box on day 1 at 10 million cubes, right? It takes a little time to ramp these up. But we've got a sales and marketing plan in place to be able to go out there and move this product and it is, as we've mentioned previously, one of the top products in our suite of EWP products. So we're encouraged and excited about it. And even if we are in this kind of housing market, we feel good about our ability to move it.

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

So Davie, Dev and Andy, I guess the first question I had, you did a real nice job in the South on mix from what we were looking for. You had mentioned a lot of things that you were sort of challenged by -- we had heard log that are pretty full and the like, and yet you had a nice mix, you were up. A lot of that you said was from fiber log sales in the quarter. I was wondering what else contributed to the mix benefits? I know you mentioned exports to India and why that doesn't continue into the first quarter because it sounds like mix will be down even though you're going to be selling a bit more on the side of fiber logs. It's just that exports will dissipate sequentially into 1Q? And what are the risks to the upside on that front? And I have a follow-on.

Yes. I mean the answer to your initial question is really just we have the scale and diversity of customers to be able to operate through a whole variety of different markets. And that's really what we've been doing here over the last several quarters where you've seen some headwinds largely related to end markets in lumber and OSB. But as we think about Q1 and the mix, I mean, to a degree, these are all around the margins, right? And so in any particular quarter, your harvest plans might have a little bit more big logs versus small logs or vice versa. You may have a little bit more standing activity in the mix. And so really in the South, the Q1 is -- we just have a little bit more thinning activity. So there's just a little bit more pulpwood in the mix. I don't think there's any sort of material change in how we're operating the business. You see those sort of minor fluctuations quarter-over-quarter. And that's really just a reflection of that. In terms of India export program, we're really excited about how that's going. In any particular quarter, just depending on how the shipping schedule plays out, you might have one break bulk ship versus two or vice versa. And so that's really just -- the mix story is nothing material. It's just kind of those minor differences you see quarter time to time.

And then a follow-on question in EWP, we're seeing at least some pickup in dimensional lumber markets. Again, as was discussed earlier, a lot of that at this juncture is probably more supply than demand driven nonetheless prices are heading higher. We'll see what happens, but it sounds like construction markets will be stable or better this year. And just wondering why we're not seeing that yet show up in EWP pricing, and it's not significant. You didn't say it would be down a lot, but you are signaling a modest decline in EWP pricing sequentially into 1Q. I'm just wondering how you see that market in terms of supply-demand competition mix this year and in particular, what's driving 1Q.

Yes. I mean, as you know, George, it's really all about what's going on in single family. That's the primary driver for EWP. And we have seen 2025 was the fourth down year in a row in terms of housing stores. And so that just puts some pressure on EWP. Unlike OSB and lumber, you just haven't really seen mill shutdowns or the level of curtailments that you've seen in some of those other product lines. So on the demand side, we're expecting -- our base case is that housing is going to be up slightly in 2026 relative to 2025. And look perhaps if we could see even more downward pressure on mortgage rates, perhaps there's even some upside. So that's just kind of where we are and in an environment where housing has been going down for 4 years in a row, that puts a little bit of pressure on the EWP. But that being said, I think when you look at our performance relative to others, our realizations have held up better than others and we're out there really trying to take advantage of the moment and pick up market share and really deliver value to our customers. And markets go up and down with housing, and you just got to be able to navigate both the highs and the lows, and that's what we're doing. So we're still feeling very good about the EWP business. The team is doing a great job, service model, product quality. We're going to be rolling out some new products at the builder show. So we're excited about the opportunities in that business.

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

Devin, lots of commentary on housing, single family. Just curious, maybe a bit more in the way of detail what you're seeing in repair and remodel and what type of pull-through maybe you've already started to see any indications that might suggest and what you're hearing from customers in terms of potential outlook for the year. Presumably, it's mostly important for your lumber business, but if this is important for anything else, maybe share that with us as well.

Yes, you're right. It's primarily a lumber play from us. Although mean there's still some OSB take away out of that market. And increasingly, and still around the margins, but a growing piece. I think there's an opportunity with EWP into that market as well. But I'd say right now, I don't know that we've seen any sort of material pickup in activity on the ground today. Obviously, the weather issue that we just had across the South has not been helpful for construction activity, but I would say in terms of outlook, our customers in the R&R channel are expecting to see some level of growth year-over-year, probably in the low single digits. But certainly, that's an improvement over what we've seen over the last couple of years.

Okay. And I recognize this is a tough question, but what type of single-family starts or housing starts level, do you think are required in the different businesses to sort of sustain balance in the market for the course of the year at this point, keeping taking into account some of the mill closures that you've been seeing kind of begin to add up.

Yes. I mean I don't think we're really that far off in lumber. We've certainly seen a whole lot of mills closing down over the last several years. It doesn't feel like we're really all that far out of balance from a lumber standpoint. And I think from an OSB standpoint, we're probably not that far off there either. Obviously, one of our competitors announced a pretty large closure that's going to be taking effect in March. So we're probably not that far away in OSB either. EWP is a little different. You just haven't really seen any sort of meaningful curtailments or closures there. So when we think about housing starts, I mean, not that it's not relevant, of course, it is, but it's really what housing starts do we need relative to the supply that's available in the system. And those two things do balance out. Sometimes it's a painful period to get there. But what I would say, Mark, is the silver lining here is at some point, we're going to see an improvement in housing activity. I really do believe that fundamentally. And as the overall supply base has worked its way down to be more appropriate for a 1.3-ish million housing starts scenario as the housing demand picks up, you do typically have a run on the other side, where demand gets a little bit stretched as that the overall housing activity picks up. So at some point, we'll hit that, and we should have a nice run in both lumber and OSB.

Great. And maybe one -- a little bit off the beat and track. But so [indiscernible] closes today. Have you guys given thought as to kind of any implications and maybe there's not much. But that you think having them as one competitor instead of two -- just two2 timber REITs out there instead of three, any thoughts that you've been having about that?

Yes. I mean I can't see any sort of meaningful impact to us. We competed with them individually. We'll compete against them collectively. It's not really going to make a whole lot of difference in the marketplace with our customers. So I don't think it's going to have any sort of meaningful impact to us.

Our next question comes from Kurt Yinger with D.A. Davidson.

I wanted to go back to the Investor Day targets. If we were to just kind of hone in on the next 12 or 24 months, can you talk about maybe a few of the main areas that you expect could be kind of more meaningful contributors? And any sense of kind of guideposts and thinking about how much of that $1 billion you might expect over that time frame?

Yes. You bet, Kurt. I mean as we think about those targets, really, I'd have you look back at the growth in our Climate Solutions business over the last several years, right? It's not necessarily going to be linear, especially in the early portions of this growth. We got a lot of work done over the course of 2025. Of course, we laid out our targets publicly at the end of the year, but really over the course of 2025, we did a tremendous amount of work, laying the groundwork, building out the project plans, identifying resources to go after these initiatives in a thoughtful and detailed aggressive way through 2030. So as we think about the larger buckets, we've already made some progress towards some of those growth areas, thinking about going back to the Climate Solutions space. That's an area that we demonstrated progress on from our 2024 baseline to 2025, growing that from $84 million to $119 million the growth that we've done with the Timberlands optimization, that's going to contribute some of the other buckets thinking about Timberstrands, some of the biocarbon initiatives, those are going to be a little bit more chunky as those facilities come online later into it. So again, I think it's not something we can necessarily give you granular guidance, but we're really pleased with the progress that we've made to date. We'll continue to report out on our progress as we progress through 2030.

Got it. Okay. That's helpful. And then on the acquisition and divestiture front, I guess, net of the deals that you did in 2025, with what you've added, is that expected to be like a net positive in terms of Timberland's profitability in 2026? And then kind of looking at the Virginia transaction specifically, how would you have us think about what that property was doing from kind of an EBITDA or cash flow perspective?

Yes. Yes, sure, Kurt. I guess, first of all, just on the broader timberlands portfolio optimization. Obviously, a lot of that can get lost in the noise of market dynamics with things being a little bit more challenging, particularly with Western log pricing over the past period of time. So it can be a little bit challenging to see that in the results at times. But really, I'd point you back to the materials that we presented at Investor Day, we showed that the portfolio optimization work going back to 2020 is going to drive $60 million on average of incremental cash flow in the timber space. So you got to slice and dice that a little bit to think about the '24 period onward in terms of the growth target, but very pleased at that. And absolutely, the activity that we did over the course of 2025 is going to be net positive to our cash flow generation capabilities. The Virginia properties, in particular, I don't know that we're going to get into specifics on the EBITDA levels there. But any time we're thinking about the candidate for divestitures, we're looking to continue our journey to improve the overall cash flow generation capabilities of the portfolio. So while these were high-quality assets in the broader market, great interest from other parties. They were certainly below average for our portfolio in terms of cash flow per acre, harvest tons per acre without significant integration. So not something that we anticipate having a meaningful impact on our Timberlands EBITDA generation.

Our next question comes from Ketan Mamtora with BMO Capital Markets.

Maybe a couple of questions on capital allocation, Devin or Davie, leverage trying to 5x this quarter and it looks like could move higher depending on what happens to lumber OSB prices in the coming quarters. Curious kind of where is your comfort level as we move through 2026. I know kind of having an investment grade rating is very important for Weyerhaeuser. I'm just curious kind of where is your comfort level so far as net leverage has been so?

Yes. Look, I would say a couple of things on the leverage topic. As we think about capital allocation, there's a couple foundational elements. You mentioned the investment-grade credit rating, that's foundational holding the base dividend. That is foundational. So yes, we have tracked higher from a leverage perspective, but as you know, again, that 3.5x net leverage target that we have is a mid-cycle number. And so certainly, we would like to see our leverage number lower today. But just as we saw a couple of years ago when markets were really strong, and we were hovering around 1x leverage. That's not necessarily something that's going to persist. I think you have to look at the commodity pricing environment and the impact that's having on the EBITDA portion of the net debt-to-EBITDA calculation. And I also think I'd point out a couple of things in terms of context on the work we've done on our balance sheet over the last several years. We paid down a significant amount of debt. If you go back to 2019 and compare our interest expense, we reduced our annual interest expense by $100 million during that time period. We've optimized our portfolio. So notwithstanding the current state with the denominator in that net debt-to-EBITDA calculation, we feel really good about the strength of our balance sheet, and the work we've done to strengthen that. So we have a tremendous amount of flexibility as we think about the balance sheet moving forward.

And I'd even say, I mean, this is working exactly as we would have expected. When you tell me that at peak pricing, we'd be at 1 and at trough pricing, we'd be at 5, and we kind of bounce around in between over the course of the interim. I would say that's pretty much exactly how we would expect this to work.

Got it. Okay. That's helpful. And then just one other question. Given sort of the disparity between public and private market values in timberlands, would you be open to doing more divestitures in addition to kind of the one that you are doing in virgin out if the right opportunity presented?

Yes, absolutely. I mean, Ketan, we're going to do anything that we think drives long-term shareholder value. I think we've shown we've been open to divesting portions of our portfolio, the activity that we do in our real estate business also capitalizes on the value that we can unlock in our portfolio. So absolutely, we'd be open to anything that's ultimately going to drive value. I think that's something that we've demonstrated. We can be adding value any time we transact on our portfolio, whether that's on the buy or the sell side. So we'll continue to look for opportunities to optimize our portfolio.

In the near term though, would you say that you would be more of a net seller versus a net buyer or not necessarily?

Again, I think we're going to look at all the opportunities that are available. So we're going to look to optimize shareholder value for the long term, and so we'll look to be active in that portfolio anytime that it makes sense to transact on our portfolio.

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

First, you talked about upside potential in Western sawlog markets if lumber prices pick up. Can you help us just give us a sense of what kind of increase in prices or sawmill demand, how do you like to frame it that you'd need to see to create real tension and price momentum there. And then from the supply side, seems like a bit of a marginal change, but would you expect the expansion of buffer zones around the non-fish bearing streams in Western Washington later this year to have an impact on log markets there in the West?

Yes. On your first question, the markets are fundamentally tension in the West. And what we've seen from a Western log pricing is really just a reflection of really weak lumber pricing. And you'll see periods of time where buyers will purchase logs at prices that put them underwater, but they just can't do that for extended periods of time. So you typically see a pretty strong log price reaction as you see lumber prices move up. Now there may be a month -- a 2-month lag in that catch-up. But if you continue to see lumber prices move up in the West, we've seen a bit of that here recently. You'll see log prices follow along shortly thereafter. With respect to your second question, that relates to some regulatory changes happening in Washington State. Look, as with almost all regulations in Washington or Oregon or really any environment where we operate, we have the scale and expertise to navigate those pretty well. So I wouldn't expect that to have a meaningful impact on us. It may to others, particularly smaller landowners. There were some, I would say, flaws in the rule-making process to bring that forward, which is why there are several lawsuits underway. So it's not even entirely clear to me that those rules will ultimately come to fruition. But if they do, we'll manage through it, and it shouldn't be too impactful to us.

Great. That's very helpful. And then just quickly, you mentioned elevated log inventories at mills in the South. Can you just give us a sense of how those inventories would compare to where they'd normally be this time of the year?

Yes. I mean when we say that, we're talking about if a mill typically carry 7 or 8 days of inventory, maybe they're carrying 8, 9, 10. So you can in the South, it's not like in Canada where they're carrying really, really large log decks. You can work through these pretty quickly if you have either a weather event that limits log supply into the system or if you see a pickup in lumber demand and people start running full and picking up overtime shifts. So you can move through that pretty quickly. The impact in the near term is just -- if you're logged [ ex full, ] you don't necessarily have to get too aggressive on pricing. You can take a little bit more risk around the margins. But again, that can reverse itself pretty quickly depending on circumstances.

Our next question is from Hong Zhang with JPMorgan.

I guess two questions for me. Number one, how are you thinking about the pace of share buyback activity given the recent rally in the stock. And for my second question, it's encouraging that export shipments are presumably in China. Do you expect export volumes to, I guess, normalize sometime this year? Or is that more of an outer year?

Yes. Maybe I'll take the export question and David can hit the share repo question. On the export piece, I do expect that to ramp up a bit over the course of the year, but I do not expect it to get back to where it was a handful of years ago. And that's just really a reflection of the lower real estate activity that we're seeing in China, and so that picks up, I don't know that you're necessarily going to see the ramp back up to kind of those more teens -- 2000 teens levels of China log demand. But nevertheless, super excited about getting that program ramped up any option for a lot of customers is great for us, and that will be helpful for our Western system.

Yes. And then with respect to share repurchase, look, we've said that's a useful tool in the right circumstance to return cash to shareholders. We have a framework that we've used consistently to evaluate capital allocation decisions. Obviously, the factors that go into that, the math is dynamic, but the process is consistent. We've been very active over the course of 2025 and our share repurchase activity completed $160 million. That was our highest annual level in a few years, closed out the prior $1 billion authorization announced the new one. So yes, at recent trading ranges, we continue to view that as a very attractive lever. But of course, we're going to continue to weigh all the opportunities available, not just share repurchase. And so that includes maintaining the the focus on ensuring we've got a strong balance sheet, having capacity for future growth opportunities. So as always, we'll continue to look to allocate our cash in a way that creates the most value for shareholders.

Our final question is from Michael Roxland with Truist Securities.

This is Niko Pacini on for Mike. Just starting off the 1Q Timberlands EBITDA guide seems maybe a little light relative to history. I think there's usually a bump up from 4Q to 1Q. We've had some commentary so far, but I guess how does that reconcile with comments that regional log markets are kind of trending more towards balanced supply/demand even if you have some inventory out of whack.

Yes. So the way I would frame that up for you is when you look at Q4 and Q1 to date, we've just seen largely because of what's happened in the lumber market, we've seen pretty soft log prices. And so to some degree, last year, we kind of saw that trending in that direction. And so we pulled a little bit more volume into the summer months so that we could take advantage of higher pricing. And so what you saw is volume coming off in Q4 as well. As we've trended into Q1, when we entered Q1 and so for January and to date, log prices are still softer than we would like. And so you look at our Q1 volume in Western Timberlands it's down relative to what you'd normally see in Q1. Now we still have comparable volumes across the year. And so we're going to spread that out as the year progresses when we expect to see pricing a little higher. So quarter-to-quarter, you might have these little fluctuations in volume depending on what's going on in the market. But our primary goal, obviously, is to maximize profitability across the year. And so that's really the context around Q1 as we pulled a little bit of volume back primarily because January and early February, we think pricing is going to improve as we get deeper into the spring and the building season. So we're going to put a little bit more log volume into the market when pricing is better.

Got it. That makes sense. And then just following me up in your base CapEx target of $450 million, excluding Monticello, what are some of the key projects there that you're looking to complete in 2026?

Yes, you bet. So yes, we did guide to $400 million to $450 million. That is in line with the guidance that we provided back in in December at our Investor Day. Really thinking about it, it's the typical suite of projects on the timberland side, that's Freeport station, silviculture, roads, bridges, those kind of things. on the wood products side, it's thinking about the projects that we've successfully completed in some of our lumber mills, replicating those elsewhere, really with a focus on reducing cost, improving recovery, improving reliability. So really more of the same in terms of the themes that we've been working on in our CapEx program over the last several years.

Got it. No one particular big project to call out or anything outside of Monticello.

No. That's right.

We have reached the end of the question-and-answer session. I would now like to turn the floor back over to Devin Stockfish for closing comments.

All right. Well, thanks, everyone, for joining us this morning. and thank you for your continued interest in Weyerhaeuser. Have a great day.

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

All right. Well, welcome, and thank you for being here with us for our 2025 Investor Day. We are really excited to share with you some of the terrific things that we've been doing at the company over the last several years and importantly, to talk to you about the next phase, which is our accelerated growth program. So we've got a lot to cover today. I'm going to go ahead and get started. I will note, we are going to be making some forward-looking statements today. We'll also make reference to some non-GAAP financial measures. So typical cautionary language will apply to those, of course.

All right, diving in. So today, my colleagues and I are going to spend the majority of our time on two key themes. First, we're going to touch on the unrivaled platform that we've built at Weyerhaeuser over the last few years. We have been doing the hard work, and we have built an incredibly strong foundation at our company. The focus on operating improvements, operational excellence, innovation, the work that we've done on the balance sheet. As a result of these efforts, our company is better positioned today than we have been in many, many years.

And second, we're really excited to share with you the next phase of our company's journey, which is growth. Over the course of this morning, we're going to lay out our new multiyear growth program that will build off of this solid foundation, improve our cash flow per share, reduce volatility and ultimately deliver an incremental $1.5 billion of adjusted EBITDA by 2030 over our 2024 baseline. This will be a catalyst for our company to improve the stock price and position us to deliver industry-leading returns in the years to come.

Quickly, for those that aren't as familiar with our story, Weyerhaeuser is a large integrated forest products company operating across North America with a foundation that's truly world-class. At the heart of our company is our Timberlands business. We are the largest private owner of timberlands in North America. We have 10.4 million acres of high-quality, highly productive timberlands across the U.S. We also manage another 13 million acres in Canada under long-term license agreements. The quality, the scale of our timber portfolio is unrivaled in the industry.

We also bring deep expertise and advanced technology to drive value across our forest. We're also one of the largest manufacturers of wood products in North America. We have 33 mills across the U.S. and Canada, where we produce lumber-oriented strand board, a variety of engineered wood products. We also have 21 distribution facilities in key locations in the U.S. We have been focused on cost discipline and operational excellence for a long time. We have industry-leading margins and strong brand recognition with our customers.

And lastly, we're focused on maximizing the value of every acre we own across this vast holding. There is a lot of optionality inherent in this portfolio to create and capture value. I will make just a quick note. We are changing the name, what was formerly our Real Estate, Energy and Natural Resources business is going to be referred to as strategic land solutions going forward. And this is really just reflective of the broadening scope of what we're doing in this business, both today and as Paul will lay out here in just a few minutes, part of our growth initiatives.

And it's all underpinned by the enduring high-performance culture that we have at Weyerhaeuser with portfolio management, OpEx, innovation. We have long had a competitive advantage here. And again, we built a really world-class foundation at this company. I'm going to get into growth here in just a minute, but I wanted to take a few moments just to highlight some of the improvements that we've made at this company over the past decade. So back in 2013, when my predecessor came into this role, we had some issues. We had some challenges that we had to deal with as a company. So we got to work.

We cleaned up the portfolio. We launched the first iteration of operational excellence. We really dove in on the cost structure. And as a result of those efforts, -- we changed the trajectory of the company, going from what was, in many instances, bottom quartile performance to a much more competitive position. We also had the opportunity to merge with Plum Creek during this period. This was one of those once-in-a-generation opportunities that you have to put the #1 and #2 players together to create the industry leader in the timber space.

So a lot of great work during that period. When I stepped into the role in 2019, the next phase of our journey was around accelerating performance improvement and really strengthening the foundation of the company. And I think we have done some tremendous work over the past 7 years. We've continued to focus on operating improvement. We are now industry-leading across our businesses. We strengthened the balance sheet by paying down debt, reducing pension liability. We reimagined the cash return framework. to better align the cash return framework with the cyclicality of our industry.

And importantly, we returned a significant amount of cash back to shareholders, nearly $7.5 billion of cash returned to shareholders over this period. And we brought innovation back to Weyerhaeuser, and we launched the Climate Solutions business. So a lot of terrific work by the organization during this period against the backdrop, I might add that was not without its challenges with the pandemic and hyperinflation and high interest rates, et cetera. As a result of these efforts, the company is in a better position today than it has been in many, many decades.

And by the way, as you can see on the bottom of this slide, we have repeatedly set aggressive, ambitious targets for the organization and importantly, repeatedly met or exceeded those targets. And I'll touch on the 2021 Investor Day targets here in just a moment, but I think we have really started to develop a reputation that we do what we say we're going to do. And at this point, we really are in a class by ourselves. Our competitive advantages are not just incremental, they're fundamental.

The scale, the quality, the diversity of our portfolio allows us to tailor solutions to our customers so that we can win in the marketplace, while at the same time, maximizing the returns across our assets. We have a demonstrated track record of industry-leading operations and performance. We have a disciplined yet flexible capital allocation approach that allows us to balance the need to invest for the future while at the same time, meeting our commitment to returning cash to shareholders today. Our people, our culture are strong.

We've been investing in new technology and innovation to unlock opportunities. And as I'll touch on more in a moment, the integrated nature of our portfolio provides a lot of opportunities to drive synergies as well as a lot of the growth opportunities we'll talk about. At this point, we really are the only large-cap integrated forest products investment in our space. We are poised for accelerated growth, and that will position us to deliver strong returns for our shareholders in the years to come.

I want to spend just a few minutes here talking about a really important part of our business and our strategy, and that's the integrated nature of our portfolio. We think this is a competitive advantage for us. It is intentional. It's strategic. It's core to many of the growth initiatives that we're going to talk about over the course of the morning. From an operational standpoint, it provides a significant number of benefits from being in the woods where it allows us to optimize our transportation network.

It allows us to lower our log and haul costs in the mills. It allows us to get the right log into the mill to maximize throughput, maximize profitability. It also allows us to manage through just all of the various things that happen in the world, whether it's fire, whether it's weather, market disruptions. It provides a lot of levers to make sure we're capturing value across market cycles.

And the financial benefits are real. We believe the benefit of having these businesses together is north of $100 million a year, in benefits just by working these businesses together. Now we're not capturing all of that today. We're getting a significant chunk of it, but we have line of sight on how to get there, and that's part of the $1.5 billion that we're going to lay out for you this morning. And I would note, I believe there's more even on top of that as we get into this in more detail.

One of the more compelling aspects of this portfolio is the ability to generate steady returns across market cycles in the Timberlands and Strategic Land Solutions business while generating significant cash flow from our manufacturing businesses during times of relative strength in the housing market. As you can see, Timberlands Strategic Land Solutions, consistent, reliable performance. We average about $1 billion of EBITDA per year in these businesses.

This is what funds the sustainable base dividend. It also underpins the overall financial strength of the enterprise. Now Wood Products, a little bit more variable, but across the business cycle, you can generate really significant strong returns in this business. And I would say with our scale and operating discipline, even during weaker markets, we're still able to generate returns from this business. Collectively, we think this creates a real competitive advantage for us.

And I would say the Wood Products business is also what funds a lot of the growth initiatives we're going to talk about as well as share repurchase and supplemental dividends. Each of these businesses is sizable and compelling on its own. But together, it creates a real competitive advantage and we think is a value multiplier for our company. Now obviously, we've been in a more difficult environment here recently with housing stuck in second gear, repair and remodel has been a little soft. That's put some pressure on pricing in a number of our product lines.

And you're seeing that really across the industry. There is a degree of cyclicality that's inherent in a lot of these businesses. And while we're optimistic that the medium and long-term demand drivers are going to be very supportive of our business, you got to be able to navigate some of these market fluctuations that are a part of the housing cycle. So I'll just make a few comments on that specifically. I believe -- we believe that cyclical businesses can be really good businesses.

You can make a lot of money and generate a lot of value as long as you have a strategy that's aligned to the cyclicality of those businesses. And at Weyerhaeuser, we now have a strategy that's better aligned to the cyclical nature of many of our businesses. What do we mean by that? Well, we stay focused on cost and operational excellence to make sure that we are the low-cost producer. That is critically important.

We have strengthened the balance sheet by paying down debt, reducing pension liabilities, refinancing debt at lower rates. We have readjusted our cash return framework to ensure that the cash we're returning to shareholders is reflective of the current market conditions. Collectively, this allows us not only to navigate through market fluctuations, but to be able to go on offense even in a down market. I think that's a big differentiator of the Weyerhaeuser of today versus the Weyerhaeuser of the past.

And I think that's something that will be seen as a real competitive advantage for us over time. Case in point, you can see how we've navigated two different years where we had softer pricing. Again, I think this just reinforces the strategy, the actions we're taking. You can create a lot of value in a down market in cyclical businesses if you have the flexibility and the dry powder to take advantage of opportunities as they arise. And that is exactly what we're doing.

We are putting the pieces in place, building the framework so that we can capitalize as market conditions improve, which we know they will. I don't see a lot of our competitors being able to do this, at least not to the same degree. And again, this is something that will be over time and over market cycles, a real competitive advantage for our company. So let me just take a few minutes to update you on the long-term targets.

So as many of you will recall, back in the fall of 2021, we laid out some ambitious aggressive targets for ourselves. Now candidly, I don't think we fully anticipated some of the headwinds that we would be facing during this period with inflation and trade disputes and all the other things that have happened. But the organization, as they always do, aligned around the goals and we got after it. And once again, we've been able to deliver on commitments that we made.

In the Timberlands business, during this period, we've acquired $1.2 billion of high-quality timberlands to add to the portfolio. At the same time, we've divested of some noncore timberlands, recycling that capital, I think, again, proving our prowess in portfolio management. Collectively, these transactions have significantly enhanced the value and the quality of our timberlands portfolio. On the Climate Solutions side, we set a goal to hit $100 million of adjusted EBITDA by 2025. I'm pleased to report that we have hit that number in 2025.

Recall, we just started this business in 2021. So I'm incredibly proud of the organization and their ability to build out the expertise, build out the pipeline. We are clearly leading in this space. And Paul is going to talk to you a little bit more here later this morning about how that sets us up for future growth in the Climate Solutions business. On the lumber side, now look, it's been a more challenging environment here recently. And so there have been some puts and takes.

We have elected to defer some projects. Certainly, over the last 18 to 24 months, we've held back some production just given the softer demand environment. That's prudent. That's exactly what you would want us to do. That being said, we have made investments into this business. So as the conditions improve, we can readily ramp that production up and take full advantage of those investments. And Brian is going to talk to you a little bit more about the plan going forward in the lumber business.

I'm just incredibly pleased with the organization's ability to deliver on the OpEx target. This has been an incredibly challenging environment from an inflation standpoint to get after OpEx. And I think this really demonstrates the OpEx culture that we have built at this company and our ability to do that. And you can see that reflected in our relative margins, the industry-leading EBITDA margins, particularly in the manufacturing businesses, just a core part of how we run the company, very proud of the organization there.

And lastly, we returned a significant amount of cash back to shareholders. Over this period, $6 billion of cash. As part of that, we have increased our base dividend 5% a year each of the last 4 years. We've closed out a $1 billion share repurchase program and put another $1 billion program in place. We've sprinkled in some supplemental dividends as well, again, just demonstrating this company's commitment to returning cash to shareholders.

So again, just really pleased with the organization's ability to get after it, aggressively go after targets and meet our commitments regardless of the backdrop. So as we close out 2025, it's time to look forward as to what's next. And what's next for us is growth. Over the course of this morning, you're going to hear more about our multiyear growth program that will build on the solid foundation, drive improved cash flow per share and ultimately deliver an incremental $1.5 billion of EBITDA by 2030.

This will position us to deliver strong returns in the years to come, and we're really excited. At a high level, the strategy around our growth program is really about driving portfolio-wide growth to improve our cash flow across market cycles. And so to that end, we've got a broad-based growth program that has initiatives cutting across all of the businesses and the enterprise. We think that does a few things. First, it derisks the program to some degree, just given the breadth of these initiatives.

And it also means that we're not overly reliant on any one initiative or business to deliver on this plan. In order to get after this, we're going to lean on three key accelerators. First is the portfolio. The scale, the quality, the diversity, the integrated nature, it provides a lot of optionality for us to create and capture value, whether it's timberlands or real estate, wood products, climate solutions, there's just a lot of inherent optionality. We're going to be going after that to drive growth and value.

Second, capital allocation. Our approach is disciplined, but it's also flexible. It gives us the opportunity to both return cash to shareholders while also retaining some cash so that we can fund the growth initiatives that we're going to lay out for you today. We'll be thoughtful about capital allocation as we always are, always with a view towards creating long-term shareholder value. And last, people, culture and technology. These are real competitive advantages for us.

We build a strong operating platform, and we're now ready to put that to use to drive the growth program that we'll lay out. So on this page, you're going to see a lot of different initiatives. And over the course of this morning, you're going to hear more detail on each of these. I'll say just a few words to set it up. First, -- each of these line of sight growth initiatives has a specific multiyear action plan with accountabilities and resource requirements.

The vast majority of these are already underway to some extent. Those that aren't will be shortly. Many of these -- most of these are organic initiatives that are, to a large degree, under our control. That gives us a lot of confidence in our ability to go after this growth plan. Just a quick comment. You'll see some additional potential catalysts at the bottom of this page. These are not included in the $1.5 billion number that we're going to talk about today.

I do think some of these will come into play, will come to fruition over this period. They're just either early stage or there's a little uncertainty made it hard to model. I'd also note, as we really lean into this next phase of growth, and the way that you start to get that momentum with the organization, there will be additional initiatives that are not reflected on this page that come up. And I say that really just to point out, we believe there is upside over and above the $1.5 billion that we're going to talk about this morning.

All right. So just to get to the bottom line, here's the waterfall chart. It shows you how we get to the $1.5 billion. The first four buckets, Timberland, Strategic Land Solutions, Wood Products and Enterprise initiatives. These are all of the initiatives you'll hear about from my colleagues over the course of this morning. This comes from a bottoms-up approach. That's how we built out this program. A lot of confidence in our ability to get there. That gets you to the $1 billion.

We've also modeled in what we think is a relatively conservative number of $500 million from some pricing uplift, and I'll speak to that here in just a moment. And that gets you to the $1.5 billion number. I will note, this is a 5-year plan. And so as is the nature of long-term plans, there will be some unanticipated hurdles over this period of time. That's just the nature of these things, right? We know how to do that. We'll pivot, we'll adjust as needed.

But that being said, our leadership, our management team, we're aligned around this. We have a high degree of confidence that we can and will deliver on this program over this period. We've been building the foundation. We put the pieces in place, and now we're ready to go after this aggressively to get to this growth number. A few comments just on the $500 million. So two things I would point out here. Number one, this is off of a 2024 pricing baseline.

As you may recall, we had a softer pricing environment, particularly in lumber in 2024. So it's a relatively slow starting point. Number two, we have a lot of leverage to lumber oriented strand board and Western logs. It does not take a lot of pricing uplift to really start to move the dial from an EBITDA generation standpoint.

We have, for purposes of this exercise, tried to be conservative because we want to focus most of the discussion today on the specific initiatives and not debate pricing assumptions. But from our view, this is relatively conservative. Davie is going to provide a little bit of sensitivity around pricing here in just a bit. I'm not going to spend a lot of time on macro drivers. We've talked about this a fair bit over the years. I'll make just a few brief comments.

First, on housing. We all know there is a significant shortage of housing in the U.S. And notwithstanding some of the recent challenges to build out from under that deficit, over the medium to long term in the years to come, we're going to have to build millions and millions of houses in the United States. And that will be a significant tailwind, both for our existing business, but certainly for the growth initiatives that we're going to lay out.

We also think there's an opportunity for wood-based building to take market share from other building materials. We've seen some momentum around that lately. We think that continues, perhaps even accelerates. That will be supportive of a number of the growth initiatives that we're going to talk about. Travis will talk about this in a little bit. As we look around the globe and we look at the demand for fiber relative to the supply from some of those historical sources, we think there's an opportunity to supply more fiber around the world from the U.S., particularly out of the U.S. South, and we've got a plan to do just that.

And then lastly, on climate. I think all of the challenges surrounding climate change are going to present a number of opportunities for us in our Climate Solutions business. So collectively, again, we think there are a number of macro drivers that will be very supportive of the growth program that we're going to lay out this morning. I'd be remiss if I didn't spend at least a moment talking about people and culture and our leadership in sustainability. These have been foundations of our company for a long time. It's one of the reasons we're still here after 125 years.

Rest assured, we're going to continue to bring top talent into the organization. We're going to devote resources to training and developing those folks to make sure that we have the right leaders to lead our business and drive these growth initiatives. On sustainability, we've been a leader in sustainability for a very long time. We were doing this before people were talking about it. And this is a core part of how we run our company. It's core to our values. We think it drives a lot of value over time.

And so that will continue today, tomorrow and really for the foreseeable future. So to recap, we've done a lot of work over the last decade to build a better, stronger, more valuable Weyerhaeuser. We have an incredibly strong foundation, and we're ready to build off of that to drive the growth program that we're going to talk about over the course of this morning. Again, most of the initiatives you're going to hear about, they're already underway, largely organic, largely under our control, have a lot of confidence in our ability to execute on those.

As we do, it will improve our cash flow, reduce volatility, ultimately drive $1.5 billion of incremental EBITDA by 2030. So with that, I'm now going to turn it over to my colleague, Travis Keatley, to talk about Timberlands and walk you through the growth initiatives in his area.

Good morning, everyone. My name is Travis Keatley, and I'm the Senior Vice President of our Timberlands business. And I'm looking forward to sharing more about our timberlands with you this morning. I'll touch on who we are and what we do, and I'll finish with a review of our growth initiatives looking forward. But first, a little bit about me. I'm in my 27th year with Weyerhaeuser, having spent all of that time in our Timberlands business in various operating and leadership roles.

And prior to serving in this role, I benefited from leading our Southern Timberlands business from Arkansas and our Western Timberlands business from Washington. So starting with our portfolio. Our timberlands are the foundation of this company. And as you know, we are the largest private timberland owner in North America with more than 10 million acres of highly productive, high-quality timberlands across every key growing region.

This is an unrivaled portfolio, both in terms of scale and diversity and candidly cannot be replicated today. In the West, we own 2.5 million acres of premium asset timberlands that are in one of the world's best timber growing regions. Additionally, it's located in one of North America's strongest log markets. This is a clear competitive advantage for us. And in the South, we own nearly 7 million acres of high-quality Southern yellow pine plantations whose broad geographic diversity puts us into every key market in the South.

And in the North, we own 1 million acres of mixed species forest, including high-valued hardwood sawlogs. This scale provides us with tremendous market diversity and customer mix. So speaking more about our customers, we have three distinct customer segments that provide a lot of benefits to our sales portfolio, our internal sawmills, our third-party domestic customers and our export segment. Our goal is to maximize total value through the system, both for us and for our customers.

And we do this by providing customer solutions that others can't. For example, when we deliver consistent and reliable base loads of volume to our customers, we are rewarded with increased market share and premium to market pricing. Our export segment provides us with unique exposure to international markets that are based on different economies unrelated to the U.S. housing starts. This segment provides a meaningful premium to our domestic alternatives.

So in total and importantly, these three segments allow us a lot of optionality in how and where we go to market to increase our margins. Now moving closer to the forest. We have deep expertise in forestry. In fact, we've been at this longer than anyone. This year, we're celebrating our 125th anniversary. And for over a century, we've been conducting scientific research across our portfolio. And among other things, that research has produced the world's largest data set for growth and yield measurements for Douglas fir and Loblolly pine, both.

For us, forestry begins with our proprietary seedings. For 7 decades, our genetic program is focused on increasing yield, desired wood properties and environmental adaptability that's tailored to our land that informs our customized planting programs. And for our targeted silviculture , we leverage in-house models using advanced imagery like LiDAR and Leaf area index to guide our foresters to determine which stands will benefit from treatment and importantly, which stands will not.

This ensures that every acre we treat will meet the investment thresholds that we have set. And our benchmarking tells us that we have the lowest silviculture cost in the industry. We know how to grow trees. We know how to influence that growth, and we know how to keep them healthy. Today, we have over 2 dozen PhD scientists that are deep subject matter experts in critical areas such as silviculture, forest health, clean quality, and wildlife habitat.

So this further cements our position as the leader in forest stewardship. As for our supply chain, it's both unique and strong as we service customers from 15 miles to 6,000 miles away from our forest. And if you were to consolidate our forest, it would be the size of Switzerland or 1.5x the size of Massachusetts. And on our forest, we manage 70,000 miles of roads, which is significantly more roads than that of our national interstate highway system.

My point is our supply chain is massive. We've been managing it for a long time, and we're best-in-class operators. Our supply chain begins at time of harvest as our forests meets financial maturity. And determine this, we use our proprietary growth and yield harvest planning tools, which we instill strict governance and financial controls. This gives us extreme confidence in our annual harvest levels as well as the sustainability of our forest.

We also have a strong track record of improving the productivity of our harvesting and hauling crews and contractors. And this is a core part of our supply chain. Over the last 5 years, we've made tremendous improvement at mechanizing the steep slopes in the West, which I'll talk about more in a moment. And across our operations, we are deploying route optimization through our centralized trucking system to efficiently deliver 5,000 truckloads of logs each day.

So to simply frame this up, our stable customer base affords us the opportunity to design and operate an efficient coordinated network of harvest and haul crews across our footprint. These contract crews are able to work year round and are able to operate at maximum production each day, which is very important. Collectively, all of this has positioned Weyerhaeuser with the lowest harvesting and haul cost in the industry.

And driving this performance is our relentless focus on operational excellence. This is core to everything we do. It's who we are at this point. And I'm going to give you two examples today, and I'll start on the left. And in parts of the South, we were seeing shortages of truck drivers that was beginning to have a negative impact on the productivity of our harvesting crews. To solve this bottleneck, we worked with regional and national transportation fleet providers who are able to source truck drivers outside of the local labor market.

These transportation providers also have a high level of sophistication and access to capital that make them a very strong partner with Weyerhaeuser over the long term. After applying this strategy to our Arkansas, Oklahoma region, we saw harvest productivity pick up significantly, and we saw our logging costs decrease materially. On the right, we have another example of OpEx, this time in the West, where we continue to reduce our reliance on large tower logging systems.

For context, these tower systems are used on the steep slopes in the Pacific Northwest, and they are, by far, the most expensive harvesting cost systems today. So to do this, we're leveraging advanced harvesting equipment that uses grapples and cameras instead of ground crews. And the advantage to these systems is that their utilization rates are much higher than tower logging systems. And in areas where we've deployed this equipment, we've seen our harvesting productivity increase by as much as 50%.

With OpEx firmly embedded in our culture, innovation is the next step at driving continuous improvement from here. One area with considerable promise is advanced imagery, coupled with our in-house AI modeling. As we develop and deploy this technology, we're seeing improvements in the consistency of the millions of decisions we make managing the forest. We're reducing our reliance on labor, and we're laying the groundwork for autonomous equipment.

And Weyerhaeuser is uniquely positioned to benefit from these advancements given the decades of data that we've collected. So I'm going to walk you through a video that illustrates four examples for how we're using this advanced imagery and AI models to enhance our operations. Let's start the video.

First, we are leveraging drones to take abovecopy images where AI is recognizing and collecting information like tree species, trees per acre and distance between trees, all of which is important information to have before and after commercial thinning. Similarly, we're applying this technology on a host of forest inventory exams, analyzing seedling quality and density in our nurseries and assessing competing vegetation levels to inform silviculture investments.

Below the canopy, we're working with Nordic Forestry Automation to leverage AI to assist operators who make thousands of value-enhancing decisions every day. Thinning is one of these applications. And overthinning and underthinning can have irreversible financial outcomes, and this technology automates some of those decisions for our contract operators. Here, you will see a 3D image of a Western harvest unit. Harvest unit designs influence tens of millions of dollars in road and logging costs each year.

At Weyerhaeuser, we're using satellite, landform and slope imagery to help our people make the best decisions today for road locations and the placements of advanced harvesting systems. We have started matching our proprietary data to these images to build AI models to produce optimal decisions that will further reduce costs. Finally, you will see how advanced imagery allows for driverless skitters. Last summer, we partnered with Kodama Systems for a pilot project where we successfully demonstrated a remotely operated skidder.

In this case, the operator was in his home office 400 miles away maneuvering the skidder, which is a much more comfortable work environment than inside this cab. The Kodama System has terrain mapping and AI-assisted navigation, which improves efficiency and could result in one operator operating multiple skidders. Ultimately, this puts us on the path towards full autonomy, which will improve how we harvest timber.

And this brings us to our competitive position, which is unmatched. Our scale, our stable customer relationships and our integrated platform are meaningful competitive advantages that allow us to manage through dynamic operating and market conditions. Our delivered log model allows us to capture additional margin through increased market share and premium to market pricing and on the bottom line through our low-cost supply chain.

Our daily alignment with our Wood Products business provides significant value across our integrated portfolio. We have built a world-class timberlands business, and we -- our performance leads the industry. So bringing everything together, we're the industry leader in a very compelling asset class. On the left, you can see that timberlands have a durable track record of appreciating in value through time with 20-year CAGRs in the South in excess of 3% and 7% in the West.

And this does not include the uplift that we generate when we apply our expertise and capabilities. So the best way to illustrate how we do this, is to walk you through our approach to acquisitions, which is on the right. We start by targeting timberlands with a 4% to 6% near-term cash yield. This ensures that those properties are competitive in our portfolio on day 1. From there, we apply our scale, our integrated platform, our tree growing and supply chain expertise to drive additional returns over the longer term, typically in the 7% to 8% range.

And from here, we can drive even higher returns through the diverse options that are afforded to us through our strategic land Solutions business. All said, we have a world-class portfolio that's delivering meaningful, stable cash flows while appreciating in value over time. So now I'm excited to turn our attention to our growth initiatives in timberlands, and they cover four key areas: ongoing opportunistic A&D, increasing harvest volume, new demand and product uplift and our Southern export expansion plans.

These initiatives will deliver improved cash flow per share and to some degree, additional stability as they're not all directly tied to U.S. housing. Because of our competitive advantages, we are well positioned to grow, and we're ready. We have the culture, we have the energy and we have the skill to grow this business. So let's dive in. Our first initiative is to drive EBITDA growth from additional A&D activity. There are two components to this target. First is capturing the full value of the acquisitions that we've already completed.

And the second is generating additional value from ongoing acquisitions moving forward. Activity over the last 5 years has been balanced between the acquisitions and dispositions, and the net impact has been an increase of $60 million of annual cash flow, which is very meaningful. And this demonstrates the value we can create both on the buy and sell side. We have a lot of conviction in the value of this asset class, and we're going to continue to evaluate strategic opportunities that enhance our portfolio.

As always, we'll remain disciplined and nimble with our approach, all balanced against the broader company-wide growth initiatives that you're going to hear about this morning. To illustrate our portfolio optimization work, I'll showcase our Carolinas acquisition that we completed in 2022. These are exceptional timberlands in our Southern portfolio. They're strategically located in strong coastal markets with export optionality, and they have integrated seamlessly with our existing timber and mill operations.

With 3 years of ownership, they're delivering exceptionally strong EBITDA, EBITDA per acre and harvest tons per acre, and we couldn't be more pleased. And we haven't -- we've just begun applying our expertise and capabilities, things like our lower-cost silviculture regimes that we're putting in place, leverage our scaled low-cost contractors, increase our local market share through our national customer relationships and doing this work with our existing employees. And on the right-hand side of the slide is our strategic land solutions team has identified additional value, $35 million of additional value above and beyond what was identified at time of underwriting.

This includes options like mitigation and conservation projects, renewable energy sites and other real estate opportunities. This performance captures the essence of our portfolio optimization, which allows us to deliver industry-leading returns over long periods of time. Volume is our next area of growth, and I'm confident in our ability to deliver on this target as it has very little risk. And this improvement is really driven by two factors: more volume per acre and more harvestable acres.

So the increase per acre is driven and a result of the previous genetic and silviculture investments that we've already made through the years. The additional harvest acres are due in part to the reforestation efforts we made following the eruption of Mount St. Helens in 1980, now as those trees and stands of timber are coming to financial maturity. Our sales and marketing team and our supply chain leaders have a very solid plan to bring this timber to market during this period.

Our next area of growth is new demand and product uplift. And I'll start by sharing we're going on offense with our own initiatives to consume millions of tons of our fiber directly from our forest, projects like our biocarbon joint venture and our greenfield timber strand facility in Arkansas, which Brian and Paul will talk more about both of these projects in a moment. Now individually, these projects will have a meaningful impact on timberlands margins.

And collectively, when strategically located, they have a compounding impact on our cash flows due to our integrated portfolio, demonstrating the strength that, that affords us. At the same time as we're making these initiatives, the ongoing regional manufacturing cost of lumber is going to continue to drive capacity to the U.S. South. As new demand comes to the South, it creates a product uplift opportunity for us where we can take a lower-value product and sell it into a higher-value category.

So what I mean by that is commonly in the South today, the small sawlog, which we call a chip and saw, it is sold into the pulpwood market. As new demand comes into Wood Baskets, they often target that low-cost sawlog, which allows us to get paid a sawlog price instead of a pulp price. Another exciting opportunity is on the upper end of the value continuum, which are utility poles. And poles command about twice the margin of sawlogs.

Pole demand is underwritten by the ongoing grid hardening efforts that are underway as well as the normal replacement rate for the distribution poles that are currently in the ground. Both of which are unrelated to U.S. housing. We naturally grow a component of poles in our forest today, and we're working closely with our key customers to increase our sales. And we're open to changing our silviculture moving forward to grow even more poles.

For example, in areas where we have our carbon footprint and we extend the rotation age, we will generate more poles on that footprint. Another benefit of the new lumber demand continuing to come to the south is we typically see increases in sawlog prices. And to be clear, as Devin said, this value is not included in our $150 million of growth initiative for timberlands. This would be on top of that. This map shows the capacity relative to our ownership. And in the circled area, which is our North Louisiana, Arkansas region, you can see that there's been 17 newly completed or announced mill expansions. And during this time, we've seen our sawlog prices increase by more than 10%. And today, in the north part of this region, our sawlog prices are trading very near $55 a ton.

And we expect this trend and dynamic continue through time and across the South, and our portfolio stands to have an outsized benefit. But our growth doesn't stop here. Several of our Wood Baskets have inherent global access opportunities that we're really excited about, and we're going on offense here as well. And that brings us to our Southern export initiative. As we look around the world, the global supply of timber is declining over the next decade.

We're all familiar with the beetle kill in Canada about a decade ago and the impact that is having on their timber supply today. More recently, Central Europe experienced a similar outbreak, and they're in the final stages of completing their salvage operations. Other parts of Europe, other countries are experiencing declining timber availability due to changing policy and regulations. At the same time, we believe the U.S. South is best positioned to provide the world with timber.

And we're the only company that can capture the full value of that for two reasons. First is our history with log exports is unrivaled. In Washington, we own and operate the largest log export dock in North America. And for 40 years, we've been sending break bulk vessels to Asian customers. During that time, we've developed deep institutional knowledge of international trade and supply chain management. No one else has this capability or history.

Second, we have a unique advantage to scale our shipments out of the U.S. South to Asian countries, specifically India. India has 1.5 billion people in a growing middle class. And over the next decade, their GDP is expected to grow at exceptional rates. As India continues to invest, develop and grow, their wood consumption will increase in areas like lumber, plywood, furniture and other appearance-grade applications.

Today, there is strong demand and interest for Southern Yellow Pine for a couple of reasons. First, its inherent strength properties; and second, its aesthetic preference compared to other species. In India, we've developed a strong customer base. And today, their demand is growing. And in response to that demand, we've increased our export capabilities to allow for break bulk vessels out of the Gulf South.

These break bulk shipments are very important because they allow us to lower our supply chain costs meaningfully, and they apply scaled advantages in the marketplace. And I would point out that no one else is doing this. And I'm happy to share that later this month, our fourth break bulk vessel will sail to the Port of Condola. In total, this break bulk capacity also allows us to allocate our existing container business on the Atlantic Seaboard to other countries.

And we're very excited about the opportunities and conversations we're having in Vietnam and Thailand and Cambodia. And moving forward, we see scenarios where we can be delivering to other Asian countries, parts of Europe and Middle East as an example. So in closing, we have a very ambitious growth target of $150 million of additional EBITDA. It's very motivating and exciting to our teams, and I'm looking forward to delivering on this commitment. Today, I've touched on our unmatched portfolio and our industry-leading performance, and I'm certain that our people and our culture are built to meet or exceed these targets. Thank you for your time.

I'll now turn it over to Brian.

Well, thank you, Travis. Good morning. My name is Brian Chaney. I'm the Senior Vice President of Wood Products. I've been with Weyerhaeuser Company almost 30 years. I've worked in a variety of leadership roles and operational roles across our platform, working in all of our Wood Products businesses and spending a little time in Timberlands as well. I'm excited to be here today, and I'm looking forward to sharing with you our industry-leading platform in terms of our Wood Products business and also sharing with you our growth initiatives over the next 5 years.

So let's dive in. And I'd like to start by just providing a little bit of a crosswalk and an orientation to our Wood Products business. So today, we have one of the largest scale and most cost competitive wood products businesses in the industry. We have brand recognition with all of our customers in all of the geographies that we operate and sell products in today. We have industry-leading portfolio in terms of margins, and it's really driven in terms of scale, diversification and quality.

We've got three core manufacturing businesses, starting with engineered wood or EWP. We have six facilities in this business in terms of our core business. That's a solid section as well as I-joists. We also have three facilities that are veneer and plywood and one MDF plant. And this is the largest capacity EWP business in North America. Our lumber business is the second largest producer in North America, 17 facilities across the U.S. and Canada.

We're highly integrated with our lumber business and our Timberlands organization. We're the fourth largest producer in OSB with six strategically located plants across Canada and the United States. And finally, we have a complementary business in distribution, which is integrated with our various manufacturing lines. We have 21 locations across the U.S. that provide top markets for our products as well as complementary products.

We'd like to say that we're taking our products the final mile to our customers in distribution. So over the last decade, we have worked intensively to build out our capabilities and build a top quartile top-performing commodities businesses. In lumber, we have strategic integration with Timberlands. I would call out that, that partnership allows us to maximize our supply chains, ensuring that we have the right logs to the right mills in the right sizes and dimensions and structures such that we can provide customers the right products and ensure manufacturing efficiencies.

We're poised for production growth in the future as we've made investments in this business that we'll take advantage of when the market conditions are appropriate. In our oriented strand board business, it's a well-managed, very lean and efficient, very low cost. This business has a 90% RONA based on the last 9 years, and we've really benefit in this business from high-quality products with a special focus on flooring. Now we have price leverage in our commodities businesses. For a product pricing uplift to $10, we can gain $50 million of EBITDA annually in our lumber business and $30 million of EBITDA in our OSB business.

Now I'd like to move to our OSB -- sorry, our EWP product line. And today, we have the premier brand in this business, and that's our Weyerhaeuser Trus Joist or TJI brand. We're known for the quality and breadth of the product mix. We're known for the quality of the field service from our teams. We have unique and fantastic in terms of product quality and in terms of innovation. Today, this business not only serves the residential single-family market, but it also serves a variety of multifamily projects. And in addition to that, we see a growing commercial, mass timber and industrial market segment.

Along with our broad mix, I would call out to you that our solid section product beam line is the most extensive and complete in the industry. Today, we offer veneer and strand-based solutions, and we also offer our branded technology in Parallam and timber strand. In addition to that, the financial results in this business are strong. On average, over the last 5 years, our annual EBITDA has been at $365 million. And our EBITDA margin is 25%, peer-leading in terms of performance.

In this business, we partner very closely with distribution. Our distribution provides the design services and capabilities and our engineering teams in EWP provide the field service in close boots on the ground with builders, architects, designers and specifiers. Next, I'd like to highlight the relationship to distribution. And this distribution business is really the conduit in which we move our EWP into the marketplace.

Today, our distribution team not only moves Weyerhaeuser products with a special focus on EWP, but we also provide a full range of top-tier top brand complementary products, siding, decking and other building materials. And we provide all of this to service our customers so that it's a one-stop shop and gives them the full range with our teams. Now our teams in distribution really start with advanced and skilled sales personnel with tenure.

We have unique capabilities in terms of our design services that we provide to all of our customers. We have very efficient warehouses and offer next-day service in most of our markets. And we do all of this with a low-cost industry-leading cost structure. So there's definitely synergies between these two businesses. 50% of our engineered wood is in one way or another is associated with our distribution business as a channel.

40% of our revenue is generated through EWP for our distribution business. So not only do we have cost synergies with this business, and we certainly have that logistics synergies, but having distribution ensures that we have access to the top markets across the United States. Now our distribution sites are all in top markets, and we cover 70% of the major homebuilding markets across the United States.

So these are all value propositions that add value and, of course, enhance the experience for our customers. But we not only add high value in distribution in EWP, but we also add value across our entire platform. And so I'd have you just zoom back and look at all of our product mix -- not only in lumber and OSB or commodities, but EWP and distribution, we offer a higher degree or a significant number of enhanced products for our customers.

Enhanced products add additional value. And because of that, we're able to generally drive and hold higher premium pricing in the marketplace. We hear routinely from our customers. They value the reliability. They value the additional services that we provide and the support across the entire platform. So we've been focused over the last number of years on OpEx, certainly the last decade. It is at the core of who we are and how we think about our businesses.

For us, OpEx is about having industry-leading cost structure. It's about superior reliability in terms of everything that we do with high execution. And it's about zeroing in rifle-shot investments that we fully leverage for improvement. In terms of our first, what I'll call, platform, it's around cost control and management. And we've been able to deliver $500 million in margin improvement since 2014 across our Wood Products platform. Now our second pillar is maximizing value of every log.

And this is really critical because our raw material costs are the largest component of our manufacturing cost structure. So we work closely with our timberlands teams and across the entire platform to ensure that we're utilizing every piece of fiber correctly and effectively that is sourced to the right mix in our mills, that we're driving out high recovery, high yields. And ultimately, we're pulling out costs in the entire supply chain structure.

Over the last number of years since 2020, we've generated $100 million of OpEx in business integration across the platform. So the other piece that I want to highlight for you is the fuel of OpEx. It's really what drives a next level performance, and that's innovation. And we've had a strong innovation program for some time. In fact, today, in all of our businesses, across all of our teams, we have innovation structure, infrastructure, if you will.

We have champions, leaders and teams that drive out replication and improvement. They find great ideas, they quickly try those ideas, generate results and then replicate them across the network. And we're taking that same approach from operational innovation to new technology innovation. And so I want to highlight for you just a few of what we think are exciting leading-edge transformations that are on the horizon. Now we have a programmatic effort around automation.

And similar to some of the things we saw in timberlands around mobile equipment, we're trying similar approaches in our warehouses and in our forklift fleets. And it's really not a matter of if, but when we're able to automate in that space. But beyond that, we're automating in our manufacturing in all phases. And one area that we focused in on is our finished departments. And all of our manufacturing, this is typically where we have the most hands-on activities.

It's actually where we have a lot of our team members, and there's a lot of costs associated with our finished and packaging components. The picture that you see here is really a -- really first of its kind or early trim block automation line. Before we would have had individual sorting trim blocks in our planar facility at one of our mills. Today, it's fully automated. We work with a supply partner, a third-party partner to develop this technology. It's generated really strong results. But I think what's more important is we're taking this concept and scaling it out.

So we have six more projects in the pipeline to quickly automate across the network. And not only are we working on automation in our operations, we're working on it in maintenance as well. So you see a picture here of the robot Spot, which is a Boston Dynamics robot. We've deployed that in one of our mills to conduct really routine maintenance activities. Spot is inspecting for heat, for vibration, all kinds of other machine center health characteristics.

And Spot reports back to us when we're out of range. Now that allows us to take our technicians and really redeploy them to higher and better use. And of course, we see a lot of potential with this. So we've moved through the initial trials. Now we're working towards scale, and we expect to have more robotics in the maintenance space in the future. Artificial intelligence and machine learning is a key lever for us, and we've been piloting projects across the system, whether it's EWP presses or OSB heat energy systems or resin lines and glue lines in our manufacturing, we're finding and unlocking use cases for this technology.

Improved rate, improved uptime, increased safety, certainly improves and helps train associates and pulls cost out of the system. We expect over the next couple of years to unlock this technology at scale across all the wood products. And finally, I want to share an example of advanced analytics that we've deployed in distribution. At the beginning of this year, we deployed across all of our sites, what I call transportation route optimization. So for all of our fleets, we increased our software capabilities.

And what that's allowed us to do at our DCs or local sites, reduce the miles that we're traveling to service our customers while meeting our customer commitments and at the same time, increase the weight per truck. This optimization is going to be very important to us going forward. It's reducing our cost in one of our higher cost categories that we're working on all the time. And again, there's a lot of network opportunity to scale it further.

So before we go to growth, I want to share a few of our performance characteristics. Devin hit on a couple of these, but I'll just start. If you look over the last 3 years in our manufacturing businesses, we have industry-leading performance in terms of our EBITDA margin. And our distribution business from 2011 through 2024 compared to peers had the largest improvement. But the rubber really meets the road when you talk to your customers and our customers routinely feedback to us through our survey network.

And we've heard from our customers that they like our products, they like the enhanced characteristics. They perform well and outperform peers in many cases. They're very satisfied and actually call out our sales and our logistics teams as best-in-class. They appreciate our sustainability message, and they value innovation, and they recognize that we're very innovative. In fact, they'd like to see us be more innovative, and that's part of what we're going to do going forward.

So I've talked at a very high level, and we've started to really get a sense across the presentations that we truly have a best-in-class platform. And in many ways, we have strengths that cannot be replicated, certainly cannot be replicated easily. So with that foundation as a starting point, I want to move into growth. And we've looked at growth from three lenses. First, we're looking to grow in high-margin products where we can expand and innovate.

We're also looking for where we can use our natural synergies, both across businesses and within Wood Products to create value through our integrated portfolio. And finally, we're looking to capitalize on investments, rifle shots, pinpoint investments that improve performance. And with that set of framework, I will share our growth initiatives. So our plan is to grow our business an incremental $440 million of additional EBITDA uplift by 2030.

And there's four specific swim lanes to accomplish this. First, we're going to capitalize on the investments we've made and additional investments we will make over time in our lumber business to grow margin. Second, we're going to move forward with our timber strand installation and new facility in Monticello, Arkansas, and we're going to leverage that to grow our EWP profile. We're going to expand distribution, both organically and through geographic expansion to service more high-value markets.

And finally, we're going to better position our business and our markets -- our market position through new product development and sales and marketing excellence. So I would share with you, all of these are well underway, and we've made a lot of progress already in the early stages. So I want to dive in, and I'm going to lead in with lumber. And as you're aware, we have a thesis or an investment approach with lumber that we've shared, and it's really about growing margin, building on this top quartile platform and expanding profitability. And over the last couple of few years, we've been making investments in this business.

And probably the hallmark of this was completing a major modernization of our Holden, Louisiana sawmill. That work is done and behind us. And as I think as we're going forward, we're thinking about the whole suite of investments. There are investments to improve recovery, improve our yields and they also improve our cost structure. But ultimately, we're also debottlenecking our plant sites and of course, improving our productivity and increasing capacity.

As Devin said, it's been prudent in the last 18 months to 24 months for us to step back and defer some of our projects. We think that, that was the right thing to do. And at this point, we've completed our major capital, somewhere in the range of 60% to 70% of our work. With that said, there's also organic activities currently happening across our network. We've really positioned ourselves to get benefits today in the categories I've talked about and in our operating structure.

But in the future, and you think over the next 5 years, we're really well positioned to grow the business and expand and certainly to bring to bear productivity and volume to the market. We made a lot of progress. We're at really good place going forward. Next, I'd like to talk about our expansion into EWP. Now this is anchored on our new timber strand plant, and we've shared this through our press release, we've talked about it.

We're very excited about this plant. It's a $500 million investment. It's already underway. We expect startup sometime in the first half of 2027. We expect to generate $100 million plus in terms of adjusted EBITDA on an annual basis when we're at full capacity. This plant really brings many portfolio benefits.

I'm excited about this because we're growing in our highest margin, lowest cost product line inside of engineered wood. We have a market in the Southeast that we've been underpenetrated and been unable to serve with our current capacity. So we're well situated logistically to serve that market. And we have an additional benefit in that we will -- approximately 80% of our volume from a raw material perspective will be serviced from our own timberlands.

And that is a huge cost logistics benefit that secures our supply line, allows us to gain additional margin. And I would also call out, we have a strong distribution network that we will also use in terms of expanding the portfolio and bringing our products to market. This will double our timber strand capacity, increase our overall EWP capacity by 24%. Now there's a few other benefits that I'll call out. I want to just share with you that this product mix is one of the most varied and complete of all of the various engineered products in the industry today.

We can serve the single-family home segment. We can serve the multifamily segment, but we can also serve industrial, commercial, mass timber. In fact, we expect 30% of the production mix from this plant will be in the industrial segment. And we already have strong partnerships with our industrial customers. And the range of products is from lumber to beams and solid section to panel type product lines into mass timber. So it has a very versatile mix.

Additionally, I would share with you that we'll have the additional advantage to be able to convert small fiber in this plant with our stranded technology. That will allow us to take small pulpwood type fiber in a mix of other log sizes as well and convert it into high-value EWP. And finally, we have decades of experience in this space, which gives us really a head start on anyone that would want to enter. We know how to manufacture.

We know the wood science of it, and we know how to market and sell it. And finally, we think there's a compelling story here for further growth in the future. Now we're going to build this plant. We're going to get it up and running. That's job one. But in the future, working with our customers, we think there's opportunities to expand and grow. So along with our EWP expansion, we're also expanding distribution. And we're doing this essentially on two fronts.

First, organically. We're working inside of each one of our DCs to grow our footprint and our reach. We're focused on the retail segment. This is an area where we're more lightly penetrated. We're building up the capability to serve this market from a sales and warehouse perspective. We've been working on industrial markets in distribution. We're going to continue to expand in that space. And we're going to continue to align closely with our partners for top-tier outdoor living, which we see as really a force multiplier for our business.

In terms of geographic expansion, what I would have you think about, we're really looking to grow in markets where we're lightly penetrated in engineered wood, and there's a high-growth opportunity in terms of residential construction. So we're pinpointing our growth opportunities. We've already started one new DC, and that's in Spokane, Washington. It's going very well, and we're excited about that project. We have a second DC coming on and building Montana in Q1 of next year.

We have three more projects on the work bench as we focus on the Southeast, but that's not the only geography that we're looking at. And we will continue to move forward with rifle shot expansions that grow margin for our business. These are low capital intensity, and they've got an ROI in excess of 20% and greater. So we have a great tradition in Weyerhaeuser with new products.

And in fact, we've invented many of the technologies that underwrite some of our best-selling and highest margin products whether it's Framer Series lumber, where we have warp stable technology, where we're essentially able to pick out the rogue boards of warp and twist in Southern Yellow Pine or our moisture absorption capabilities and premium panels or all of the host of capabilities that we bring in our branded engineered wood products.

We've got a great foundation, and we've got a great history. But that's really just the start. Our intention is to be the innovator of choice for the industry going forward. And we want to truly be the voice of the customer and listen to the voice of the customer. So with that in mind, we've expanded our capabilities in new product development.

What this is really about first is being able to sense the market, understand our customers' needs, our different business channel partners' needs, rapidly be able to deploy an understanding of that -- of those technology requirements set that against a very disciplined and detailed pipeline and structured approach, couple that with a world-class innovation lab with leading -- industry-leading scientists who can pilot, can innovate and quickly adapt solutions, and we're able to commercialize products.

So unfortunately, today, I do not have new products to share with you, but I'd like to invite you to the International Builder Show. Please come by our booth next year in 2026, where we will be launching some new products that we'd love to share with you and talk about. That's really only the beginning. We will be doing this at scale going forward.

And finally, I'd like to talk about sales and marketing transformation. Now sales and marketing transformation really starts with the value proposition that this is all about generating value for our customers. And we're good at this, but we want to be great at it. And this is about moving to the next level. So the two peers that I'll share today, and there's multiple work streams in this area. First, it's about applying predictive analytics and market data to our current systems, arming our teams up so we can move faster and better understand trends.

And with improved software and tools and really providing a cockpit of data to our teams, we will be able to make more rapid decisions and be able to move quicker in terms of market -- be able to see market trends and move quicker to adapt and adjust. Now a component of this is also arming up our pricing teams in terms of improved optimization in the commodity space. We expect there to be tremendous value. We've already started to do some of this work, and we see additional enhancements over the next couple of years.

And finally, we're developing tools that help us tailor our solutions to our customers' needs, better matching up our service capabilities with what the customer wants and is willing to pay for. Now the other part of this journey is really about the customer experience. This is the other peer. And this is about tailoring our solutions to the customers' needs. So this really starts with having a deep understanding of our customers' requirements and where they see value and then lining up our capabilities to service them.

We built a model to do that. We've deployed it, and we're using it today. And in addition to that, we're working on improving the experience for the customer. We want to make it easier to do business with us, more seamless. And so we'll be deploying technology to do that. And then finally, we want to be able to reach out and understand our customer even better.

And so we're increasing our customer satisfaction metrics so we can stay aligned and tuned in with the customer need. So capturing opportunities rapidly, growing profitability and loyalty across the system as we better meet our customers' needs. So as I close, it really all starts with these fundamentals. It's about talented people, competitive cost structure, superior reliability and targeted and engaged customer engagement.

When you wrap all of this up, it really sets a great foundation for us to drive $440 million of incremental EBITDA uplift. We're excited. The team is excited about the direction of where we're heading. We're confident in our ability to do this. And as I've said, we're already well underway. Thank you for the time.

And now let me turn it over to Paul to talk about strategic land management. Paul?

Thank you, Brian. Good morning, everybody. I'm excited to share what we've been doing in Strategic Land Solutions over the last 5 years. Before I do that, let me introduce myself, Paul Hossain. I've been with the company 2 decades. And before that, almost another 10 years in the natural resources, energy, real estate and climate solutions space. So as I said, I have the privilege of leading the Climate Solutions team.

And today, I will walk through how we're building on our excellent foundation and how we're unlocking new and diverse growth opportunities. So I'm going to start with an overview of Strategic Land Solutions. And as you heard Devin say, that is the new name for our financial segment, which was Real Estate, Energy and Natural Resources. So starting in 2026, that segment will now have three product lines: the Real Estate, the Climate Solutions and Natural Resources.

Now that evolution reflects really two things. The first is our legacy of really doing an excellent job of delivering value of every acre from our real estate and our natural resources businesses. And then it also reflects our leadership in building a meaningful climate solutions business. Now in addition to running the financial segment, the Strategic Land Solutions team is also responsible for portfolio management. And we view portfolio management as having two key legs.

The first is ensuring we own the right acres in the right markets with the right value drivers. And that's where our strategic acquisitions and divestitures approach comes in. And the second component, and it's equally important is how we manage those acres. And here, our integration and our scale and use of technology really sets us apart. It gives us insights across every acre and our operating regions or Wood Baskets as we call them. So we call that process Wood Basket optimization.

So when you wrap all of this together, Weyerhaeuser's end-to-end portfolio management and driving the value of every acre is really setting the industry standard. So I'm going to give you a little bit more detail on portfolio management, starting -- excuse me, I'm going to dig a little deeper into what sets Weyerhaeuser's strategic land solutions apart. And this is really three of our fundamental competitive advantages. And you've heard my colleagues talk about scale.

The scale of 10.4 million acres is really unrivaled in the timberland space. However, it's an unbelievable platform for our strategic land solutions business, too. And the second, given that scale, we are able to invest in deep subject matter expertise across multiple verticals. Our team -- in our team, we have data scientists, biometricians, economists, geologists, engineers and more. And we pair that team with technology, allowing us to quickly rapidly identify new opportunities and execute on them.

And the third really is our partnerships. Again, given our scale and our sophistication, we are able to partner with best-in-class companies, these companies that have the capital and the expertise to execute complex projects such as renewable energy, carbon capture, real estate development and much more. So pulling all of this together, the competitive advantages that we have in strategic land solutions are really, really hard to replicate, and they provide us a really exceptional foundation for growth, as you'll see shortly.

So now I'll turn to portfolio management and a little bit of some of the results we've had recently. So Travis shared a little bit more detail on the different transactions on the acquisitions and the divestiture side we've had over the last 5 or 6 years. So what I'm sharing here is just an overall portfolio view. As you've heard, we've divested 1.3 million acres of lower productivity and lower optionality timberlands over this period.

This generated $1.7 billion in proceeds, and we've recycled a little bit more than that, that's $1.8 billion into 530,000 acres of much higher value, much higher productivity timberlands that are really well integrated with our overall operations. And in this acquisitions and divestiture process, we've doubled the harvest tons relative to the acres acquired. And this doubling of harvest tons, and Travis touched on this results in an average 5-year increase of $60 million of cash flow.

And now that's a cash flow number from our timber value only. As you know, every time we look at an acquisition, we look at all the different strategic land opportunities embedded in that asset class, and that's what we do across all of these acquisitions. Now these are compelling results, and it's a demonstration of our ability to always look for the right acres again in those right markets with the right value drivers. And looking forward, our portfolio management is never done.

We're always looking for options to improve the portfolio, and we can create value, whether we're selling or we're buying through our disciplined approach. And as I mentioned, the second element of portfolio management is how we manage those acres. And this is where our Wood Basket optimization approach comes in. And Wood Basket optimization is essentially a decision support framework, and it's underpinned by our decades and decades of data that you've heard us talk about as well as new geospatial technology and analytics.

And so it enables us to map the value of every single acre and provide the full spectrum across a broad geography. So it informs our high-level strategy and our transaction level execution. Now a great example of Wood Basket optimization in action is this area, the Mississippi, Louisiana footprint that we own. It's 1 million acres. We call it the [ Mislouis ]. It's a great timber asset integrated with many of our mills.

And deploying Wood Basket optimization, we have identified all of the different value attributes that are possible on this footprint, and we have developed integrated plans across the business lines, and now we're executing in a fully coordinated approach to drive portfolio value.

And here in this particular footprint, executing on all these value drivers will result in approximately a 50% increase in our EBITDA by 2030. And this increase does not include sawlog price appreciation. This is about Weyerhaeuser going on offense and looking for all of the different value attributes, whether it's in our timberlands or subsurface or on the surface. And it's a great example of Wood Basket optimization in action, and we're doing this across all of our ownership, and it's a key factor in driving our growth initiatives across the enterprise.

So let me transition now to the business segment of Strategic Land Solutions and our recent performance. We really have a strong record of driving sustained growth in this segment. And notably, we've increased run rate adjusted EBITDA by 45% from 2020 to 2025. And that growth has come on the heels of growth both in our legacy businesses of Real Estate and Natural Resources -- but as you've heard, we have driven significant growth from our Climate Solutions business. Now looking to our 2025 numbers, our guidance for the segment is $390 million. So this growth continues.

And as you heard from Devin, we are happy to report that we achieved our 2025 Climate Solutions target of $100 million of EBITDA, and I am very proud of the team's work in this space. So these results demonstrate a couple of things. Our ability to execute and consistently find new opportunities to maximize the value of this footprint.

And it gives us the confidence that we have a robust strategy to execute additional growth initiatives as we identify them going forward. So now what I'm going to do is give you an overview of each one of the business segments that make up Strategic Land Solutions. Now the first is real estate. And we really have been a pioneer in unlocking the real estate value of timberlands.

We started that program 20 years ago with our asset value optimization approach. And our proven strategy generates significant premiums to timber, and we do this through two channels. Now the first is what we call our higher and better use program, or HBU. And this program is built on 1.2 million acres of our property that we have identified that have particular attributes that we will drive a value above and beyond timber.

And we have a very efficient program to sell these acres, but we have a very disciplined approach. Overall, we're selling less than 1% of that portfolio on a given year. So this is a very durable business and provides long-term value for the portfolio. Now the second channel is our real estate development business. And this is a business that targets our highest value lands in the portfolio. This includes 150,000 acres in high-growth markets, primarily in the Southeast. Across these markets, we have strong tailwinds for significant price appreciation unrelated to timber.

And we have traditionally captured this value through a nimble and capital-light entitlement strategy. Now as always, this pipeline is never static. As Travis noted in our 2022 North Carolina transaction, we've added additional real estate assets and as well as all of our other recent acquisitions.

Now turning to Natural Resources. An interesting thing about our legacy timberland ownership is under that ownership in many places, we own either subsurface or mineral rights. And this can add really valuable incremental cash flows to our business. And so today, we're highlighting one of those areas, and that is our construction materials business. And this business is anchored by 46 operating sites, and they supply construction materials such as sand, gravel and crush rock into major metropolitan markets such as Portland, Seattle, Atlanta, Dallas and New Orleans as well as many smaller markets.

Now our sites generally have very long-term reserves and they're often located in markets with high barriers to entry, making them very valuable assets. And importantly, these, of course, not managed by us. They're managed by third-party operators. We've, again, partner with the best-in-class operators here, which provide very safe and environmentally friendly operations. For us, that translates into low-risk, high-margin cash flows that are inflation protected given the nature of these assets.

And it is really a terrific component of our Strategic Land Solutions business. Now I'm going to discuss our Climate Solutions business. And as you've heard, we are delivering tangible results in this area. In addition to hitting our $100 million target, I believe this business is setting the industry standard. And in 4 short years, we built a peer-leading business, a team of unmatched technical and commercial expertise and a diverse portfolio that drives value from carbon to energy and more.

As you can see here in forest carbon, we have four projects completed and five more in process. Our first credit were issued -- our first credits, excuse me, were issued in just 2023, and now we're up to 600,000 credits issued as of this year. Our renewable energy portfolio continues to expand and mature. We have eight operating wind farms, which really are great complementary assets to working forests. And we have one operating solar site with three more currently under construction.

Now in carbon capture and sequestration, we've executed three high-quality agreements in the U.S. South, including one tied to a large-scale CO2 offtake agreement. And in mitigation and conservation, we continue to build on a very strong business. In mitigation, we operate in six states, making us one of the largest operators of these assets in the U.S. And in conservation, we continue to leverage in-house expertise and those external relationships to drive value from ecological and climate attributes on our portfolio, and we do capture the value through sales or easements.

Now as you can see, our business -- our natural climate solutions really sets us apart, and we're remarkably well set for meaningful growth. So let's turn to this growth outlook. So across Strategic Land Solutions, we're positioned to generate an incremental $230 million of annual EBITDA by 2030, measured against our 2024 baseline number. Now in our legacy businesses, we see real estate development and construction materials as the key drivers, and we expect them to contribute $60 million to that target.

And in Climate Solutions, the opportunity is even more compelling. We see a clear path to $170 million of incremental EBITDA from a diverse and growing set of assets. Now as a result, by the end of 2030, our Climate Solutions business will reach approximately $250 million of adjusted -- of annual EBITDA. So now let's take a look through the market and the assets in each one of these verticals. So I'll start with real estate. So looking ahead in the real estate business, we still see our HBU program as being a steady and major contributor to the business. However, in terms of growth, we see that 150,000 acres of real estate assets as the key driver.

Now as I've mentioned, our real estate assets, this 150,000 acres are located in diverse markets across the Sunbelt. And this is a region that continues to see strong population inflows, sustained job creation and lifestyle and affordability attractiveness. Now these trends have a positive impact on the value of our acreage across the region. And to maximize the value of these assets, our in-house team has been executing a disciplined and focused approach to development.

As you can see here, from the potential to sell some of these lands with very limited investment on the front end that are in the path of growth to investing to bring them to full horizontal development ready for homebuilders and other commercial and residential opportunities. On the low end, these lands can be valued at 2 to 3x the timber value in the path of growth and on the high end with horizontal development and investment up to 10 to 20x the value -- underlying value of timber.

Now today, across the portfolio, we have active projects in all phases of development. We have ongoing master planning and rezoning outside Atlanta in North Florida, Coastal North Carolina and the Charleston area. We also have two active master planned communities, one in North Carolina and one in Louisiana. And we have two industrial shovel-ready sites, one in Georgia and one in Florida. The one in Florida has its first customer, and they'll begin operations early next year.

Now this is a diverse and high-value portfolio that we see as giving us resilient monetization options across different market cycles. So let me provide you a little bit more color on our actual portfolio and more specifically, this 150,000 acres that I've mentioned. Again, these are well located in strategic markets with very strong demographic and economic activity. One such area is Charleston, South Carolina. We own tens of thousands of acres in this area. And this is really a great example of what's happening in many cities across the South.

Here in Charleston, the population has grown by 20% over the last 10 years, again, driven by jobs and lifestyle and affordability. It's estimated in Charleston that 40 new people move there every single day. Now as I've mentioned, in our real estate business, we've typically taken a relatively capital-light approach, largely concentrating on the early phases of development and with some selective participation later on in the value chain like our two master planned communities.

We're going to keep that discipline as we go forward. However, what's really exciting about this asset is that the growth is coming towards us. The growth is on our doorstep here. So over the next 5 years, we see some compelling opportunities to increase investment in select markets where acreage again sits in squarely in the path of growth, and we can unlock meaningful premiums and value during that disciplined capital investment.

Now given this backdrop, we are confident in generating incremental cash from these assets over -- as part of our growth plan. So now let me turn to the growth outlook for our Construction Materials business. And as I've noted before, we have 46 operating quarries, all run by some of the major construction materials companies in North America. And over the next 5 years, we see this portfolio expanding by up to 25%.

So 13 new operations coming online and not only expanding our footprint, but diversifying our markets. We see our assets now supplying 18 different markets by the end of the growth plan. Now with our 10.4 million acres, this is not the only asset we have here. We have a team of geologists and scientists. Their work is never done. They are always prospecting for new natural -- high-value natural resource opportunities across the portfolio.

And so we see continued growth from this asset class way beyond our 2030. So now let's take a look at our Climate Solutions business. Now we've said this before, but the early -- some of the early growth from our Climate Solutions businesses came from businesses we had underway already, some of our wind assets, mitigation banking and conservation. In the next phase of growth, we see increasing contribution from forest carbon, renewables later in the decade, carbon capture and sequestration.

And now we are building a new business, which we announced today, biocarbon. All in all, we see this broad suite of climate-related opportunities as a key growth engine for the company over the next 5 years. So let me give you a little bit more color on each one of these, and I'm going to start with forest carbon. So the key market for forest carbon is the -- for us is the voluntary carbon market. Now we expect this market to grow significantly as corporates look to meet their 2030 and 2050 climate goals.

Now as this market grows, our approach -- we see our approach is having two distinct advantages. The first is that we've built an in-house team that brings decades of operational and scientific expertise to this relatively complex project development process. Now by keeping this development process in-house ensures we align our projects fully with the operational requirements of our timberlands partners. And the second, frankly, it means we keep more of the economics in-house. Most folks in this business use outside developers.

Now the second, and this is really important, is quality and integrity. The customers in this space are increasingly looking for very high-quality credits, high integrity credits, and that's something that Weyerhaeuser can deliver. With our decades and decades of experience and data managing working parts, we are bringing that expertise and that data into this space, and we are providing very transparent and science-backed credits to this market. And as we do across all of our different businesses, we look to partner with subject matter experts, whether it's on the commercial side, on the technical side to complement our scale.

Scale help us scale our business and accelerate the development of this program. So now that we have invested in the resources to build our internal expertise and strong partnerships, we really have a strong line of sight to accelerate value in forest carbon. Based on the thorough way we have been designing our forest carbon projects, not only do they provide high-quality marketable carbon credits, they enhance total asset value. Specifically, on the projects we are developing on our southern acreage, we see the ability to deliver up to 2x cash flow improvement when we layer a forest carbon project and integrate it very mindfully with our existing timberlands business.

And overall, that can result in a 1.5 net present value uplift on that particular footprint. And so based on this strong value proposition, we see a compelling growth trajectory. And our approach is relatively straightforward. It continue to build a high-quality portfolio of timber and complementary -- timber and carbon complementary projects that will increase our credit generation from the 32,000 credits we issued in our first year to over 1.2 million credits by 2030.

Now we are pairing this disciplined project development approach with an active customer engagement program where we're looking at both spot market sales as well as long-term offtake agreements. Now the bottom line at forest carbon, we're positioned to create significant value here, leveraging both that science-backed approach and our in-house expertise.

So let me turn now to renewable energy. Now renewable energy, after years of relative stability in the energy markets, it's really interesting what's happening here. We used to refer to this as the energy transition and renewable energies was what was driving that transition. Now you can think about it as an energy expansion. So it's -- there's a desire for all different types of energy to come in this market.

And so renewable energy still remain a very pivotal component of this growth opportunity. Now we do recognize there are some policy headwinds here. But again, given the backdrop, the economic backdrop of large-scale demand for new power, speed to sort of power as well as sustainability, we continue to see renewable energy as a key driver in this space. And our strategy is really built for this moment. We leverage through our WBO and other platforms, deep ownership insights, and we partner with companies that excel in navigating the complexities of building new infrastructure and energy projects.

So let me dig a little bit deeper into the value proposition for Weyerhaeuser. Now for a landowner like Weyerhaeuser, utility scale energy projects offer us excellent opportunities to increase the value of that ownership and build steady recurring cash flows. And here, the numbers speak for themselves. A fully operational solar project can deliver cash flows that are on the order of 12 to 15x that of timber. So the solar projects do take time to develop. We know that, but we also receive option payments and milestone payments during that period, and we can manage that land for timber along the way.

So it's very limited opportunity cost for us. Now we recognize the value of solar more than 6 or 7 years ago, and we did lease our first project 6 years ago. And that was really building on over a decade of experience we had in leasing some of our properties for wind starting in 2015 or so. Now we are really seeing that strategy pay off. As I've mentioned, our first solar project came online late last year, and we have three more under construction. And as we see the market maturing, we see line of sight to another 20 projects coming online on our land over the next 5 years on over 35,000 acres of our property.

And what's interesting about the energy space, our momentum is not limited to solar. We still see strong demand for properties for wind energy. We've been doing some wind energy projects this year and some leasing and also battery storage. There's strong demand for battery storage. So really, our diversified pipeline of energy projects positions us very well to have this element of our business be a key growth driver going forward.

So let me touch now we go underground a little bit here and then talk a little bit about carbon capture and sequestration. And for those of you not familiar, this is the permanent and geological storage of CO2 emissions deep underground. And for us, that adds another valuable layer to our portfolio. Now the U.S. is emerging as a leader in this space and much of the investment is happening in the Gulf South, where we have a large ownership block.

So it overlies us. It complements our ownership very well. So from our perspective, we identified 500,000 acres of our property that was well suited for CCS development. And we also have our own proprietary geologic data for that footprint, which can help speed to market some of these projects. Now these projects do take some time to develop, and they are complex, but they have no impact on the surface during that time. And in our agreements, we receive option payments and other types of payments. So it's really, again, no lost optionality for us as we go forward.

So let me talk just a little bit more about our CCS portfolio. So now we did execute our first lease back in 2022, and that particular project reached a final investment decision this year. And that's a project with Oxy's 1PointFive subsidiary, and they have secured 2.3 million tons of CO2 offtake to send to that site. Now we do expect that project to come online by late 2029 with this first customer. Now this particular site has significantly more injection capacity than the 2.3.

So we will expect Oxy to bring in new customers to this site. And we suspect, given the geology in this site and its location, this will become a very valuable carbon sink in that area, and we are positioned to benefit as that continues to evolve. Now in terms of value uplift to timber, you go underground, the geology is different everywhere. But just as a rule of thumb based on some of the average project economics we've looked at, an active CCS project can add up to 5x timber value or cash flow per acre for every project that's within an operating asset.

Now this project, the Livingston project, as we call it, is a clear example of our competitive edge. Our team identified this property. We used our own geologic data to assess whether it was viable. We went through a competitive RFP process, and we're able to select a best-in-class operator, and now the results are showing. This project is moving forward. So now let me turn to conservation and mitigation. And as I've said before, these have been the work portions of our Climate Solutions business for a while and will continue to feature prominently just given the scope and scale of our ownership.

Looking ahead, as I've said, our other businesses that I've just talked about will provide more of the growth going forward. But in mitigation, this is a solid business for us. We sell stream and wetland credits to different customers to offset the impacts of their projects across the -- mainly in the U.S. South. Today, we operate 16 such banks, and we have identified and we're permitting 14 more banks. So we will continue to -- we have a continued ability to expand and grow this business.

And these banks also offer a strong uplift compared to timber, on average, 3 to 5x that of timber value -- underlying timber value. And in conservation, we continue to see very strong demand based on funding that's available from the federal government, state, local and even private sources. And based on these strong demand signals, we continue to assess our portfolio or our acreage for unique ecological, climate and cultural and recreational opportunities.

When we identify those opportunities, we partner with, again, whatever local agency, state or federal agency is interested, and we're able to transact and create value. Sometimes we do easements. When we do easements, we retain our full forestry operations. So it's really another layer of value we can add into our portfolio. Now these are what we can call our legacy Climate Solutions businesses, even though they're not that old. And as we've announced today, we're not stopping there.

We're pursuing transformational opportunities that fully leverage Weyerhaeuser's scale, our expertise and again, our integrated portfolio. So today, -- we're introducing one of these such opportunities, a new exciting growth area for the company, and that's metallurgical biocarbon. Now we see this as an exciting new opportunity for us that enhances value across all of our businesses. And so just very quickly, what is biocarbon?

So biocarbon is a carbon-rich material produced from the lower value logs and mill residuals, and it is a drop-in replacement for met coal. And met coal, as we know, is used in the production of steel and other metals has a lot of CO2 emissions. And these industries are under immense pressure to decarbonize. And so this is one of the most affordable technological solutions they have to hit their decarbonization targets.

Now for us, it is a fundamentally new market for our fiber and the opportunity is enormous. The met coal market alone is 1.2 billion tons a year. Now if we were to replace 1% of that, with biocarbon, that would require 60 million tons of fiber annually. And that would create substantial new demand for pulpwood and mill residuals that is completely unrelated to some of the existing markets such as U.S. housing. So let me tell you a little bit more about this opportunity.

So today, we announced a major step forward in biocarbon. We announced a partnership with Aymium, the industry leader in this space to produce and sell 1.5 million tons of sustainable biocarbon annually. Now this venture combines really Weyerhaeuser, as I've said before, scale, manufacturing and forestry experience. We bring the fiber, we bring the colocation opportunities, and we bring the expertise in understanding some of the carbon markets, et cetera. So Aymium brings deep technical expertise and market presence in decarbonizing steel and metals.

Now for this opportunity, the first step is a joint venture to build and operate the first location adjacent to our -- excuse me, McComb, Mississippi lumber mill. Now this facility will be designed to produce 100,000 tons of biocarbon, consuming approximately 0.5 million tons of our fiber and our residuals.

Now the site has been secured, engineering design is underway as is permitting, and we expect this facility to come online late in 2027. Now in terms of the overall agreement, where we go from site 1 is an agreement with Aymium to scale up to 10 different sites consuming up to 7 million tons of fiber to hit that 1.5 million tons of production. Now to put that 7 million tons of fiber into context, that's the equivalent of five or six new pulp mills within our ownership baskets and adjacent to some of our mills.

So it's a really great opportunity for us. And Weyerhaeuser, we are uniquely positioned to help Aymium and partner with Aymium to scale this platform. It leverages our timberlands, wood products and colocation facilities. Now this initiative is fully aligned with our growth strategy. It drives incremental EBITDA. It unlocks new demand and it amplifies the value of our integrated ownership. It's a clear example of Weyerhaeuser going off on offense and creating new pathways for growth.

So many of the opportunities -- well, I should say all of the opportunities I've shared here today are underway. These are things we understand and are relatively derisked. As Devin mentioned, all of these opportunities have different risk profiles, but we're pretty confident that most of these have a clear path to providing incremental EBITDA for the company. At the same time, our teams are always looking ahead and always actively engage with new partners and customers to find new opportunities.

And this is really an exciting time. If you look at what's happening in the energy space, in the sustainable materials and the climate solutions, there's really two areas that are emerging, and that is nature-based and engineered or technology-enabled solutions. And our strategy gives us line of sight into both. We can leverage our core strengths while looking for new opportunities that are adjacent to some of these things we're already working on.

And so this intentional diversification allows us to capture the near-term value from the opportunities that are mature, such as the ones I've just talked about and positions us very well to capture value from new and emerging opportunities such as some of the ones shown here, talk about biochar, geothermal, battery and pump storage, et cetera. So our teams, again, are always looking out very proactive business development approach to ensure we can find the next wave of opportunities that intersect with our portfolio.

Now to wrap up, as I've shared, we have an excellent foundation, excellent strong team, and we are very excited about our ability to deliver the $230 million of incremental EBITDA. We will do this through both our legacy businesses of real estate and natural resources. We're confident in our ability to deliver the $60 million in that area. And then in our Climate Solutions, as I've said, the opportunity is even more compelling. We see a strong pathway to delivering an additional $170 million of EBITDA there.

So with that, I'll turn it over to David.

Thanks, Paul. I'm Davie Wold, Chief Financial Officer. I've been with Weyerhaeuser for 12 years in a variety of finance and accounting roles. I'm very pleased to be with you here this morning as we lay out Weyerhaeuser's vision for how we're going to accelerate growth while remaining rooted in excellence.

I'll start off by covering some of our enterprise initiatives before moving into a summary of our growth plan and then coming back to capital allocation.

So starting with our enterprise-wide initiatives. You heard specifics this morning from Travis, Brian and Paul, on the things that we can do within each of our businesses. But with the breadth of our portfolio and platform at Weyerhaeuser we can do more than that. We can drive initiatives at the enterprise-wide level. We've done this over time in things like OpEx, innovation, safety.

And so we've identified four buckets just like those that we view as growth accelerators that are going to allow us to drive $180 million of EBITDA uplift through 2030. I'll walk through each of the buckets in a little bit more detail, but a key theme that you're going to hear through each of them is the power of our scale platform and integration.

So starting with integration excellence. At Weyerhaeuser, we make countless, perhaps thousands of decisions at every step of the way from seedling all the way through to end customer, and integration excellence is about how we take each of those decisions and optimize them to create the most value across the enterprise.

I'll give you a few examples of the areas that I'm excited about. But I'll note we've been working on this for a while, but we've become increasingly intentional and strategic on how we're approaching these.

So the first area I'll highlight is product mix optimization. In this space, thinking about log supply and the ultimate mix of products that we produce and optimizing this for the overall value for the enterprise.

Targeted CapEx investments. We've talked this morning about our TimberStrand facility. When we make those kind of investments, not only does that drive value in the Wood Products business, but it drives value back to our portfolio.

Wood basket optimization. Paul mentioned this is a component of our activities that we're always pursuing. This is about driving maximum optionality to ensure we're capturing the most value per acre from what we own.

And then data. Data has always been a competitive advantage for Weyerhaeuser with our scale, but it's going to become increasingly important as we move from here in the current environment. So in short, for integration excellence, we're going to be leveraging our scale, our unmatched portfolio, our complementary businesses to create and capture value across our portfolio and supply chain.

So now moving to artificial intelligence. We've been doing this work for a couple of years now. And through this process, we've been building out our teams, it's early days still, but we've brought on some remarkable resources in this process. We're really excited about the foundation that's being built, and I'll walk through the four pillars that we've established in this space.

The first is AI foundations. We're consolidating data and models to establish a baseline across the organization. Agentic and generative AI is being rolled out across the organization and that's going to allow us to drive efficiency and productivity. And importantly, we're also building an AI fluent organization. Operators, foresters, sellers, accountants, all of these individuals will learn how to use AI safely and effectively through this pillar.

Our second pillar is business solutions AI. In this space, it's all about how do we increase revenue and reduce costs. So on the revenue side, using elements like demand sensing, dynamic pricing, these can allow us to ensure we're getting the right product to the right market at the right price.

We can also use AI and machine learning to optimize our product mix, and this along with the dynamic pricing and demand sensing allow us to better serve our customers. We're also leveraging our vast amounts of data to ensure we're driving procurement costs as low as possible. That's another example in the business solutions pillar.

Industrial AI is our third pillar. And in this space, we can use predictive maintenance to improve reliability. Quality models can improve grade and yield. And of course, to the extent we're able to automate repetitive manual tasks, not only does that drive savings and efficiencies per unit cost, but it also enhances the safety environment for our employees.

Our fourth pillar is geospatial AI. And in this space, we can use our land base as a scaled competitive advantage and leverage satellite imagery, drone data, sensor data, all of these things to better optimize how we operate our Timberland operations. It can also help enhance other decisions as we're weighing optionality, whether that be how to site forest carbon project or in thinking about the renewable energy opportunities that we have.

Across all of these pillars, we're taking a thoughtful approach. We're starting with the highest return use cases, building on them incrementally as we prove out the value. And then as we've proven them in one place, we can replicate elsewhere.

Importantly, we're focused on having the right controls and governance in place to, again, ensure we're utilizing AI safely and effectively. This will be a key technology element that we can leverage to accelerate growth.

Our final two enterprise-wide buckets are innovation and automation and our cost and supply chain optimization. These two buckets are built firmly on the foundation that we've established over time in OpEx and innovation.

Operational excellence has been a core part of Weyerhaeuser for over a decade now. And today, it's embedded deeply at every level of the organization. Employees understand what OpEx means and how they personally contribute to it and why it's so important. So on this foundation, we're going to continue to drive for new opportunities to innovate and automate. There's always opportunity to get better.

I'll give you one example that I'm excited about here this morning, and that is in the procurement space as well. We've been focused on this for some time, thinking about how do we leverage our buying power. But we have the opportunity moving forward to not just do that in one pocket or corner of the organization, but to do that on an enterprise-wide level and also leverage the broader ecosystem that surrounds Weyerhaeuser.

So now I'll pivot and discuss a summary of our growth plan and what you've heard this morning. Devin shared this slide earlier to give the broad outline of the specific buckets that will contribute towards the $1.5 billion EBITDA target, and you heard more specifics from Travis, Brian and Paul.

What's striking to me about the initiatives that we've laid out this morning is that we're not relying on one or even two or three initiatives to drive this. We have a broad and diverse set of initiatives that are going to help us achieve this $1.5 billion target. And look, things will not materialize precisely as we expect today.

Certain things are going to take a little bit longer to materialize. Others will come more quickly, just like we've seen as we've been pursuing our Climate Solutions target that we set back in 2021. Regardless, we're going to aggressively pursue this $1.5 billion goal and target while recognizing that we're operating in a dynamic environment and adjusting as appropriate.

Here's another version -- another slide that Devin shared a version of earlier this morning, and I'll make a few comments on this one. First, we are well underway. We have resources identified. We have project plans in place, and we are aggressively going after these.

Another element that's worth highlighting here is that many of these initiatives have a limited exposure to the commodity cycle. So what that means is that these initiatives will allow us to increase our baseline cash flows in the more challenging parts of the cycle while also increasing our substantial cash flows in the stronger commodity markets. We continue to be focused on increasing the cash flow generation capabilities through the cycle.

As we approach these growth initiatives, some of these items will require investment. Others though, we're pleased, will require very minimal investment. Some of the ones that might require some investment, of course, are Timberstrand facility we talked about, timberland acquisitions to the extent we do those. Those, of course, would require investment. All in, we're anticipating $1.5 billion to $2.5 billion of gross investments to drive these growth initiatives through 2030.

Now I'll say as we approach this, we maintain a strong commitment to maintaining that investment-grade credit rating. That is foundational for us. And so to that point, we have a lot of flexibility as we approach how to fund these items. We can use cash on hand. We can use cash that we'll generate from operations in the coming years.

To the extent appropriate, we can utilize debt to fund these initiatives. We can divest noncore assets. We've demonstrated our ability to do that while still capturing significant value. And while it's not our base case, we always retain the ability to redirect from other levers such as our programmatic and ongoing CapEx that's incremental to this $1.5 billion to $2.5 billion.

Regardless, the return profile is immense here, being able to invest $1.5 billion to $2.5 billion and then achieve $1.5 billion uplift in EBITDA is a tremendous return profile. So we'll remain focused on executing on the strategic growth plan while maintaining that strong balance sheet.

So what's the result of this growth plan? As we look at the value creation opportunity, adding $1.5 billion in EBITDA using a 14 to 15x EBITDA multiple, which is in line with our 10-year average, would result in an uplift to enterprise value of over $20 billion with just a minimal increase in net debt as a result of the investments required.

Of course, EBITDA multiples can shift around over time, but adding those cash flows in some of the less volatile areas could support a favorable re-rating, not to mention the opportunity to drive incremental per share value through opportunistic share repurchase through 2030.

And of course, as I mentioned, with our focus on increasing the cash flow generation, this results in a tripling of our adjusted FAD through 2030 compared to the 2024 baseline.

So now I'll spend a moment talking about pricing. We've laid out the growth initiatives, and we intend to drive those. But we also stand to benefit from an improved pricing environment over this time period.

Today, many lumber and OSB producers are operating at below cash cost. We've incorporated a $500 million assumption into that $1.5 billion growth number for pricing improvement. We view this as conservative. As you look at the details behind that $500 million, even in that environment, there are lumber producing regions that would be operating at negative margins in light of the current cost and trade environment.

So when we think about the type of pricing environment that would be required in more of a mid-cycle scenario, we laid out a scenario here that results in over $1 billion in pricing uplift at mid-cycle. Really, this reflects what would be necessary to not just get back to margin positive, but also have a reasonable margin through the cycle.

And of course, the nature of commodity pricing environment is such that we're going to see times with pricing well above mid-cycle. We've included a scenario here that results in $1.75 billion in uplift.

Now we've seen prices above this, so we don't necessarily view this as a ceiling. But this is, again, one illustrative example of what up-cycle pricing could look like. Our businesses have an immense ability to generate cash flow in strong commodity pricing environments.

So now I'll move over into capital allocation. In short, our capital allocation framework remains consistent. We continue to be focused on returning significant amounts of cash back to shareholders while investing in our businesses and maintaining an appropriate capital structure. We also have the ability to deploy capital opportunistically above and beyond that. That's been true in the past, and it will remain true moving forward.

So here we see what it looks like to having that significant -- that commitment to returning significant amounts of cash back to shareholders. Since 2021, which was the first year of our new capital allocation framework, we've deployed $8.6 billion across our capital allocation levers with over $6 billion of that being returned to shareholders.

During this time, we completed $1 billion share repurchase authority and we announced a $1 billion share repurchase authority. We've also increased our base dividend by 5% each year through 2025.

Along the way, we've invested in our businesses in order to maintain that industry-leading operating performance, and we've identified attractive growth opportunities, the Monticello Timberstrand facility as well as increasing our distribution footprint. And we've been active in our timber portfolio.

When we established our growth target back in 2021, we did so with the thesis that high-quality timberlands are going to be increasingly scarce, driven by the option value that's inherent in owning the asset class, and that's proven true.

At the same time, we've been nimble as we've approached that target. We funded the majority of those acquisitions, as you heard this morning, through divestitures of less strategic assets with the net result being that we've significantly improved the cash flow generation capabilities of our portfolio.

And in line with our commitment to maintaining that strong balance sheet, we've also pursued attractive liability management activities, reducing our annual interest expense by $175 million since 2021.

So here we see more detail on how we go about determining the amount of cash we're going to return to shareholders each year. We have that commitment to returning 75% to 80% of our adjusted FAD to shareholders. That starts with our quarterly base dividend that's supported by the more stable cash flows from our Timberlands and Strategic Land Solutions business.

Beyond that, we can use share repurchase or supplemental cash dividend to get to that total 75% to 80%. Importantly, we're able to retain 20% to 25% of that adjusted FAD. And just as the cash flow generation capabilities are significant in terms of the amount that we're returning to shareholders when commodity markets are strong, in those times, we also have a significant amount that we retain in that 20% to 25%, which we can use for growth, additional share repurchase or debt paydown.

Now I'll spend a moment talking about the specific levers we have to drive value and some of the thought process that goes into each of these as we look at them. We're fortunate to have a number of levers as we think about deploying capital. And every time we do so, we run the math and ensure we're allocating that cash in a way that creates the most value for shareholders.

Any time we transact on our timber portfolio, we can leverage the best-in-class teams and tools that we've built up over time to ensure we're delivering value anytime we transact on our portfolio, whether on the buy or sell side. It's important to be disciplined in this asset class, and we have a strong track record here.

When we invest in this space, we can add to our stable cash flows through the cycle, while also helping to build out that pipeline of opportunities in the Strategic Land Solutions business. When we make investments in our wood products facilities, we can rely on our successful track record, replicating projects from one mill to another in a disciplined fashion.

When we make these investments, we bolster our significant cash flow generation capabilities in strong markets while also ensuring we have the right cost structure to thrive through the cycle. And when we invest in our fee wood baskets through mill investments, those drive value back to those same acres.

And then finally, we have the ability to be active in share repurchase. We've been programmatic here over the past couple of years, but we've also leaned in opportunistically as appropriate.

Moving forward, we'll continue to invest in our businesses to ensure we can maintain that industry-leading performance. We're very pleased with the return profile in this space with many of our optimized projects having returns in excess of 20-plus percent.

So moving forward, we expect to invest $400 million to $450 million annually in our ongoing and programmatic CapEx. And again, that's above and beyond the growth investments that we laid out earlier.

I'll make a few comments on M&A. Our M&A strategy has been disciplined and focused over time. Much of the activity that we've executed on has been focused on the timberland space. We've been active there. But we've also evaluated a number of bolt-on or even larger scale M&A opportunities that we've ultimately not pursued.

Moving forward, we'll continue to evaluate those opportunities, but we're only going to pursue those that we think are accretive to our industry-leading portfolio and will also deliver meaningful amounts of value for shareholders.

So with that, I can summarize a few brief comments on our capital allocation framework. Again, our framework overall remains unchanged. We continue to focus on returning significant amounts of cash back to shareholders while being able to invest in our business and maintain an appropriate capital structure.

And with that, I can turn it back to Devin for closing remarks.

All right. Well, thanks, Davie, and thanks to Travis and Brian and Paul. As you can see, we've got a great leadership team here. And I couldn't be more pleased with the folks that are helping us run our business today, but importantly, are going to help us drive growth going forward. So over the course of the morning, I think what you've heard is we really do have an unrivaled platform.

We are in a league of our own at this point. We have a strategy that's aligned to the cyclical nature of many of our businesses. We have a portfolio with scale and quality and diversity and the integrated nature that allows us to win with customers and deliver strong returns across our asset base.

We have a demonstrated proven track record of industry-leading operations and performance. We've been focused on OpEx for a long time. We layer in this new reinvigorated focus on innovation. It helps drive that going forward. We've got a disciplined, flexible capital allocation approach that as you've heard, it allows us to return cash to shareholders, but also invest for the future.

In combination, you put together this portfolio, the performance, the disciplined capital allocation, you layer on top of that the accelerated growth program, that's going to propel us to the next level and really put us in a position to generate strong returns for our investors in the years to come.

So in closing, look, we've done the work. We have put in the work to build a very strong foundation at our company. We build a better, stronger, more valuable enterprise over this time period.

And we're ready to leverage that to really lean in to this growth program to improve our cash flow, to enhance our competitive position, allowing us to return significant amounts of cash back to shareholders and meet the $1.5 billion EBITDA growth target that we've laid out for you this morning.

So we're really excited about it. As you heard, most of these initiatives, they're already underway. They're largely organic initiatives that are to a large extent under our control. So we have a lot of confidence in our ability to do this and to execute on this growth program. As we do this, it really will propel us to a whole another level.

So we're going to take a 15-minute break. We're going to set up the stage so that we can bring our full senior management team up and start the Q&A session, and we'll be happy to answer any questions that you have on this growth program.

For those on the webcast, I'd ask you just to hang tight here for a few minutes, and we'll get started here shortly with the Q&A segment. So we'll go ahead and pause for now.

[Break]

Okay. Welcome back. I think we are live now with the webcast. So for the Q&A section, we have folks around the room with microphones. And so happy to take any questions you have. Just raise your hand and someone will come with a microphone, and we'll get started.

I'm sorry, one thing I forgot to do. I am joined by two of our colleagues that were not part of the presentation. Denise Merle, who's our Chief Administration Officer, runs HR, runs IT, a whole variety of other things within the company, and Kristy Harlan, who is our General Counsel and among other things, also runs our procurement function and the integration excellence team reports up to her. So thank you both for joining us up here.

So with that, we'll go ahead and get started with questions.

Ketan Mamtora from BMO. Thanks for a very detailed presentation this morning. Maybe to start with, Davie, can you clarify the growth CapEx number that you talked about, $1.5 billion to $2.5 billion, that's separate from the ongoing CapEx that you -- that we talked about, the $400 million to $450 million. Can you clarify that?

Yes, that's right. So the way I would have you think about the growth CapEx, you can really think about the intention there is for us to not otherwise reduce the amount of cash that we're going to be returning to shareholders. So similar to how we've thought about the Monticello timberland or the Monticello TimberStrand or timberland investments in the past, generally, we'll plan to report out on those separately.

Understood. So can you give us some sense, I know you can't talk specifics, but -- so Monticello is about $500 million. Can you give us some framework for how we should think about the other kind of remaining, call it, $1.5 billion at midpoint in terms of what these investments could look like?

Yes. Let me make a couple of quick comments there before getting into the kind of more specific heart of your question. I think as we've approached this growth plan, we recognize that there are going to be elements that are fluid.

As I mentioned, some things are going to materialize sooner than others. Others may take a little bit long. So as we think about the CapEx investments required, there's going to be some fluidity. And I think that's why we have come out with that range of potential outcomes.

The second foundational comment I'll make is we're again going to evaluate every dollar we deploy and ensure we're doing that in a way that creates the most value for shareholders. So we'll look at each of those dollars to the extent we have additional opportunities to deploy capital with favorable returns. If we think that's ultimately the right answer, we'll do that.

So we've modeled out a variety of scenarios within that $1.5 billion to $2.5 billion. We have a base case, of course, and that's probably at the lower end of that range. And so thinking about the larger buckets, timberland acquisitions, of course, would be one bucket. We've already talked about the Monticello bucket.

And then really, I think about a third bucket really encompassing all the other initiatives that we've potentially thought about. Paul mentioned some of the opportunities in biocarbon, real estate development, but there's a whole host of other opportunities that we could end up deploying that capital to.

Charles Perron-Piche from Goldman Sachs. Devin, contrary to the prior Investor Day, you haven't announced any commitment to further expand the timberland portfolio in today's presentation. Considering the targeted monetization of certain assets that you've talked about, do you think your portfolio has reached maturity in terms of size? And how do you approach the scale optimization going forward?

Yes. So when we think about the growth program and Davie sort of alluded to, there's a portion of the $1.5 billion on the low end that would be spent on timberland acquisitions. Unlike the last Investor Day where we put a specific dollar value on the timberland acquisitions, we're not going to be as prescriptive this time.

What I would say, though, is that is the core of our business. I would expect that really in perpetuity, you're going to see us trying to pick up higher-quality timberlands and divest lower quality timberlands. And that's something that will just be ongoing for the foreseeable future.

So we don't necessarily have a target size. We want to be at x number of acres. It's really about how do we continue to add value to the portfolio. And at the end of the day, it largely goes back to what kind of cash flow can we drive for the portfolio.

We do think that, as of today, we have scale across each of our businesses, and that allows us to capture some of that integrated value. You've heard us talk about that. So it's not scale for scale's sake. It's scale when we can create value from applying capital in that regard.

Anthony Pettinari from Citi. You have -- I think on Slide 30, you talk about timberland transaction values growing 3% CAGR in the South, 7% CAGR in the Pacific Northwest over the last 20 years.

And if I look at that and then also maybe the NCREIF index data that we get, it seems like the value of Weyerhaeuser Timberlands, at least within the stock, have derated against those benchmarks.

And if you agree with the premise of the question, I guess first question is, why do you think that is? Do you think people are looking for something with log prices or housing market conditions?

And second of all, if that kind of valuation gap has widened, are there strategies that you can take in terms of more aggressive buybacks or selling more land in order to kind of close that valuation gap with these kind of other indexes that we see for timberland values?

Yes. Maybe I'll make a few comments and then maybe Davie can chime in as well. I mean I think when you look at the underlying value of the timberlands in our portfolio, I guess I wouldn't agree with the premise that those have derated. I think the value of our timberlands has increased certainly in line, if not in excess of just because of the quality of our portfolio.

I think when you look at the stock price specifically, our view is that is largely a function of some of the macro dynamics at play right now. And particularly when you see where the housing market is, we've seen repair and remodel that have been a little bit softer. We have leverage to lumber and OSB prices in particular.

And so as you've seen that demand wane and you've seen some of that pricing come down, what that's meant is that from a near-term basis, that's obviously impacted our free cash flow. And I think that's really what's going on with the stock, less so about the underlying quality of the assets.

Now to your question, how do you close the gap? Certainly, share repurchase is a component of that. As you know, we've closed out a $1 billion program. We put another $1 billion program in place. And we think that is a good use of capital and certainly something we're going to continue to look to do.

But as Davie mentioned, as we think about over the longer term, every dollar we spend, whether it's share repurchase, timberland acquisitions, investing CapEx, where can we drive the most FAD per share accretion? And so that's the basis of the decisions that we make when we allocate capital.

So yes, I think certainly, there is a gap in our view in terms of the underlying value relative to the stock price. And we're selling assets, as you've seen. We have sold a number of noncore nonstrategic timberland assets over the last several years, and we'll continue to look to do that as appropriate to fund both share repurchase and some of these growth initiatives.

Hong Zhang, JPMorgan. So you laid out a target of $170 million of adjusted EBITDA from the Climate Solutions business across a lot of categories. I guess if you were to attribute growth for each category, which ones would be the most contributive to that target, which ones would be the least?

Yes. Paul, do you want to take that one?

Yes, sure. At this stage, I think what we have said, there's a lot of value, a lot of opportunity across that pipeline and portfolio of projects. And a lot of the early growth came from the more mature businesses, so conservation and mitigation.

We do expect more of that growth and more of the $170 million to come from renewable energy, forest carbon and carbon capture and sequestration, and then, of course, biocarbon. I think today, it's a little premature to dimension that.

But if we just -- directionally, I would say, approximately half of that $170 million would come from forest carbon, renewables and carbon capture and the remaining half we see as coming from the growth of our biocarbon business.

Peter Ostberg from Tocqueville. Two questions. One, you talked a little bit about distribution business increasing, and there's been clearly some talk in the industry about consolidation of building products in general.

So is there something specific about either your business or the sort of building products business in general that is sort of requiring that consolidation? Or is it just a classic slower growth business, putting together a whole bunch of fragmented pieces to get a better business in general?

And the second one is Southern Yellow Pine, Obviously, that will be huge for you guys that can sort of break into the more construction market more than it is currently. Is there any remote concern that promotion of that devalues your Douglas Fir assets?

Yes. Maybe I'll take the first one and then send the second question over to Brian. I think when you think about consolidation in the distribution and building products space, there are really two things that are driving that.

Number one, scale on the cost side. When you're thinking about you're buying and selling and so you make some margin on that buy/sell, every penny you can drive out of the cost bottom line or just drops to the bottom line. So there's a cost benefit in the scale. And I mean, I think that's part of it.

But the other part is just the ability to go to market and customers with scale to make their lives easier. I think it's really a combination of those two things. For us, those are both certainly true, but we also have the added benefit of our distribution network sells our products.

And particularly on the EWP side, you need third-party distribution or your own internal distribution to get that EWP to market. And so there's an added benefit integration-wise for us to grow that business.

You want to comment on Southern Yellow Pine versus other products?

Yes. Let me hit this question, I guess, into two parts. If you look at our Douglas Fir system, the majority of our volume is focused in the green markets, Southern California through the Southwest, and we're heavily focused on retail markets.

So they're really fundamentally different in terms of where we're shipping and sending. And again, we do have some dry Doug Fir that moves into, I'd say, historically Southern Yellow parts, historically SPF markets, but it's pretty lightly penetrated.

The other thing I'd share with you is that we see great value in the conversion of pine into SPF. And really, the thing that we see is really the catalyst, and we're already starting to have some real success is using our WarpStable technology.

And what WarpStable really allows us to do is we can predict warp and twist very accurately at the time of manufacture. That helps the end user in terms of the quality of the product.

It also ensures that when they put it into a wall or into an application, it's not going to warp and twist on them 3, 6 months past the time that it was manufactured. And their coal rates are going to be lower. That technology is proprietary. We've been developing it for decades.

We have been building out this capability on the East Coast. We've now applied it to our southern system, and we've got great logistics into the Upper Great Lakes regions. And we are successfully converting markets in this region today and expect it into the future.

Paul, you mentioned that as much as half of the $170 million increment in Strategic Land Solutions could come from the biocarbon. What are going to be sort of the key variables and gating factors in your opinion that determine the degree to which this continues to be a really important growth arena and maybe soak up some of the pulpwood that is looking for home?

Sure. Let me start by saying the biocarbon -- the partner we've selected in this business is Aymium. They've been developing this technology for quite some time. They have full-scale operational -- operating plants around the country.

They just completed a new plant in California. And additionally, SDI, Steel Dynamics, which is, I think, the third largest steel producer in the U.S., has built their own biocarbon plant.

So first, we are confident in the technology. The technology does work. Second, we are confident in the market. Now any decisions we make to locate a plant within our timberlands or adjacent to our mills, we'll make that after we have had a clear understanding of a long-term offtake agreement for the production. So those are some of the things we're looking at.

But I'll just repeat, we're very confident in the technology. Aymium has approximately 600 patents on this technology. They've tested it throughout a number of different metals manufacturing operations.

So really, it's about can we get the logistics and the supply chain really dial down and pick the right locations and then match that with high-quality long-term offtake agreements in steel, silicon and other metals manufacturing.

And I just might add here, and I think that it was embedded in your question. This has the potential to be an incredible competitive advantage for our company. We feel good about the technology. They've got multiple facilities out there.

There's a lot of demand. They're already partnered with companies like SDI, Nippon. There's demand for this product. We feel good about that. What's held this up in terms of scaling more quickly is trying to cobble together the feedstock supply is challenging. And that's where I think there's a real opportunity for us to expedite the rollout.

We bring both the fiber from the residuals at the mill together with the pulpwood with our scaled timberlands ownership and the supply chain in the forest. This is something that can be a real accelerator. And you know this, [ Mark ], there have been a lot of pulp and paper mills that have shut down over the last 10 to 15 years.

If we can selectively put these in markets where we are going to benefit, we're going to have a feedstock outlet for pulpwood and mill residuals. This is potentially a really big opportunity for us. So we're excited about it.

And if I could, just one quick follow-up. Do we have a time line for this first project on when we're going to start seeing evidence of success?

Yes, most definitely. So that first project, we talked about the MOU today, but we actually have a definitive agreement for the first site, which I mentioned is adjacent to our McComb, Mississippi mill.

So the time line that we have a site under contract from the state, and we're looking at completing design and permitting as soon as we can with bringing on this facility mid- to late 2027. So that's our time line. But we're going to move multiple sites in parallel to that.

That's because Aymium has the technology, they have the engineering. So this is not a test facility. This is just a facility #5 for them. So we see us being able to amplify that, leveraging the supply chain expertise and the scale that we have.

John Petrides also from Tocqueville. Just two -- there are two questions. It was a great bottom-up presentation on controlling what you can control.

And you mentioned almost every sexy narrative that's out in the market right now, autonomous vehicles, AI, alternative energy, exporting to India. I mean the only thing you didn't say was if there are rare earth minerals in your quarries.

There may be, but that's...

But at some point, it's going to come from the macro and what's going to spur the demand side of things. So tell us, we're in a very unique housing cycle, I think you've all seen multiple housing cycles.

So where do you think the world is from the housing cycle from a top down? And what are your customers saying that's going to get demand spurred again?

And then my second question is, it's been 15 years since Weyerhaeuser became a REIT, and none of you were in your current positions at that point in time. The Board has very little REIT experience. So what's the benefit of actually staying in REIT form outside of being forced to pay out the dividend under the REIT rules? Why bother?

Because from an investor standpoint, there is a narrative that it causes confusion as to how to value the company as a REIT, a basic material land company. And I know that's our problem, but just offer your thoughts on the benefits of staying in REIT status.

Yes. All right. Well, maybe I'll answer the first question at the outset. So as you look across all of these various growth initiatives, they do -- they cover a lot of different areas. Some of those are going to be directly tied to what's going on in the domestic market with housing, certainly.

But I think you also saw a number of these that are not going to be tied to the housing industry. And that's, to some extent, by design, looking to try to reduce some of the volatility that's inherent in this portfolio mix.

Now you're undoubtedly right in the sense that the real leverage will come when we start to see an improvement in the overall housing market. I'll make a few comments on that.

Today, the housing market is challenged, right? The affordability issue is real. I think you're seeing the homebuilders as a whole trying to navigate through that. They're providing incentives, they're changing amenity packages, changing square footage, but it's clearly a challenge.

And until you see mortgage rates moving down meaningfully, that is going to be an issue. My position is, ultimately, this is something that is going to have to be solved. It's going to have to be a combination of building products, suppliers working with the homebuilders and working with state, local, federal government.

And I do think there's an appreciation in terms of the need to do that. Everywhere you go, every city, every state, every time you're talking to people in D.C., housing is one of the #1 issues that people are concerned about. There are things that we can do.

And I know it's hard when you're in the bottom of a cycle to look beyond it. But if we don't figure out how to start building more homes in the U.S., you're taking away the American dream from a whole generation of Americans. I don't see that as being a likely outcome.

Now in the interim, right, there are other things that can happen before housing really gets into the next year. Repair and remodel, I think that will probably return a little bit more quickly than overall housing. And remember, 40% of lumber demand comes from repair and remodel.

And beyond that, there is a demand component and a supply component when you think about product pricing. We've been in a position over the last, call it, 12 to 18 months where the pricing environment is really unsustainable for the industry, and you're starting to see mills close, take more sustained downtime, et cetera.

So there's a supply response that can improve pricing even outside of a material pickup in demand. But again, we feel that housing over the next 2, 3, 5 years is going to provide a good tailwind for many of these businesses.

On the REIT side, I would say we do have folks on our Board that have run REITs, that do have REIT experience. So I would just say it's not as though our Board doesn't have REIT experience. But beyond that, there's a tax benefit, obviously, to being a REIT.

And that is the primary reason we organize as a REIT. It doesn't necessarily restrict how we run our business. There are certain tax advantages that we have as part of being a REIT. And so with that in mind, I don't see any real need to change that.

Now in terms of the confusion around it, look, we can spend time with investors telling our story. I think most of the firms that have been with Weyerhaeuser for an extended period of time get our investment thesis, but certainly, that's something we can continue to help people understand.

Anything to add to that, Davie?

No. I mean, I guess just you could do your math on what you think the tax leakage would be if we converted away from a REIT, but it's certainly hundreds of millions of dollars at a very large multiple. So that would be pretty challenging to overcome from a valuation perspective.

Brad Barton on behalf of George Staphos at BofA. Maybe just digging a little deeper on the previous question on housing, Devin, I think you mentioned earlier in the presentation that Wood Products is going to fund a lot of these initiatives that you've talked about.

So when you think about housing starts next year, maybe even beyond, what level of starts would you want to see? Or maybe said a different way, what duration of a continued delay in recovery might cause you to rethink your strategy in terms of these initiatives or just in terms of capital allocation overall?

Yes. I mean what I would say with respect to housing starts is remember, again, that's only one side of the equation. I mean we look back over the last 10 years, you've had a number of periods where you can generate a lot of earnings in Wood Products even at lower levels of housing starts.

And so it's both the supply available as well as the demand. I can't tell you sitting here today that I can predict what housing starts are going to be next year. I do think there continues to be a lot of underlying demand for housing and I do believe that the homebuilders want to meet that demand.

The challenge is how do you figure out that math equation to make it affordable so that people can get into housing. I also think, and others may have some visibility into this as well, at the federal level, there has been a lot of interest from this administration on what can we do to help unlock housing in the United States.

And so I think there are a variety of things that are going on. Ultimately, it's about can we get affordability down? Can we get consumer confidence up, and that will unlock more housing activity.

In terms of what would change our overall view on this strategy, look, if we stayed in a market like we saw in 2025 where pricing was below cash flow breakeven in perpetuity, yes, obviously, we're going to have to adjust and we will to the degree we need to. But I don't think that's a very likely outcome.

You will see the supply response as you see pricing below cash flow breakeven. And these things have a way of working themselves out. So we'll be flexible, of course, as we always are, but that's not our base case. And I see a lot of opportunity for us in this space.

Kurt Yinger, D.A. Davidson. Two questions. First, I wanted to go back to the capital component of it. Just kind of on an average basis, $800 million a year of CapEx. You got the base dividend at, call it, roughly $600 million.

I guess in the next 1 or 2 years, if we see kind of this softness persist, how do you think about kind of funding that? And then could you just talk about how you would maybe prioritize some of the investments in that growth bucket based on that?

And then secondly, on the Wood Products side, the $440 million of uplift, Monticello, $100 million of that, it seems. Can you maybe just provide a little bit more of a breakdown on the $300 million to $350 million kind of remaining gap in there?

Why don't you take the first one?

Sure. Yes. So Kurt, I mean, look, we have a lot of flexibility. I think as we approach these investments, we're going to do them coming from the foundation. We're going to retain that balance sheet strength. We're going to be focused on retaining that investment-grade credit rating.

I mean that is foundational for us. So as we think about the path to deploying this capital, we've got a lot of different opportunities. Again, Devin mentioned the pricing environment. We don't expect that to continue.

Of course, we've modeled a number of different scenarios, and we're confident on our ability to be able to deliver this growth plan even if the current commodity pricing environment persists for some time.

So again, we'll look at all of the options available to us. We've demonstrated the ability to go out and divest nonstrategic assets and get strong value.

Again, when you look back at the cash flow profile of what these investments are going to bring, that's a substantial amount of capacity that it brings in terms of EBITDA. And so we're going to aggressively go after this. But again, we'll be nimble and flexible as we approach it.

Yes. And then just in terms of the breakdown, I will note, when you look at the investor slides, we've got little bar charts in the corners, and that will give you sort of a rough order of magnitude of the contribution from each of those initiatives.

But Brian, do you want to kind of talk high level that $440 million, what the breakdown is?

Yes, you bet. So you mentioned the $100 million at Monticello, and so we've disclosed that and shared that. In terms of the rest of the initiatives, we expect a little bit larger contribution from the new products development and sales and marketing transformation, say a little bit smaller for our lumber transformation and margin expansion.

And then our distribution growth is the smallest, although I'd still say it's meaningful. That's -- there's puts and takes across the various initiatives, and we see multiple paths to ultimately delivering the $440 million. But that's how we're thinking about it today.

Matthew McKellar, RBC Capital Markets. One more for Brian, please. So in Wood Products, you talked about a reenergized focus on product development. Two questions there.

First, could you expand at all on why this is the moment for that renewed focus? And second, not to front run what you'll show at IBS, but could you tell us at all about what problems you are aiming to solve for your customers?

Yes. I think this is absolutely the time to be invested in new products. And we've had a rich heritage. So we've always believed it's important. I think over the last decade, we've really leveraged and worked on our operating performance and really put our efforts into delivering a platform that's top quartile.

That's not to say we weren't interested in new products. We were, but we put in a renewed intensity around it. And going forward, it really is about meeting our customers' needs. And so we think about this from a very broad-based perspective.

We're looking to help our channel partners and builders in terms of efficiencies on the work site and how our products can better be used to allow them to generate better cost efficiencies as well as to be able to build faster, more efficiently.

We're looking at codes and how we can best help our partners comply with codes, come up with new and innovative ways to address code requirements. We're thinking about the whole range of construction profiles and how our products could better fit, whether it's in panelization or just in general in terms of design and specification.

And so we're thinking about all of those elements. And of course, we're thinking about weather, mold, moisture, cold, hot, all of those things, fire. And again, this is really about adding incremental value for our customers, driving a premium in terms of what we can bring to the marketplace and helping our entire channel to succeed.

A question from the webcast. How is artificial intelligence integrated into the company's 2030 growth strategy? What use cases are being assumed for EBITDA uplift by 2030?

Do you want to take those?

Yes. Great. So we have artificial intelligence built into all aspects of our 2030 growth strategy. We actually started this about 3 years ago, and we really built upon our culture of OpEx and innovation and started educating our top leaders on how to use AI, what's possible with AI.

And then soon after that, we went out, we hired -- recruited and hired a team of excellent AI experts. They've really been focused on setting up the platform for us to be able to develop, scale and replicate AI models.

You heard about the data that we have within Weyerhaeuser Company with 10 million acres of timberlands or manufacturing sites or distribution sites, getting the data platform right for AI was absolutely our first priority. And so that work is well underway.

Just to give you some context on some of the projects that we have going on within Wood Products, we're working on real-time dynamic pricing so that we can react much quicker to shifts in the market. We're also working on demand forecasting so that we can fully optimize our supply chain from end-to-end within Wood Products.

You saw some of the great data that's being captured within timberlands in that video. So we're in the early stages of working on digital forestry for timberlands. That's going to enable us to optimize the supply chain. So think about it from seedling all the way through to harvest to our end customer, wherever that might be, whether it's one of our mills or one of our other end customers or export markets.

And then in Paul's area with Strategic Land Solutions, we're actually a little bit further ahead. So when you think about the data and the geospatial data that we have internally, we've built a model. You heard Paul refer to it. We utilize that model to make strategic decisions on acquisitions or carbon siting.

We're further working on layering some additional information through external sites. So geospatial satellite data that we can layer on top of that and make faster strategic decisions and create even more value for the company.

We're also training our accelerated staff on how to use Copilot, and we've put some domain-specific AI agents in place that automate a lot of our tactical work. So collectively, all of these things are really helping us be more efficient, be quicker, reduce costs and generate value. So that's how we'll be contributing to the EBITDA uplift in 2030.

One more from the webcast. Given the demand growth you expect for wood poles, are there opportunities to capture more value by selling finished poles yourself versus just providing pole grade logs to pole manufacturers?

Travis, do you want to take that?

Sure. Well, the distribution pole and transmission pole business is pretty exciting. And when you look forward over the next 5 years and beyond, it's an area of tremendous growth. And as I mentioned in my prepared remarks, I mean, how we approach our relationships with our customers is to try to solve problems that they have.

How do we give customer solutions that others can't provide? So we really, at this stage, are aligning ourselves around supporting our customers so that they can create value and take advantage of this growth period in their industry.

And in that, sure, we know a lot about how to manufacture a pole and how to do the processing and specifically some of our supply chain advantages with our transportation and harvesting and our GIS to identify where are the poles to begin with. These are advantages that we can help apply to support our customers as they benefit and we benefit together.

One more for Travis. On the Southern export opportunity, we've seen that in the past as well last decade when it started, but then it sort of stopped.

What gives you confidence this time around that the Southern log export opportunity is kind of sustainable and that we can see continued improvement over the next few years?

And just as a follow-on, one question on M&A. You talked about sort of recent M&A focus more on timberlands. Is that how we should be thinking about going forward as well? Or wood products will also be part of that sort of opportunity set so far as M&A is concerned?

Why don't you take the first one on export?

Okay. So one of the dynamics about the export is around the global supply of timber. And as that has continued to change and move, that's creating an opportunity on the supply side.

And of course, the U.S. South is the world's most readily available supply of timber with the infrastructure in place, the labor, the trees are there, the force is there, the ports are there, the access is there.

I think as growing economies continue to develop, particularly in India, which we all know a lot about, but there's tremendous investments in the infrastructure.

Devin and I were there in September, and we're witnessing airports being built and rail lines being built and roads being built, just tremendous growth, and that brings along wood consumption in terms of lumber and appearance grade.

So I think the balance between the demand and the supply over the next decade will play favorable for our position to export and service those markets. And there's other countries as well.

As I mentioned, Thailand and Vietnam and some of the manufacturing moving around, and we're seeing increased opportunity and Southern Yellow Pine is a player in that space. I would say in our growth plans, we don't have China in there at all, and we'll see what -- how that continues to develop with the trades between the two nations.

Great. Yes. And then, Ketan, on the M&A side, I mean, in my prepared remarks, mentioning the bolt-on or larger scale M&A opportunities that we've evaluated in the past, but ultimately not pursued. Ultimately, that covers our opportunities in the wood products space.

We certainly looked at those in the past. We like the Wood Products businesses that we're in. If the right opportunity presented itself where we could create meaningful value for shareholders, where it would be accretive to our portfolio of assets, absolutely, we'd be willing to look at those.

One more from the webcast. How are you approaching integration excellence differently going forward? And can you provide some additional details on recent and future initiatives?

Kristy, do you want to take that one?

Sure. I'll take that one. So we've been focused on cross-business OpEx for a number of years, and we've made some really great progress in creating alignment between our different business teams. What we're doing now is we've put together a dedicated team that's using a systematic enterprise-wide approach to all of our integration excellence efforts.

So they're also leveraging our data and our technology. They're working with our AI team that Denise talked about and really working with our businesses to help us make the fastest, most reliable operating decisions with the consolidated company in mind to really maximize the value of our integrated portfolio.

All of these efforts are enabling us to do things like optimize log specs from our feed timberlands so that we're maximizing the production output at our lumber mills. We're optimizing logistics so that we are reducing our log truck turnaround times and improving our transportation costs.

And we're also doing things like making strategic kiln improvements in wood baskets where we can flow additional fee volume in that wood basket back to that mill. So those are just a few examples of all of the great work that's being done across the organization to really continue our ability to drive value from the integrated platform.

Looks like we have time for maybe two more questions, and we do have one more from the webcast, if there are any more in the room.

Yes. You laid out some pretty compelling economics around solar leases. I guess now that you've opened your first facility, are there any lessons learned that you could apply to future leases, especially since it seems like you expect to accelerate?

Yes, sure. We really have a lot of lessons learned in that space because as I mentioned, we started leasing property for wind energy over a decade ago. And this sort of lesson learned applies across all of Strategic Land Solutions, and we've talked about it as an enterprise, and that is the partner selection.

Whenever there's a new sort of boom, land boom, whether it's AI data centers or energy, there's a lot of companies out there who say they know how to do things. And so we are very particular on who we work with.

And so that's really the lessons learned we've taken from our natural resources business, our wind energy business into our solar energy business. So we often, as I say, do competitive processes. I think you saw on the slides, one of the companies we work with is NextEra. Everyone knows who they are. So we're very particular on who we work with.

And then the other things we do is we run our own financial models of our solar projects so we can fully understand where the value lies and how much we can get as a partner and as a landowner. So those are the things we integrate into our approach for partner selection.

And then, of course, as they move through the permitting process, in many instances, we have local relationships in those areas. And if it makes sense, we will partner with them at that local level to help smooth some of the permitting issues over.

So yes, those are some of the lessons we've learned, and that really helps us, in my mind, able to have a higher conversion rate of a lease to an operating project, which is really where the value lies.

Okay. So our last question today is from the webcast. On the new EWP facility in Arkansas, how much flexibility will you have to shift between industrial and residential end markets as demand changes? And what does that mean for the value the operation will generate?

Brian, you want to take that?

Yes. Well, I think just a couple of things that I'd comment about this. We build a strong customer base and really build out the supply chain logistics and partnerships and end-user relationships. And so as we build up the mill, I feel very confident we're going to have a very diverse product portfolio.

We're going to have a very strong industrial component. And even today at our Kenora site, which is about 30% industrial, we flex in and out of that product from time to time, working with our customers, given their needs and what other products are needed in the market from our other customers.

I expect that we're going to grow beyond industrial. I think we're going to find other applications. We're going to grow significantly in the lumber component where we have a really high-value product to bring to the market.

I think there's a very unique and compelling mass timber component that we're looking to bring forward as we innovate and we get the full power of using TimberStrand and LSL. I do think that there's a fair amount of flexibility to the question, but it's always within a range. And again, we'll manage that as we do with our order file.

All right. Well, I think that was the last question. Again, really appreciate everyone being here with us in person and the folks on the webcast. We're really excited about this growth program, and we look forward to continuing to update you as we execute on this and really propel Weyerhaeuser to the next level. So thanks, everyone. Have a great rest of your day.

Greetings, and welcome to the Weyerhaeuser Third Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Andy Taylor, Vice President of Investor Relations. Thank you, Mr. Taylor, you may begin.

Thank you, Rob. Good morning, everyone. Thank you for joining us today to discuss Weyerhaeuser's third quarter 2025 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 Davie 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 today. Yesterday, Weyerhaeuser reported third quarter GAAP earnings of $80 million or $0.11 per diluted share on net sales of $1.7 billion. Excluding special items, we earned $40 million or $0.06 per diluted share. Adjusted EBITDA totaled $217 million for the quarter.

Our third quarter performance reflects solid execution by our teams against a very challenging market backdrop. Notwithstanding recent headwinds, we remain well positioned to navigate the current environment given our deeply embedded OpEx culture and competitive cost structure. We've done considerable work over the last several years to align our strategy with the cyclicality of our businesses. As a result, Weyerhaeuser is a much stronger company today than at any point in recent history. And we continue to demonstrate the durability of our portfolio, the strength of our balance sheet and the flexibility of our capital allocation framework across market cycles. Looking forward, we remain constructive on the longer-term demand fundamentals that support growth for our businesses, and we're ready to capitalize on opportunities as market conditions improve.

Before getting into the businesses, I'd like to provide an update on recent actions to further optimize, improve and grow our Timberlands portfolio. Our recent Timberlands transactions are summarized on Page 18 of our earnings slide.

In the third quarter, we completed two high-quality acquisitions totaling $459 million. This includes our previously announced transaction for timberlands in North Carolina and Virginia and another acquisition of exceptional timberlands in Washington state. Additionally, in the third quarter, we advanced three divestiture packages of noncore timberlands, one of which closed earlier this month, and the other is under contract and scheduled to close later in the fourth quarter. These two transactions will result in $410 million of expected cash proceeds by year-end. We anticipate closing the third divestiture in early 2026, and expect total proceeds from all divestitures to exceed the cash outlay required for our recently completed acquisitions.

These transactions represent strategic opportunities to improve the quality and value of our portfolio. As we've demonstrated over the last several years, we're committed to active portfolio management across our timber holdings and it remains disciplined and nimble in our approach to growing the value of our timberlands. Through this process, we've achieved the multiyear timberlands growth target we announced in September of 2021. Over a similar period, we've also returned a substantial amount of cash back to shareholders through dividends and share repurchase and announced a compelling engineered Wood Products growth opportunity, all while maintaining a strong balance sheet.

Moving forward, we will continue to evaluate capital-efficient opportunities that enhance the return profile of our timberlands while also balancing other levers across our capital allocation framework to drive long-term value for our shareholders. Additionally, in the third quarter, we completed the sale of our Princeton mill in British Columbia for $85 million. In September, we received $61 million of the proceeds in conjunction with the closing of the sawmill portion of the deal. We expect to receive the remainder of the transaction proceeds over the coming months following the transfer of associated timber licenses in the province. It's worth noting that our other lumber operations in Canada are not affected by this transaction, and we continue to serve our customers from our 2 sawmills in Alberta.

Turning now to our third quarter business results. I'll begin with Timberlands on Pages 6 through 9. Timberlands contributed $80 million to second quarter earnings. Adjusted EBITDA was $148 million, a $4 million decrease compared to the second quarter. In the West, adjusted EBITDA decreased by $9 million. Log pricing in the domestic market faced downward pressure in the third quarter as supply remained ample, and mills continue to carry elevated log inventories and navigate a very challenging lumber market. As a result, our average domestic sales realizations decreased moderately compared to the second quarter. Per unit log and haul costs increased in response to higher elevation harvest activity that's typical this time of year, and forestry and road costs were slightly lower than the prior quarter. Our fee harvest volumes were moderately higher and exceeded our initial plan for the quarter, largely driven by fewer operational restrictions given a relatively light wildfire season.

Moving on to our export business to Japan. Log markets in Japan softened somewhat in the third quarter in response to ongoing consumption headwinds in the Japanese housing market. As a result, our customers' finished goods inventories increased and log prices decreased. Despite this dynamic, our customers remain well positioned relative to imported European lumber, which continues to face headwinds in the Japanese market. For the quarter, our average sales realizations for export logs to Japan were moderately lower and our sales volumes were moderately higher, largely due to the timing of vessels.

Turning to the South. Adjusted EBITDA for Southern Timberlands was $74 million, a $5 million increase compared to the second quarter. Southern sawlog markets moderated slightly in the third quarter as log supply increased with drier weather conditions and as mills further adjusted to weaker lumber markets. In contrast, Southern fiber markets were relatively stable outside of a few localized regions impacted by recent mill closures. On balance, takeaway for our logs remained steady given our delivered programs across the region. That said, our average sales realizations decreased slightly in response to a higher mix of fiber logs from increased thinning activity.

Given favorable weather conditions, our fee harvest volumes increased slightly compared to the prior quarter. Per unit log and haul costs were lower and forestry and road costs were comparable. In the North, adjusted EBITDA increased slightly due to the higher sales volumes, resulting from the seasonal increase in harvest activity that is typical in the third quarter.

Turning now to real estate, energy and natural resources on Pages 10 and 11. Real estate and ENR contributed $69 million to third quarter earnings and $91 million to adjusted EBITDA. Third quarter EBITDA was $52 million lower than the prior quarter, but $28 million higher than our initial outlook for the segment, largely driven by the timing and mix of real estate sales. It's worth noting that real estate markets have remained healthy year-to-date, and we continue to benefit from strong demand and pricing for HBU properties, resulting in high-value transactions with significant premiums to timber value. Notably, our average price per acre has steadily increased in 2025 and reached its highest quarterly level since late 2022.

I'll now turn to our Natural Climate Solutions business. First, on our carbon capture and sequestration project with Occidental Petroleum, which is expected to reach first injection in 2029. In the third quarter, Occidental announced the formation of a joint venture for the construction and operation of pipeline infrastructure between regional customers in the CO2 storage facility in Livingston, Parish, Louisiana. This represents another important milestone associated with our CCS project and underscores the importance of selecting sophisticated counterparties with strong technical, commercial and project development expertise.

Turning quickly to Forest Carbon. We have now received approval on our fourth project and currently have 5 additional projects under development. We continue to see solid demand for our credits given our commitment to developing projects that meet a high standard for quality and integrity. For 2025, we still expect a significant increase in credit generation in sales relative to the last couple of years. And overall, we remain on track to reach $100 million of adjusted EBITDA from our Natural Climate Solutions by year-end.

I'll note here that we are excited to go into much more detail on our Natural Climate Solutions business, including multiyear growth targets at our upcoming Investor Day in December.

Now moving to Wood Products on Pages 12 through 14. Excluding a special item associated with the sale of our Princeton mill, earnings for Wood Products was a $48 million loss in the third quarter. Adjusted EBITDA was $8 million, a $93 million decrease compared to the second quarter. These results reflect extremely challenging lumber and OSB prices in the quarter, which reached historically low levels on an inflation-adjusted basis.

Starting with lumber. Third quarter adjusted EBITDA was a $48 million loss as several ongoing headwinds persisted across the North American market. The framing lumber composite began the third quarter on a slight upward trajectory, largely supported by improving Western SPF pricing and broader concerns around the pending increase in duties on Canadian lumber. As the quarter progressed, demand softened seasonally and buyer sentiment turned much more cautious. In addition, the supply-demand imbalance worsened in response to elevated shipments of Canadian lumber into the U.S. market, ahead of the increasing duties. Collectively, these dynamics drove composite pricing significantly lower through the balance of the quarter.

It's worth noting that we have seen pricing stabilize and move slightly higher for certain species over the last several weeks. At this point, the industry has largely worked through the excess lumber volume that entered the U.S. prior to Canadian duties moving higher. Although we do expect the typical seasonal softening of demand as we enter the colder winter months, leaner inventories, combined with elevated duties and the new 232 tariffs should support product pricing and bridge the market until we start ramping up for next year's building season.

For our lumber business, production volumes decreased by approximately 3% compared to the second quarter. This reflects our election in September to slightly moderate production across our mill set in response to the softer demand environment as well as the volume impacts associated with the closing of our sale of our Princeton mill late in the quarter. As a result, our sales volumes were slightly lower compared to the second quarter, and unit manufacturing costs were higher. Our average sales realizations decreased by 11% in the third quarter and were generally in line with the framing lumber composite. Log costs were moderately lower.

Now turning to OSB. Third quarter adjusted EBITDA was a $3 million loss, primarily driven by weaker product pricing in response to subdued residential construction activity. Following a steady decline for most of the year, the OSB composite stabilized in August and was generally range-bound for the balance of the quarter, albeit at a much lower level than the prior quarter average. For our OSB business, average sales realizations decreased by 18% compared to the second quarter. Our sales volumes were comparable to the second quarter. Unit manufacturing costs and fiber costs were moderately lower. I'll note that pricing has remained stable through October. And similar to lumber, we do expect demand to improve early next year as we approach the spring building season.

Engineered Wood Products adjusted EBITDA was $56 million, which was comparable to the second quarter. It's worth noting that third quarter results included a onetime $7 million benefit from insurance proceeds associated with the fire at our MDF facility in Montana earlier this year. As for the performance of our EWP business, we continue to align our production with customer demand and single-family homebuilding activity, both of which softened somewhat in the third quarter. As a result, our sales volumes decreased for most products compared to the second quarter and unit manufacturing costs increased. Notably, our average sales realizations for solid section and I-joist products were comparable to the prior quarter. And raw material costs decreased primarily for OSB web stock.

In Distribution, adjusted EBITDA decreased by $4 million compared to the second quarter, largely due to a decrease in sales volumes. With that, I'll turn the call over to Davie to discuss some financial items and our fourth quarter outlook.

Thanks, Devin, and good morning, everyone. I'll begin with key financial items, which are summarized on Page 16. In the third quarter, we generated $210 million of cash from operations and ended the quarter with approximately $400 million of cash and total debt of just under $5.5 billion. Our balance sheet, liquidity position and financial flexibility remains solid, notwithstanding the challenging market backdrop, and we are well positioned to navigate a range of market conditions.

Share repurchase activity totaled $25 million in the third quarter, and as of quarter end, we had completed approximately $150 million of share repurchase activity for the year. Capital expenditures were $125 million in the third quarter, which includes $32 million related to the construction of our EWP facility in Monticello, Arkansas. As we previously communicated, the total investment for the facility is expected to be approximately $500 million to be incurred through 2027.

For full year 2025, we anticipate approximately $130 million of investments for Monticello. And as a reminder, CapEx associated with this project will be excluded for purposes of calculating adjusted FAD as used in our cash return framework.

Excluding CapEx for Monticello, we have lowered guidance for our typical CapEx program to a range of $380 million to $390 million in 2025. It's worth noting that we are always evaluating our capital allocation levers and have the flexibility within our framework to make adjustments in response to market conditions, alternate uses of cash and to fund growth opportunities.

Given the timing of cash inflows and outflows associated with recently announced timberland transactions and typical liability management activities, we took advantage of the beneficial rate environment in third quarter to secure a 3-year $800 million term loan with an effective interest rate of 4.3%, and we used $500 million of the proceeds to prepay a portion of our 2026 maturities.

Third quarter results for our unallocated items are summarized on Page 15. Adjusted EBITDA for this segment increased by $30 million compared to the second quarter primarily attributable to changes in intersegment profit elimination and LIFO. Looking forward, key outlook items for the fourth quarter are presented on Page 19 and updates to full year outlook items are presented on Page 20. In our Timberlands business, we expect fourth quarter earnings before special items and adjusted EBITDA to be approximately $30 million lower than third quarter of 2025, largely driven by lower sales volumes and realizations in the West.

Turning to our Western Timberlands operations. Log demand in the domestic market remains soft at the outset of the fourth quarter as mills continue to work through elevated log inventories and navigate a challenging lumber market. That said, log supply typically moderates into the winter months, which should provide some support for log pricing as the quarter progresses. On balance, our domestic sales realizations are expected to be moderately lower compared to the third quarter. Our fee harvest volumes are expected to decrease largely due to fewer working days in the fourth quarter and the pull forward of volume over the summer with minimal wildfire-related operational restrictions. Our per unit log and haul costs are expected to be lower and forestry and road costs are expected to decrease seasonally.

Moving to our log export program to Japan. As Devin mentioned, log inventories have expanded in the Japanese market in response to ongoing consumption headwinds. As a result, we expect softer demand for our logs in the fourth quarter and lower sales volumes compared to the prior quarter. That said, we anticipate our Japanese log sales realizations to be slightly higher, largely driven by freight-related benefits. It's worth noting that we expect demand for our logs to improve over time as inventories normalize in the Japanese market and as our customers continue to take market share from competing imports of European lumber.

Turning to the South. Sawlog markets remain muted as mills continue to navigate lower pricing and takeaway of lumber and work through elevated log inventories. However, we anticipate a slight uptick in log demand as supply decreases seasonally into the winter months. In contrast, fiber markets are expected to remain relatively stable outside of a few localized regions impacted by recent mill closures. On balance, takeaway for our logs is expected to remain steady given our delivered programs across the region, and we anticipate our sales realizations to be comparable to the third quarter. Our fee harvest volumes and forestry and road costs are expected to decrease seasonally and per unit log and haul costs are expected to be higher. In the North, our fee harvest volumes are expected to be moderately lower due to seasonal wet weather conditions, and we anticipate slightly lower sales realizations due to mix.

Moving to our Real Estate, Energy and Natural Resources segment. Real estate markets have remained healthy year-to-date, and we have capitalized on strong demand and significant premiums to timber value. As a result, we are increasing our guidance for full year 2025 adjusted EBITDA to approximately $390 million, an increase of $40 million from prior guidance. We now expect basis as a percentage of real estate sales to be 25% to 30% for the year, and we remain on track to reach $100 million of EBITDA from our Natural Climate Solutions business by year-end. For the segment, we expect fourth quarter earnings before special items to be approximately $5 million lower and adjusted EBITDA to be approximately $15 million lower than the third quarter of 2025 due to the timing and mix of real estate sales.

Turning to our Wood Products segment. Excluding the effect of changes in average sales realizations for lumber and OSB, we expect fourth quarter earnings before special items and adjusted EBITDA to be slightly lower than the third quarter of 2025. We anticipate a slightly softer demand environment for Wood Products in the fourth quarter as housing and R&R activity typically moderates into the winter months. Looking further out, we would expect demand to increase into next year's spring building season and more broadly as the macro environment improves. Composite pricing for lumber and OSB has been relatively stable through October. That said, pricing for both products remains at historically low levels on an inflation-adjusted basis and slightly below third quarter averages.

For our lumber business, we slightly reduced our production at the end of the third quarter in response to the softer demand environment and have maintained a similar operating posture through October. Assuming we continue with this reduced posture for the remainder of the quarter, combined with the effect of the Princeton sale, our lumber production would be approximately 10% lower quarter-over-quarter. As a result, we anticipate lower sales volumes in the fourth quarter. Unit manufacturing costs are expected to be comparable to the prior quarter and log costs are expected to decrease moderately. Looking forward, we will continue to ensure our operating posture is aligned with driving optimal financial performance.

For our OSB business, we expect sales volumes and fiber costs to be comparable to the third quarter. Unit manufacturing costs are expected to be higher due to planned annual maintenance outages that are typical in the fourth quarter. For our engineered wood products business, we continue to align our production with customer demand, which is most notably tied to single-family home building activity. As a result, we anticipate lower sales volumes for most products compared to the third quarter, with our average sales realizations and raw material costs expected to be comparable. For our distribution business, we expect adjusted EBITDA to be comparable to the third quarter.

With that, I'll now turn the call back to Devin and look forward to your questions.

Thanks, Davie. Before wrapping up this morning, I'll make a few comments on the housing and repair and remodel markets. Starting with housing. Overall, housing activity has remained lackluster this year with total starts hovering around 1.3 million units on a seasonally adjusted basis and single-family starts below 1 million units. Based on conversations with our homebuilder customers, the biggest issues continue to be ongoing affordability challenges and weaker consumer confidence. While mortgage rates have declined to the low 6% range, many potential homebuyers remain on the sidelines given elevated uncertainty about the economy, inflation and employment. The ongoing government shutdown is likely also not -- also having an impact on overall sentiment. All said, consumers have been less inclined to jump into the housing market in 2025, given all the noise in the broader macro environment.

Moving forward, it seems we could see some of the tariff-related concerns easing over time. We might also get additional support from the Fed on interest rates in the coming months. And hopefully, the government shutdown will end soon. Perhaps clarity in these areas could alleviate some of the uncertainty that's been weighing on consumers in the housing market. And while I suspect we'll see the typical seasonal pattern of slowing construction activity over the winter months, we do expect to improve as we approach next year's spring building season.

Over the longer term, our outlook on housing fundamentals remains favorable, supported by strong demographic tailwinds and a vastly underbuilt housing stock. In addition, there seems to be a growing appreciation that government policies need to better accommodate building activity to address housing shortages across the country. All of this will ultimately support healthy demand for housing over time.

Turning to the repair and remodel market. Activity has been softer this year compared to 2024, largely driven by many of the same factors impacting the residential construction market, namely lower consumer confidence, higher interest rates and concerns around the trajectory of the economy. We've also seen less R&R activity in response to lower turnover of existing homes given higher mortgage rates and the lock-in effect.

Looking forward, while we do expect seasonal moderation in R&R activity around the holidays, we're optimistic that demand will recover as interest rates move lower and consumer confidence improves. In addition, we think the dynamic around deferral of large discretionary projects over the last few years will ultimately serve as a tailwind as the macro environment improves. And longer term, many of the key drivers supporting repair and remodel activity remain intact, including favorable home equity levels and an aging housing stock.

In closing, I'm extremely proud of the focus and resilience demonstrated by our teams in the third quarter. Despite the challenging market backdrop, we continue to execute against our strategy and demonstrate the durability of our portfolio and capital allocation framework across market cycles. Our financial position is strong, and we continue to capitalize on strategic opportunities to enhance the value of our portfolio. And looking forward, we maintain a favorable outlook on the longer-term demand fundamentals that support growth in housing, repair and remodel and climate solutions. And we remain focused on driving operational excellence, serving our customers and creating long-term value for our shareholders. And finally, we look forward to connecting with many of you at our upcoming Investor Day on December 11. Davie and I will be joined by other members of our senior management team to present a detailed overview of our strategic growth plan, enterprise capabilities and financial targets through 2030. For those of you who plan to attend the event virtually, please visit our website to register in advance for the live webcast.

And with that, I think we can open it up for questions.

[Operator Instructions] My first question comes from Susan Maklari with Goldman Sachs.

My first question is on -- I want to talk a bit about how you're thinking of lumber and OSB capacity. Appreciating the comments around fact that your lumber production will be 10% sequentially lower in the fourth quarter and expectations that housing activity could pick up as we get into the spring. But I guess as we think about what the builders are telling us, especially the big publics that they're going to slow starts late this year. And that sounds like it could hold into early 2026 as well. How are you thinking about the potential for further capacity to come out of your business. What are you watching for, for signs to determine if that's necessary? And how are you thinking about balancing the near term and the initiatives that you've put through with OpEx, which are obviously coming together and allowing perhaps for some share gains relative to the longer-term demand outlook?

Yes. I mean great question, Sue. The reality is this has been a really challenging year from a lumber standpoint and of late from an OSB standpoint. And that's largely been driven by just the dynamic that we've seen in the housing market primarily, but to a certain degree, by repair and model as well. And I think there are a lot of reasons to expect that over the the medium to longer term, we need a lot of housing in the U.S. And so we're still very bullish on housing in the U.S. But as you say, in the near term, both from the standpoint of just the general consumer confidence environment, affordability. And then obviously, we're going into that time of year where we typically see some slowdown in residential construction. I don't think we have an expectation that we're going to see the demand environment for those products pick up dramatically here as we close out the year. So as we think about our operating posture, we look at a number of different factors, as you would expect. We think about consumer commitments. We think about balancing our fee volumes to maximize profitability across our integrated portfolio. We think about trying to maximize our earnings at both the mill and the regional level. Because of the nature of our portfolio, there are some dynamics that play with us maybe that wouldn't necessarily be the case for less integrated companies. We think about it from a short-term and long-term perspective. And really, we also look at it from a competitive dynamic in our space and really how we want to position ourselves with our customers. And that includes our position on the cost curve all the levers that we can pull with our integrated scale business, the cost structure, the OpEx, the environment. So there are a lot of things that go into that. For us, I do think that look, from an operating margin perspective, I think we've demonstrated we're best-in-class. I think we're well positioned on the cost curve. And so we're going to continue to watch that as we progress through the quarter. I will say stepping back from our operating posture specifically when we look at the industry as a whole, it's been a tough environment, and we've seen some level of capacity announcements here recently. I think there's some quiet downtime going on in the market as well, but producers are not going to continue to operate below cash breakeven indefinitely. Something is going to have to change, and absent some dynamic with the demand environment that's going to have to come on the supply side. And that's just kind of the reality of where we are, at least until we start getting ramped up for the building season.

Yes. Okay. I appreciate all those comments. And then maybe turning to the timberland side of the business. It's nice to see the acquisitions and some of those sales that you announced this quarter that will be coming through. I guess as you think about your timberlands portfolio and having reached the goals that you have set for yourself at the last Investor Day. How are you thinking about the positioning today? What should we expect going forward? And can you talk a bit about how you're thinking of the general footprint there?

Yes, look Sue, I mean we're really pleased with the Timberland portfolio activity that we've been able to complete over the course of this year and advance into early next year. Look, that's something that is a core part of who we are and what we do. We're always going to be active in this space. We're very pleased to have completed the target that we set out a few years ago. As a reminder, I'd say that was really our view of what we thought was a realistic level of programmatic M&A that we could affect in a disciplined fashion over a multiyear period. And so as we said at the time, we expect to be active, looking for opportunities to optimize our timberlands portfolio in a disciplined fashion, and that will continue to be true going forward where we can find acquisitions that we think create value. So I think we've demonstrated that we can create value anytime we transact, whether on the buy or sell side. So we'll continue to look for opportunities to optimize our portfolio moving forward.

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

I appreciate the commentary. So I wanted to dig in a little bit more into the portfolio transaction you made in Timberlands. Devin, what do you think the net cash generation has been benefited by the acquisitions relative to the divestitures. What do you think the sort of cash flow, if you had to look at it per acre has benefited just across what you sold relative to what you gained?

Yes, George, this is Davie. I'll take that one. And I'll mention that in a couple of ways. Obviously, we've got the transactions that we're executing on here in the current environment. I think if you look back to 2020 over the series of acquisitions and divestitures that we've completed, that's somewhere in the neighborhood of $50 million of an increase to our annual EBITDA that we've been able to generate through the buy and sell activity. So it's a phenomenal way for us to continue to look to to increase the cash flow generating capabilities and optimize the portfolio. The transactions that we've -- that we're working on this year on the buy side, we've said that, that's on a 21x EBITDA multiple compared to the 45x multiple. From a divestitures perspective, we've disclosed the cash yields. So I think you can go do the math on what you think that looks like. Again, I think it's really important to note that we have the ability to create value anytime we're transacting on our portfolio, whether on the buy side, whether on the sell side, and I think our integrated portfolio, the scale and diversity, that gives us a way to unlock value on these types of transactions that others may not be able to do with the tools and teams that we've invested in over time. I think uniquely positions us to execute in a disciplined fashion in this space.

I guess my other question would be aimed at lumber, in particular. So again, recognizing that you are low on the cost curve and you have the higher margins in the sector from what we can see. Nonetheless, black at the bottom was born from kind of an absolute need way back when coming out of the crisis to improve the cash flow kind of irrespective of what everybody else was doing, where you're at and recognizing there's been a lot of progress. When we look at EBITDA losses this quarter versus, I guess, last year's third quarter, pricing was about the same, but the EBITDA loss was a bit further, what -- and maybe we'll talk more about this at the Analyst Day, but what are you doing to lower cost and try to get to a breakeven at these very, very labored, if you will, price levels for lumber?

Yes. I mean, I'll make a few high-level comments on that, George. I mean we've been focused on cost and OpEx for going on a decade at this point. And I think you can see that in our relative position against most of the industry. The reality is we are operating in an environment that is extremely challenged at present. The pricing dynamic that we are seeing currently is really one of the toughest pricing environments we've seen in a very long time. Now I think when you think about black at the bottom, I do think kind of pre-pandemic and the high single-digit inflationary environment that we saw for a few years, we were there. The reality is when you see inflation go up like that, it's going to take us a little bit longer to kind of work all the way back down there. There's just -- there's a scenario in any environment where prices go so low that it's going to be very difficult. I think that's where we are right now. And you can kind of see that hitting the entire industry. Again, we're well positioned on the cost curve. I think we're navigating the environment better than most. But the driver for negative earnings was just the weak price environment. And we did elect to reduce our operating posture a little bit in September, and we're carrying that through to October. But we're going to keep focused on efficiencies. We're going to keep focusing on reliability and cost and all the things that we do to make sure that we have world-class manufacturing operations, and to the extent that we do see a little bit of improvement in pricing, we'll be back in the positive from an EBITDA standpoint on lumber.

Devin, if I could just -- if prices held at these levels, and we recognize why they can't because of where prices are for everybody in the fourth quartile and so on. But let's assume just for instance, that prices held at these levels, would you be able to, within the course of a year or 2 years through whatever actions and things that you know you have on your whiteboard to actually get to a breakeven level on a cash basis.

Yes. I mean we've got a path there. Every mill has a road map to get to first quartile cost structure. We're frankly largely there at most of our mills. So we have lots of things on the drawing board, and we're going to talk about some of that at our Investor Day and the continuing OpEx work that we're doing, and we're supplementing that with some of the things that we're doing from an innovation standpoint. So we're never done. But again, tough environment right now. It's not going to stay this way forever. It's unsustainable, and we'll be well positioned to take advantage of the market as things start to improve.

Next question comes from Anthony Pettinari with Citi.

When we look at leverage net debt to EBITDA at 4.3x, I know that's backwards looking on what should be kind of trough Wood Products earnings. But I'm just -- if we do have a more muted year in '26, like it seems like we have had in '25, can you just talk about kind of guardrails on leverage, the levers that you can pull potentially did delever capital allocation priorities, maybe in -- if we kind of imagine maybe a bit of a tougher scenario in '26? Or just generally, kind of how you think about that given what's kind of optically at least elevated leverage.

Yes. Look, Anthony, I mean I think Devin laid it out well in his prepared remarks, we've done considerable work over the last several years to align our strategy with the cyclicality of our businesses. So with the strength of our company today, we have a tremendous number of levers. I think you hit on it right. I mean, really, the -- from an LTM net debt-to-EBITDA perspective, what you're seeing there is that with the EBITDA coming down, you're seeing that number tick up. But importantly, that's a number that's designed to be a mid-cycle valuation, and we expect to be well under that target as EBITDA levels normalize over time. I mean I think from the starting point, we remain committed to maintaining that investment-grade credit rating, and that's going to be a guiding principle as we think about all the ways that we navigate these challenging markets. But again, I think our view is that eventually, we're going to see these markets improve, and we'll see that number normalize over time.

Okay. That's helpful. And then your two public timber REIT peers are combining into one company. And I'm not asking you to comment on competitors, but I'm just wondering if you can share any thoughts on the consolidation we've seen in the timber space over the years. Maybe you can remind us how much you actually face off against Potlatch and Rayonier in your local markets? And if public timber REITs are moving, I guess, to Coke and Pepsi, like how should investors think about Weyerhaeuser's relative value proposition?

Yes. I mean, like you said, we're not probably going to comment too much on that acquisition. I will just say from a high level, we obviously agree that there is a significant benefit to scale and to having an integrated business. We've been operating that way for a very long time. We think that there are a lot of opportunities to create value in having a scaled integrated model. We compete against each of them in local markets as we compete against other landowners, both small private landowners, TMOs, et cetera. we'll compete against them in more or less the same way once they combine. I do think, from our standpoint, it's important to keep in mind, right? So we have 10.4 million acres. We're one of the largest wood products manufacturers in North America. I don't think this fundamentally changes in terms of the competitive operating environment in any region in any sort of meaningful way. But again, I do think scale and integrated business makes sense. So there's some logic in the deal.

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

First, a small one, maybe leads into a bigger one. So on the HBU, you had pointed out that prices have been rising over the course of this year. Is that a function of just the mix of what you're selling? Or is it that you're seeing higher pricing for like properties than you were before?

Yes. I mean I think it's a little bit of both. There's always a component of mix, right? Because every every quarter, there's going to be a slightly different mix of the properties that you're selling. So there's a part of it that's that, and there's some geography dynamics at play there as well. But I would say on balance, what we are seeing is -- on a like-for-like basis, we're continuing to see the prices that people are paying for this go up. And I think so it's a combination of both of those things, Mark.

Okay. Great. And then also, I hear you on the buying and the selling of timberlands and how optimizing the portfolio is very, very beneficial, makes total sense. At the same time, it's very interesting that the per acre at least to me, the per acre values that we're seeing as well as the multiples of cash flow that you were relaying, are as high as they are, if anything, it does seem like timberland values, like HBU, in the private market transaction seems to be trending higher, too. And obviously, your stock hasn't fared as well, lots of other variables at play. But does that color your appetite to be more aggressive on the sell side than on the buy side? And also, as you've gone out, particularly and sold some acreage, is your sense that there's a fair bit of money still looking to be deployed in the timberland space. Kind of color on that would be great.

Yes, Mark, let me comment just broadly on the overall timberlands market. I mean we continue to see very strong interest in the asset class. We've talked about the amount of capital that's been raised to pursue these assets. There's a lot of that that's still sitting out there, several billion dollars that's not yet been placed. Really, if we go back to the genesis of our 2021 target in Timberlands, that was really coming from the standpoint of there's going to be an increasing scarcity in the availability of high-quality timberlands. And that's really played into all of the decisions that we have made over the last several years. And so I think that's guided our strategy, and I think it's an important element as we move from here. .

I would just make one other kind of comment generally on that, Mark, and that is when you think about both the values that we're paying to bring the timberlands into our portfolio and the value of the timberlands that we're selling. Embedded in that is really, a, our team on the A&D side spends a lot of time out looking for high-quality deals. And I think you can see that really in all of the transactions that we've brought in. We're looking for very high-quality timberlands with good cash flow generation that can also create value through our integration, NCS alternative values. And so to some degree, the value that we're paying is reflective of the team's work and what we're looking for. But also even on the sell side, I think -- and maybe this was part of your question, we have a very high-quality timberlands portfolio existing. And so even when you think about some of the deals that we're selling, which are noncore to us, it is reflective of what is a very high-quality timberlands portfolio that we've assembled over frankly, 100 years. And so I think both of those things play into the value that you're seeing on the buy side and sell side when we do deals.

That's helpful. And speak to maybe just one quick follow-on. Given that is the case, it would seem that, that discrepancy between how the public markets are valuing your stock, recognizing it's tough times in wood products, and that's certainly playing a role. But are there other things that you're contemplating to help bridge at least what is a temporary seeming very, very wide gap between NAV and where the stock trades.

Yes. Look, Mark, that's always on our mind. I mean we're always out here trying to think about how we can create shareholder value. And part of that means looking at that very item. I think we're going to have a lot of items that we'll walk through at our Investor Day in December on that topic. I think we've been focused for a while now on how we can ultimately grow the value of the company and drive cash flow improvement through the cycle. So I think we'll have more to say about that in December.

Our next question comes from Kurt Yinger with D.A. Davidson.

I think Mark had a lot of good questions there. But maybe just dovetailing and trying to kind of wrap it up, like Davie, you talked about remaining kind of active from a portfolio management perspective. Does that mean that we should expect that you guys will remain acquisitive going forward? Or just help me understand kind of that balance between being a buyer versus maybe a net seller looking ahead?

Yes. Look, again, we're going to consider all the options to create shareholder value. We think we can create value on both the buy side and the sell side. I mean I will note one of the realities here in the current environment as we look at all of the capital allocation alternatives that are available to us, when the inputs on some of the other alternatives are more attractive, that does raise the bar on what it's going to take from a Timberland acquisition perspective. But I think it's indicative of the quality of the acquisitions that we're completing this year that they cleared that bar. And that's something we're always going to be looking at as we make those decisions.

Okay. Switching gears to the Wood Products side. A little bit surprising to see the EWP realizations up a bit in Q3. It sounds like you're expecting pricing to be stable in Q4. Is there anything temporarily benefiting that? I mean it seems to kind of diverge at least from what we've heard around the market? And how are you thinking about kind of overall competitive dynamics and what you're seeing out there?

Yes. I mean, well, look, the EWP market has been under some pressure this year, just as residential construction activity has been soft for a bit. As you know, EWP demand is largely driven by residential construction. And with the housing market being stuck in second gear, no doubt that's been a bit of a headwind. And we've seen pricing come down somewhat over the course of 2025. But that being said, I do think that we've managed the environment fairly well. We've mitigated some of the downward pressure, and that's largely a function of the power of our Trust Choice brand, the quality of our products and really I think, to a large degree, the service model that we provide to our customers. And so while there has been some pressure on pricing, we're doing everything that we can to bring value to our customers in what is a tough environment. And I'd also say in this environment, which has been challenging, we're also out there working to take market share, take market share from competitors, take market share from Open Web. So we're out there really pushing. And I think it's a testament to the team that we've been able to keep our market share, grow our market share, keep the pricing relatively stable in what is a very challenging environment. And we'll adjust our operating posture as needed through Q4, as we said. But ultimately, we feel like we have a really good brand, a really good business here in EWP, and we're going to continue to look to find ways to take advantage, whether we're in good markets or bad markets.

Our next question comes from Ketan Mamtora with BMO Capital Markets.

Maybe to start with, on the timberland side, particularly in the U.S. South, we've seen a lot of pressure on pulp wood prices here in the last 4 to 6 quarters, I mean these are kind of multi-decade lows right now. Some of it is sort of cyclical weakness, but we've also seen a lot of pulp and paper mill shutdowns, which it seems like kind of will be hard to reverse here. So can you sort of talk to kind of what you guys are seeing out there on the pulpwood side? And how you at least in your sort of wood baskets, what can you do to help mitigate some of that. I guess the engineered wood plant that you're building will help. But anything outside of that?

Sure. Well, the reality is, as you say, I mean it's unfortunately been the case that we have seen a lot of pulp and paper capacity coming out of the system. And that's something -- it's not new. This has been going on for a while. But even this year, we've seen several fairly large pulp and paper mills shutting down. Now I will say one of the benefits to the diversification that we have geographically as well as just the the integrated model that we have, the scale that we have, we do have levers that we can pull when you see those market dynamics. And even with the mills that have shut down recently, we're typically able to just move volume to different customers. So it probably impacts us maybe to a lesser degree than some others. We also have some levers, for example, one of the IP mills that shut down, we were able to move some of that volume to our OSB mill. And so we have some levers. As you say, the Engineered Wood Products Timberstrand facility that we're building in Arkansas will be using a fair bit of pulpwood in that geography. But it's an issue. It's an issue for the industry. I think it's going to be challenging. We do have some ideas. And frankly, we're going to lay some of those out at our Investor Day. So I'm not going to front run that, but it's an issue. I would say, though, for us, on balance, fiber demand has been pretty steady lately. You see a few dips here and there on pricing, at least temporarily when you see a mill close down. But I think we're doing a pretty good job overall in navigating that.

Got it. No, that's helpful. And then Switching here to sort of capital allocation. Obviously, a lot of discussion here on the call around both acquisitions and divestitures in timberlands. I'm curious on the downstream side, given how extended the downturn has been in lumber, would that be sort of an area of interest from an inorganic growth standpoint for Weyerhaeuser?

Yes. Look, Ketan, we're -- we've had a focused M&A strategy. I think you've seen us be really active on the timberland side over the last several years with the portfolio improvement opportunities. But we're always evaluating and looking at opportunities for bolt-on as well as potential larger scale M&A opportunities. But of course, as always, they've got to meet our stringent criteria. We are focused on making sure that the assets are complementary or accretive to our industry-leading portfolio. They've got to be cohesive with our longer-term strategy and drive significant value for our shareholders. So that's really how we think about it.

Our next question comes from Hamir Patel with CIBC.

Davie, I was just wondering how you think about the opportunity to grow Southern pine log exports. China's cut off, but what sort of opportunity do you see in India over time?

Yes. I mean we're really excited about the opportunity. Obviously, we would prefer that the China market get opened back up, and I can tell you we're having conversations with the administration about that topic on an ongoing basis. But in the interim, I do think the silver lining behind the China log ban has been it's really increased our focus on India. And I do think that there's a pretty significant opportunity there. We've been growing our India export business as well as, frankly, trying some additional markets in Southeast Asia. Again, we're going to go into a lot more detail about that opportunity at our Investor Day, but I would just leave you with I think it's a real opportunity for us. We have been growing it, and we have some plans to grow it meaningfully from here.

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

Thanks for all the great things dealt so far. Just two quick questions on Japan for me. First, should that inventory destocking phenomenon be relatively short-lived in your view, maybe a one quarter headwind? Or could that persist longer? And then second, you addressed demand conditions, but I was wondering if you could also provide some perspective on how supply has trended over the last quarter or so. Is there anything we should be thinking about around trends on the supply side, around imports from Europe or elsewhere that maybe also contributed to this situation?

Yes, happy to answer that. I do think it's going to be relatively short-lived. The issue -- without getting into too much detail, there was a regulatory change in Japan that impacted the timeline in getting permits for smaller houses and that created a real backlog in managing those permits. And so what you saw was a bit of a slowdown in the housing environment. We expect -- our customers expect that will resolve itself and things should normalize. I mean they have some headwinds from a a demographic standpoint, of course. But that being said, our customers are really, really well positioned in that market. And candidly, notwithstanding some of the challenges that they have in Japan, the customer base that we have, the cost structure that they have, the mill investments that they're making, I'm as optimistic about the Japanese opportunity in the midterm as I have been in a while. So -- we think that, that will -- the headwind on consumption should resolve itself relatively soon. The big dynamic at play currently is just that relative cost position of our customers with our logs from the Northwest competing against European supply. In Europe, log costs in many of the key producing regions have been going up fairly dramatically, add in some other cost competitive dynamics at play. It's just a really challenging environment for European lumber coming in that market. And so our customers taking advantage of this and they're really looking to grow market share. And so like I say, I'm pretty optimistic about that opportunity over the medium term.

Our next question comes from Hongliang Zhang with JPMorgan.

I guess you've adjusted lumber production in response to the weakness in prices, but with OSB pricing where it is, would you potentially reduce production as well? I'm just asking relative to your guidance of comparable volumes in the fourth quarter?

Yes. I mean, so OSB, just like lumber, it's something that we're going to continue to watch and monitor. We'll adjust as necessary most of the same considerations that I talked about earlier with respect to our decisions on lumber capacity are equally applicable. I will say, as we mentioned with lumber from a cost curve standpoint, we're in a pretty good spot. And so that certainly plays into our consideration there. But like lumber, we're going to continue to watch that, and we'll make adjustments if necessary.

Our final question is from Mike Roxland with Truist Securities.

One -- the first one I have is, Devin, you mentioned that there are some items that you consider as an integrated producer in terms of running lumber, that smaller nonintegrated producers don't have to consider. Any way to expand on what factors you're referencing?

Yes. I mean, so there are a few things, right? So we can adjust log flow to our mills to make sure they're getting the optimal log mix to maximize profitability. You can take a little bit more risk on log supply because you know you have the full power of the Timberlands business, if you have a rain event or a weather event and you start to lose inventory, you can flex that very quickly. I would say just in general, the planning on ultimate product mix coming out of the lumber mill when you work closely with your timberlands business, you can get that dialed in to make sure that you're optimizing the mix to maximize profitability. So there are a bunch of planning things that you can do when those two businesses are working together to really maximize profitability across market cycles. It's always important, but I would say particularly in the environment that we're in today where every dollar counts. And so our teams, as you can imagine, are working together every single day to make sure that we're maximizing the profitability across our portfolio.

And Mike, I would just add, I mean, those are a lot of the things that we can do from a day-to-day operational perspective, but when you think medium term, longer term, some of the larger-scale strategic things we can do like putting a Timberstrand facility in a place that's very advantageous for our timberlands business. That's another huge advantage that we can drive with that integrated portfolio.

Got it. And in this one, I know we're running over here, but just one quick second question. In terms of Natural Climate Solutions, any concerns over the government cutting funding. I know you've spoken about this in past calls, but obviously, the government of from get-go has been aggressive with wind. From the asset has become more -- it seems to have become more aggressive on solar. So any concerns about government and maybe restricting federal funding for these types of projects.

At a high level, I'm not particularly concerned about that. Certainly, some of the things that came out of the Big Beautiful Bill did impact, particularly on the renewables side. I do think for our partners, we align with more sophisticated larger partners who, to a large extent, saw this coming, and so their pipeline feels pretty good. So I don't think it's going to have any meaningful impact over the next several years. There may be an air pocket when you get towards the end of the decade on some of these renewable projects, but these are typically long term. And I would just say CCS with the 45Q tax incentive that did make it through the bill. And overall, even though the rhetoric certainly has changed in this current environment, behind closed doors, most big company management teams understand this is a long-term issue that they're going to have to address. And so I haven't really seen a meaningful drop-off in the level of interest in these solutions even in this current environment.

There are no further questions at this time. I'd like to turn the floor back over to Devin Stockfish for closing comments.

All right. Well, thank you, everyone, for joining us today. Thank you for your interest in Weyerhaeuser, and we look forward to seeing you at our Investor Day in December. Take care.

This concludes today's conference. You may disconnect your lines at this time. And we thank you for your participation.