Weyerhaeuser Co (NYSE:WY) reported a 25% increase in adjusted EBITDA for the fourth quarter, reaching $294 million.
The company announced plans to invest approximately $500 million in a new Timberstrand facility in Arkansas, expected to generate over $100 million of annual adjusted EBITDA.
Weyerhaeuser Co (NYSE:WY) increased its base dividend by more than 5% and returned $735 million of cash to shareholders in 2024.
The Natural Climate Solutions business saw a 79% increase in adjusted EBITDA, driven by strong contributions from conservation, mitigation banking, and renewables.
The company achieved notable milestones in Forest Carbon, with significant increases in credit generation and sales expected in 2025.
Negative Points
The company faced challenging market conditions in 2024, particularly in the lumber sector, impacting cash generation.
Multifamily housing starts decreased by approximately 25% in 2024 due to higher interest rates and a wave of new units entering the market.
Weyerhaeuser Co (NYSE:WY) experienced lower sales volumes in China due to ongoing consumption headwinds and reduced shipments.
The company anticipates slightly higher unit manufacturing costs for OSB in the first quarter of 2025 due to increased energy and resin costs.
There is uncertainty regarding potential tariffs on Canadian wood products, which could impact pricing and margins.
Q & A Highlights
Q: Can you provide more details on how you're thinking about product inventories heading into the spring season, especially with potential inflation in commodity prices? A: Inventories vary by product. Lumber inventories are relatively lean, particularly for Southern Yellow Pine and Doug fir. OSB inventories are a bit heavy due to a backup during the holidays. EWP inventories are normal for this time of year. Overall, there's optimism for improvement in the spring building season, with retailers expecting better R&R activity this year.
Q: What are the implications of potential tariffs on Canadian wood products for your margins and business? A: If a 25% tariff is imposed on Canadian imports, it could lead to upward pricing pressure. Most of our manufacturing is in the US, so we might see some margin benefits. About 80% of our lumber manufacturing is in the US, and only 20-30% of our Canadian lumber is exported to the US. For OSB and EWP, most of the Canadian production is exported to the US, but the majority of our production is still US-based.
Q: Can you discuss the progress in recapturing market share from open web floor trusses in the EWP segment? A: During the pandemic, some builders switched to open web trusses due to EWP supply issues. The conversion back to EWP has been slow due to low lumber prices. However, we expect to recapture market share over time as lumber prices normalize, given the advantages of EWP in home construction.
Q: What is the outlook for Forest Carbon credit sales in 2025? A: In 2024, we sold around 50,000 credits at a premium price. For 2025, we expect a significant increase, potentially 5 to 10 times more than 2024, as we have seven additional projects in development. The timing is challenging to predict due to third-party audits, but the pipeline is strong.
Q: How do you plan to manage potential increases in US industry production if tariffs lead to higher demand? A: We have some flexibility in harvest levels, but we aim to manage within a sustainable range. In the South, there is adequate fiber availability to support increased manufacturing. We don't foresee fiber availability as a bottleneck for ramping up production if needed.
