Weyerhaeuser (WY) Q1 2026 Earnings Transcript

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DATE

Friday, May 1, 2026 at 10 a.m. ET

CALL PARTICIPANTS

• President and Chief Executive Officer — Devin W. Stockfish
• Senior Vice President and Chief Financial Officer — David M. Wold

TAKEAWAYS

• GAAP Net Earnings -- $156 million, or $0.22 per diluted share, directly reported for the quarter.
• Adjusted Earnings Excluding Special Items -- $77 million, or $0.11 per diluted share, as separately provided.
• Net Sales -- $1.7 billion, as stated for the period.
• Companywide Adjusted EBITDA -- $308 million, a 120% sequential increase from the fourth quarter.
• Timberlands Adjusted EBITDA -- $120 million, 5% higher sequentially, with Western adjusted EBITDA at $58 million, up $13 million, and Southern at $62 million, down $7 million for the period.
• Strategic Land Solutions Adjusted EBITDA -- $193 million, up $98 million sequentially; included a $94 million conservation easement transaction in Florida conveying approximately 61,000 acres.
• Wood Products Adjusted EBITDA -- $71 million, an increase of $91 million compared to the prior quarter, driven by higher lumber and OSB pricing.
• Lumber Average Sales Realizations -- Increased by 13% sequentially; production volumes also rose as operations returned to normal.
• OSB Average Sales Realizations -- Rose by 8% sequentially, with adjusted EBITDA at $3 million, a $13 million increase; production and sales volumes were slightly lower due to weather-related disruptions.
• Engineered Wood Products (EWP) Adjusted EBITDA -- $39 million, down $10 million sequentially due to lower average sales realizations and higher raw material costs.
• Distribution Network Expansion -- Two new locations announced during the quarter: Billings, Montana (opened); Gallatin, Tennessee (operational by year end), increasing the total network to 22 sites.
• Portfolio Optimization -- Completed divestiture of noncore Virginia timberlands for $192 million in February; received $22 million from British Columbia timber license transfer in April.
• Cash and Debt Position -- Ended the quarter with about $300 million in cash and $5.4 billion in total debt; repaid $150 million of 7.7% notes at maturity.
• Capital Expenditures -- $112 million, including $30 million for the Monticello EWP facility; $300 million in Monticello investments planned for 2026.
• Shareholder Returns -- Returned $151 million via base dividend and $10 million through share repurchases this quarter.
• Operating Cash Flow -- Generated $52 million, in line with typical seasonal working capital build for the first quarter.
• Inflationary Cost Pressures -- CFO Wold reported, "the headwind on a gross basis is about $10 million a month" due primarily to energy, transport, and raw materials; mitigation actions are in place.
• Guidance: Timberlands -- Adjusted EBITDA and earnings before special items projected to be comparable sequentially; Western log realizations expected slightly higher; anticipated increased fee harvest volumes and costs due to seasonal shifts.
• Guidance: Strategic Land Solutions -- Full-year adjusted EBITDA expected at approximately $425 million, with basis provided as 20%-30% of SLS sales; Q2 adjusted EBITDA projected to be $70 million lower due to timing of conservation transaction.
• Guidance: Wood Products -- Q2 adjusted EBITDA and earnings before special items expected to be comparable sequentially, excluding changes in product realizations; higher sales volumes anticipated, offset by inflation-driven costs and planned OSB mill maintenance outages.
• Tariff/Duties Update -- CFO Wold stated, "the all-in duties would come down from about 45% to about 35%" if current preliminary rates are finalized later in the year.
• Wood Products Innovation -- Previewed new products (AeroStrand, ProPanel) with positive early feedback; a "long pipeline" of innovation cited as a growth driver.
• Climate Solutions Revenue -- Segment included $111 million in sales, mostly from a $94 million conservation easement; three solar projects under construction, with four to six expected underway by year end.

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RISKS

• CFO Wold reported, "the headwind on a gross basis is about $10 million a month" from inflationary cost pressures related to energy, transportation, and raw materials, with ongoing uncertainty linked to the Middle East conflict.
• CEO Stockfish stated that "the housing market remains largely stuck in second gear" due to weak consumer confidence and affordability issues, and "in the near term, I suspect we will continue to see choppiness in the housing market as consumers navigate ongoing affordability challenges and uncertainty around the economy."

SUMMARY

Management announced first quarter adjusted EBITDA of $308 million, with all business segments showing sequential improvements, and confirmed completion of key noncore asset divestitures totaling $214 million in proceeds. Cash flow from operations was $52 million amid a seasonally low quarter, while capital allocation was focused on $112 million in capex, including investment in the new Monticello EWP facility. Company guidance anticipates steady sequential results for Timberlands and Wood Products, tempered by higher inflation-driven costs and OSB mill maintenance outages. Strategic Land Solutions full-year EBITDA is targeted at $425 million, with a significant sequential decline expected next quarter due to the absence of a major conservation sale. Inflationary pressures are observed at approximately $10 million per month, partially offset by procurement and vendor-sharing measures, but persistent geopolitical risks may continue to impact costs.

• CEO Stockfish described a "front-loaded" pattern for Strategic Land Solutions, explaining that larger first-half real estate sales are typical, with a "bit of that mix" affecting the projected step down in the second half of the year.
• New product introductions—AeroStrand and ProPanel—mark the start of a broader innovation pipeline in Wood Products, with management highlighting plans for additional rollouts to meet evolving customer needs.
• Expansion of the company’s proprietary distribution network targets underpenetrated growth markets, aiming to boost EWP sales by deploying a dedicated sales force in new geographic regions.
• CFO Wold indicated a temporary elevation in net leverage metrics due to trailing EBITDA, but emphasized management’s commitment to a mid-cycle 3.5x net debt/EBITDA target and flexibility via ongoing portfolio optimization.
• Renewable energy expansion continues, with three solar projects currently under construction and up to six anticipated by year end, while multiple new solar options have been signed amid heightened customer and investor interest.

INDUSTRY GLOSSARY

• Strategic Land Solutions (SLS): Weyerhaeuser’s business segment encompassing real estate sales, natural resources, and climate solutions, replacing the prior Real Estate, Energy, and Natural Resources segment.
• Conservation Easement: A legal agreement restricting future development on company-owned land, often to protect habitat, while allowing continued timberland management.
• Engineered Wood Products (EWP): Manufactured wood products—including I-joists and laminated beams—used primarily in structural building applications.
• OSB (Oriented Strand Board): An engineered wood panel product made of pressed wood strands, commonly used in building construction.
• Fee Harvest Volume: The amount of timber harvested from company-owned (fee-title) forests, as distinguished from volumes harvested under managed licenses.
• WarpStable: Proprietary Southern Yellow Pine product designed to facilitate transition from SPF lumber, enhancing dimensional stability in structural applications.

Full Conference Call Transcript

Devin W. Stockfish: Thanks, Andy. Good morning, everyone, and thank you for joining us. Yesterday, Weyerhaeuser Company reported first quarter GAAP earnings of $156 million, or $0.22 per diluted share, on 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 would 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 will provide a quick update on previously announced actions to optimize our portfolio. In February, we completed the divestiture of noncore 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 will also highlight some recent advancements associated with our Wood Products growth strategy. First, we were excited to preview two new products, AeroStrand and ProPanel, at the International Builders’ Show in February.

We are 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 Company’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 will 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. 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 remained 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 are 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 conveyed approximately 61 thousand acres of Weyerhaeuser Company timberlands to a larger wildlife corridor, restricting future development and protecting habitat for a variety of species.

Notably, the easement allows Weyerhaeuser Company 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 worked to replenish lean inventories into the spring building season but faced supply constraints from previously enacted curtailments and closures. This dynamic was felt across the North American market, and it was most acute in southern yellow pine, which experienced a significant pricing increase during the quarter.

For our lumber business, average sales realizations increased by 13% compared to the fourth quarter. Our production volumes increased as we returned 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 webstock. Our sales volumes for solid section products increased slightly, while I-joist 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 will turn the call over to David M. Wold to discuss some financial items and our second quarter outlook.

David M. Wold: Thanks, Devin, and good morning, everyone. I will 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 is worth noting that the 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 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.

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 premiums 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 easement 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 are encouraged by the recent upward momentum in lumber. As shown on page 19, our current 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 increase seasonally. With that, I will now turn the call back to Devin and look forward to your questions.

Devin W. Stockfish: Thanks, Davey. Before wrapping up this morning, I will 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 are still fairly early in the year, so there is 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 would also note a few positives on housing. First, we did see a much better March starts number than we were anticipating. Plus, we have 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.

That all being said, in the near term, I suspect we will 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 are encouraged by the recent increase in lumber prices, and we are well positioned to navigate a range of market conditions. 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, we can open it up for questions.

Operator: We will now open the call for questions. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. It may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from Susan Maklari with Goldman Sachs. Your line is now live.

Susan Marie Maklari: Thank you. Good morning, everyone.

Devin W. Stockfish: Good morning.

Susan Marie Maklari: My first question is, looking at the Wood Products segment, it is nice to see how the margins there came back, especially in lumber. Can you talk about your ability to continue to drive profitability really across all 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 and your positioning relative to that will come into play?

Devin W. Stockfish: Thanks, Susan. That is a really good question, particularly with respect to the supply-demand dynamic. We have been operating in a challenging housing environment over the last several years, and that has put a lot of pressure on pricing across most of our products, and that is true across the industry. One of the things that is 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.

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 have made significant profits with housing starts well below 1.5 million. It really comes down to what is the supply-demand dynamic in each individual product line.

As we saw lumber prices 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. So yes, we think housing will improve, but ultimately it is about supply-demand dynamics in each product line. We have been very focused on cost and OpEx, we have layered in innovation, and we have strong brand recognition and customer support. We are out there battling every day.

We have a lot of upside, and as pricing improves—and you started to see some of that in lumber in Q1—there is a tremendous amount of upside across our businesses in Wood Products.

Susan Marie Maklari: That is great color, Devin. Sticking with Wood Products, it is great to hear the innovation and the new products that you launched at the Builders’ Show this year. Can you talk a bit about the pipeline that you have there? And as AeroStrand and some of these other offerings gain traction, what that means 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?

Devin W. Stockfish: One of the things that we have 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 have always had remarkably strong wood scientists—we have some brilliant people here in the wood products space—but I would say we arguably underutilized them over the last decade. We have really ramped up that effort. The new products that we brought out at the Builders’ Show, ProPanel and AeroStrand, are the first big ones that we are bringing to market, but we have a long pipeline.

At the end of the day, it is really all about how we serve our customers—reducing costs, improving efficiencies, helping deal with issues around weather and code. We are in business to serve our customers, and one of the ways we can distinguish ourselves in the market is through this new product development. We have a healthy pipeline, and we expect to continue to bring out new products and accelerate that as we move forward. We are really excited about these two. AeroStrand, in particular, is based off our TimberStrand technology.

We will have a lot more opportunity as we bring Monticello up next year, which is another example of how broad-based the opportunity set is for TimberStrand technology and one of the reasons we are so excited about Monticello coming up next year.

Susan Marie Maklari: Great color. Thank you. Good luck with the quarter.

Devin W. Stockfish: Thanks, Susan.

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

George Staphos: Hi. Thanks so much. Hope you are all doing well. Good morning, everybody. Thanks for the details. Devin, 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. And then relatedly, it is nice to see lumber pricing higher, and you had a very strong operating quarter across all your businesses. There has been a little bit of a pullback in Southern Yellow Pine recently. What do you think is driving that?

Devin W. Stockfish: I will hit the lumber piece, and then Davey can touch on some of the impacts from tariffs on the business. From a lumber standpoint, we saw a nice run in Southern Yellow Pine and really across the composite in Q1, but mostly in Southern Yellow Pine. I think that was driven primarily by two key things. Number one, we saw a lot of supply come out of the system last year. As we have said over the past couple of years, multiple mills have been shut down or curtailed, so there was just less supply. Number two, coming into 2026, for risk mitigation, many dealer networks and customers were carrying pretty lean inventories.

When we moved into the spring building season, there was a bit of a scramble to get product. You have seen that level off a little bit in Southern Yellow Pine—there has been some volatility over the last few weeks—but between treaters and multifamily, Southern Yellow Pine should hold up reasonably well going forward. We have also seen a nice run-up in Douglas fir prices, and we benefit there. Ultimately, it is really about supply and demand. We still have some opportunity for repair and remodel to pick up a bit, particularly as we come out of the colder months in northern regions. Our view is lumber prices at the aggregate level should hold up reasonably well.

There may be a little volatility in the near term with Southern Yellow Pine, but we still view that as an opportunity, particularly as you see less SPF coming into the U.S.—that is an opportunity for Southern Yellow Pine. Davey, do you want to speak to tariffs?

David M. Wold: Sure, George. With respect to tariffs and how that impacts cost and procurement on our end, it is another inflationary pressure. We have been living in an environment with elevated inflation over the last several years, so it is another thing our teams have to be focused on. Most notably, that is going to affect our CapEx program—steel and aluminum inputs—and a variety of other elements across the supply chain. We have been aware of the tariffs for well over a year and have incorporated that into our capital pipeline and the analysis on how we think about the return profile of particular projects. Like any other inflationary pressure, it is something we are dealing with.

Our teams are focused on discipline and cost to minimize the impact, and we are still looking to get very favorable returns across our capital program.

George Staphos: Thanks. Just on duties, what is your view on where duties may reset late summer versus where they are now?

David M. Wold: The preliminary results from the AR7 have dropped the duties about 10%. If that comes in more or less in track with where the preliminary duties were set, the all-in duties would come down from about 45% to about 35%. That is full softwood lumber duties as well as the Section 232 10% tariff. That should come in around August; oftentimes that gets pushed back into the fall, but that is the general timeframe.

George Staphos: Thanks very much. Good luck in the quarter.

David M. Wold: Thank you.

Operator: Our next question is from Ketan Mamtora with BMO Capital Markets. Please proceed with your question.

Ketan Mamtora: Good morning, and congrats on a good quarter.

David M. Wold: Thank you.

Ketan Mamtora: Maybe to start, can you talk a little bit about the inflationary pressures you are seeing, specifically resin for OSB and freight/transportation cost? Is there a way to quantify what the potential impact would be?

David M. Wold: Yes, you bet, Ketan. We are 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 log and haul costs, fertilizer, transportation, as well as ocean freight for our export business. On the Wood Products side, we will see it in resin and additive costs, as well as transportation to get 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. That said, we are able to offset a majority of that headwind.

We are focused on leveraging our procurement and logistics expertise to minimize cost and executing with discipline. We are also able to share some of those costs with vendors and customers, whether through log and haul rates or delivery costs that are typically passed along. The net effect is incorporated into our guidance for the second quarter. We will continue to monitor how the macro environment evolves while remaining focused on disciplined execution and cost control.

Ketan Mamtora: Understood. Very helpful. Then switching to capital allocation, leverage has climbed to a little over five times; I recognize Q1 is a working capital use quarter. To the extent we are in a higher-for-longer environment and housing remains depressed, and you have multiple investments this year, how are you thinking about leverage and potential options to lower it over time? Would that involve potentially selling some timberlands?

David M. Wold: As we have said, maintaining our investment-grade credit rating is foundational. We are going to manage leverage to a mid-cycle target, and we have a lot of flexibility and levers across a wide range of market conditions. We are clearly operating at a cyclical low in earnings, and that will impact trailing leverage metrics, particularly given the very low pricing environment we saw over the second half of last year, which is still weighing on the ratio. Our 3.5x net debt to EBITDA target is designed to be evaluated over the cycle, not at the trough. Through a mid-cycle lens, we remain very comfortable with our balance sheet and expect leverage to improve naturally as EBITDA normalizes.

It does not take that much improvement from current levels to get back to the 3.5x target. For capital allocation this year, our approach remains consistent and disciplined. We evaluate every dollar to ensure it creates the most value for shareholders. We have approximately $300 million teed up for Monticello this year, and we will continue to invest in our business on a programmatic basis. Specifically to Monticello, the timberland divestiture and the Princeton proceeds we received in the first quarter will offset a significant portion of the expected Monticello spend over the course of 2026.

We feel really good about the strength of our balance sheet and the work we have done over the last several years to strengthen and improve the portfolio. We have a lot of levers as we navigate these conditions.

Ketan Mamtora: Perfect. Very helpful. I will turn it over. Good luck.

David M. Wold: Thank you.

Operator: Our next question is from Kurt Yinger with D.A. Davidson. Please proceed with your question.

Kurt Willem Yinger: Great. Thanks, and good morning, everyone. On the Wood Products side, could you talk about demand patterns you saw with home center customers over Q1? Specifically, looking at March and April, did the seasonal pickup you might expect occur, or is it just delayed?

Devin W. Stockfish: Overall it is a mixed view. When we talk to our customers across R&R generally, including home centers, there have been differing views depending on geography. The professional segment has held up better than DIY. We have also seen more focus on smaller remodeling projects, which typically use a little less wood. It has been solid, but we have not seen as meaningful a pickup as you sometimes do this time of year. Nevertheless, we are still in the heart of repair and remodel season. Some of the colder areas are just starting to get into the warmer season, and we have a while to go before the South dials it back for midsummer heat.

So it is a mixed story to date on R&R.

Kurt Willem Yinger: That makes sense. On EWP, realizations have come in a little bit the last two quarters. Some folks have talked about a bottoming on price in the last couple of months. How would you describe the market balance today in early Q2? Any green shoots, either from demand or competitive dynamics?

Devin W. Stockfish: At a high level, what has been going on with EWP is really the story of single-family housing. It has been a more challenging single-family environment recently, and that has created downward pressure on pricing. Seasonally, we are seeing a bit of an uptick as you would expect—we have seen order files pick up a little in March and April, which is positive. Pricing is very regional; we manage demand and pricing market by market. To see a meaningful pickup in EWP demand and pricing, you need improvement in single-family housing. Unlike lumber and OSB, where there is more R&R demand, EWP is really residential new construction. We view it as stable.

As we guided for Q2, we think pricing will be comparable with upside on sales volumes.

Kurt Willem Yinger: Appreciate the color. Thank you.

Devin W. Stockfish: Thanks.

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

Mark Adam Weintraub: Thank you. Devin, first, a question on the very strong performance, particularly in lumber—OSB as well—in what presumably was an inflationary environment. By my numbers, it looked like your lumber cost per unit was the lowest it has been for several years. Anything to call out to help us understand how sustainable that is, or was it more one-time?

Devin W. Stockfish: Overall, this is the continuation of the OpEx and cost focus that we have been working on for a number of years. There are inflationary pressures, particularly with the Middle East conflict, and that is a cost headwind we have to overcome. Given the tougher operating environment, it is yet another reason for us to be clamped on cost. From a controllable cost standpoint, the team in Wood Products—and across the business—has been very focused on every dollar.

Combine that with moving into Q1 operating at more normalized rates—whereas in the back half of last year we were operating a little less than we ordinarily would due to market conditions—when our business can run full, we are in a very strong cost position. It is the combination of vigilance on controllable costs and operating the mills at normal levels that puts us in a good cost position. There is no reason to think that cannot continue.

Mark Adam Weintraub: Great. I thought I heard you say volumes were a little weaker than you expected, but at the same time you were running full. Did you build some inventory in the first quarter? How do we square that?

Devin W. Stockfish: I would separate that. What I said was that in the back half of last year we were operating a little below normal because of market conditions. We did build a little inventory on the lumber side—and OSB for that matter—because we typically build some inventory in Q1 to prepare for the full building season, which is pretty typical. Nothing outside the norm on inventory build.

Mark Adam Weintraub: Shifting gears, what are you seeing on the solar leasing front? With energy costs up a lot, is that creating added impetus for conversations? Any color as we get closer to times when some options should be coming up for potential exercise?

Devin W. Stockfish: We are seeing really nice momentum across the renewables business, both in converting leases into operating solar facilities—we have one operating now and the next one should be operating any day—and in construction. We have three currently under construction, and by the end of this year we could have four to six under construction. The pipeline is developing nicely. We have seen a wave of new solar options signed recently, and even on wind we are seeing interest. Wind timelines are longer, but overall the interest level in renewables has been very strong this year.

Mark Adam Weintraub: Thanks a lot.

Devin W. Stockfish: Thank you.

Operator: Our next question is from Hamir Patel with CIBC Capital Markets. Please proceed with your question.

Hamir Patel: Hi. Good morning. Devin, there were two new OSB mills supposed to start up later this year. Given the relatively sluggish demand backdrop, do you think we will see supply additions delayed into 2027?

Devin W. Stockfish: It is hard for me to speculate on that. I have seen some articles written on delays, but I do not have specific knowledge. That is for those operators to decide against the current market backdrop. I do not have much to add there.

Hamir Patel: Fair enough. On your log export business, how are the initiatives to grow Southern Yellow Pine exports progressing?

Devin W. Stockfish: It is going really well. Transportation costs associated with the Middle East conflict are a headwind we have to move through, but I am pleased with how it has developed, particularly in the India market. We have gotten nice traction with the customer base there, and there is opportunity to continue to grow. We are continuing to drive costs out of the supply chain, particularly with our breakbulk program out of the Gulf South, where we have near-term opportunity to take out meaningful cost, which will make us even more competitive. We are looking to grow the India program. Beyond India, there is opportunity in Cambodia, Vietnam, and Thailand—we have seen strong customer interest.

Ultimately, there may be opportunity into Europe; we have had initial conversations with some sawmill customers there. There is a lot of opportunity, and we are going after it.

Hamir Patel: Great. Thanks. That is all I had.

Devin W. Stockfish: Thank you.

Operator: Our next question comes from Anthony Pettinari with Citi. Please proceed with your question.

Anthony James Pettinari: Good morning.

Devin W. Stockfish: Good morning.

Anthony James Pettinari: If I look at Timberlands results and the 2Q outlook, it seems like first-half Timberlands EBITDA could be down year over year maybe 25% from 2025. If you think about big-picture earnings improvement drivers for Timberlands going forward, is it really about lumber recovery flowing through to Western log prices, or do you see meaningful scope to improve log prices in the South or reduce costs, or any idiosyncratic items around weather that we should keep in mind? What are the building blocks for Timberlands earnings improvement going forward?

Devin W. Stockfish: A few comments. First and foremost, what has been happening in Timberlands—mostly a Western comment—is that with lumber prices at historic lows, that put a lot of downward pressure on log prices, which you can see over the last few quarters. We saw log prices start to improve in Q1 and continue into Q2, but relative to the last several years, they are still at low levels. As you have seen Douglas fir prices going up recently, that gives us more room to push log prices in the West, and I would expect that to happen. It is still a very tensioned wood basket.

From a volume standpoint, over the last couple of quarters—particularly in the West, but a little in the South due to weather—volumes have been down a bit. For 2026 as a whole, in the South harvest volumes will be up slightly, and in the West they will be comparable. Charting that over the year, there is some upside from volume. On costs, as Davey mentioned, issues in the Middle East have put incremental cost pressures on, and we will have to overcome those. I do not think that is structural. If transportation costs are up, we have to find a way to push that through on price; there may be a lag, but we can work through it.

Looking further out, as we said at our Investor Day, we think there is a significant amount of volume increase coming in the West. It has been more challenging on Timberlands over the last couple of quarters, but we see that improving over time.

Anthony James Pettinari: Then switching gears, on distribution—understanding it is not the biggest part of your business— with the greenfields, is the goal to enter new markets where you are not present or underpenetrated, or to sell more high-value EWP and new products? What are you trying to accomplish with the greenfields versus leveraging existing distributor relationships?

Devin W. Stockfish: You hit it. The principal rationale is that we sell about 50% of our EWP through our distribution business, and we have found that in key growth and important building markets, when we have our own distribution sales force on the ground, we can push more volume and gain market share for our EWP products. That is the primary rationale. Over and above that, we also sell commodities through our distribution business, providing another channel to move product, and the team has done a nice job building vendor partnerships in decking and siding, which provides a sales and profit opportunity. But the primary rationale is to drive EWP sales and growth in markets where we are currently underpenetrated.

Anthony James Pettinari: That is helpful. I will turn it over.

Devin W. Stockfish: Thank you.

Operator: Our next question comes from Hongliang Zhang with JPMorgan. Please proceed with your question.

Hongliang Zhang: Yes. With the run-up in lumber prices, are you seeing any changes in valuations or volumes when it comes to timberland transactions?

Devin W. Stockfish: Not really. Timberland markets do not change much quarter to quarter or week to week; it is more about long-term price appreciation. You do not typically see timberland values moving with lumber prices in the near term. If there were a longer-term structural change in lumber prices, that could ultimately flow through, but not in the near term.

Hongliang Zhang: Sticking with higher lumber prices, are you seeing any operators that previously shut down mills start to restart mills in response to pricing?

Devin W. Stockfish: As a general matter, no. Once a mill has shut down—versus taking extended, two- to three-week outages—when a mill goes through actually closing and laying off employees, it is unusual for them to come back, and we really have not seen that. Around the margins in the South, in the back half of 2025 a lot of mills were not operating full out—not running overtime—so there was some slack capacity. You have probably seen a little pickup there as Southern lumber prices have picked up, but I would not say it is significant from our vantage point.

Hongliang Zhang: Got it. Thank you.

Operator: Our next question comes from Michael Roxland with Truist Securities. Please proceed with your question.

Michael Andrew Roxland: Yes, thank you, Devin, Davey, and Andy, for taking my questions. First on the SLS guide, based on your 2Q outlook for EBITDA, first-half should be around $320 million, but you are guiding 2026 to $425 million, implying a significant step down in 2H. Realizing you had some one-off benefits from real estate in 1Q, but you are also guiding to a pretty strong 2Q. What gives you confidence that you will have such a step down in the back half of the year?

Devin W. Stockfish: Thanks, Mike. It is pretty typical for us to be fairly front-loaded in our Strategic Land Solutions business. If you look over the last several years, you will see that pattern due to timing and mix. As we think about the second half of the year, we will see a bit of that mix play out, but nothing unusual in terms of trends we are expecting. As always, if we continue to see strong real estate markets, we can adjust, but for now our outlook is a good guide for the year.

Michael Andrew Roxland: Got it. Climate Solutions had sales of $111 million in 1Q, a big increase year over year and quarter over quarter. Davey, what drove that?

David M. Wold: The conservation easement we pointed out in the first quarter—a large $94 million transaction—was the biggest component.

Michael Andrew Roxland: Perfect. Last one: following up on EWP, margins are now over 17% in 1Q. It seems like pricing may have declined more than you expected—you were calling for modestly down, but prices were down about 4% to 5% sequentially. Have competitors been more aggressive, or has the competitive landscape changed such that increased competition to drive sales negatively impacted pricing more than you expected?

Devin W. Stockfish: As a general statement, our competitors are always aggressive in trying to get business—that is no different now. When housing starts are down relative to a few years ago, there is less pie to go around, so people battle it out. Where we compete, we have to be thoughtful about price, but we focus on a service model that is valuable to our customers. We have high-value products and continue to innovate to solve customers’ needs. We are not necessarily battling it out for the lowest-price opportunities; we are serving long-term strategic customers with a value proposition.

The competitive dynamic is tough and will always be tough, and you have to find a way to win regardless of where you are in the cycle.

Michael Andrew Roxland: Got it. Thank you.

Devin W. Stockfish: Thanks.

Operator: Our last question will be from Ketan Mamtora with BMO Capital Markets. Please proceed with your question.

Ketan Mamtora: Thank you. What is driving the strength in Douglas fir prices recently?

Devin W. Stockfish: We have seen primarily an uptick in demand coming out of California. There was some softening last year broadly in the California market, and that has picked up recently. That is where a lot of Douglas fir product goes, and that has been a big driver. There is only so much opportunity for supply, and you had not seen supply dial back as much as in some other geographies, so there is not as much incremental supply to meet improving demand.

Ketan Mamtora: Understood. Are you seeing any sign of increased use of Southern Yellow Pine in residential construction—thinking about trusses and those kinds of things?

Devin W. Stockfish: We are. First, there is a lot less SPF coming into the U.S. today, due to long-term trends with beetle infestation and regulatory dynamics that make it challenging to make lumber in Canada, as well as the duty/tariff dynamic. There is overall less SPF coming into the U.S., which creates an opportunity for both Douglas fir and Southern Yellow Pine. Additionally, there was an opportunity, because of the delta between SPF and Southern Yellow Pine prices, to market value. Broadly, as you look at where supply is increasing and decreasing, there is going to be more Southern Yellow Pine. That trend will continue. For Weyerhaeuser Company specifically, we have been active on that front.

Our WarpStable products are a nice transition product for folks that have historically used SPF to move into Southern Yellow Pine. We have picked up some momentum there, and I expect that trend to continue as we move forward.

Ketan Mamtora: Very helpful. Thank you. Good luck.

Devin W. Stockfish: Thank you.

Operator: There are no further questions at this time. I would like to turn the floor back over to Devin W. Stockfish for closing comments.

Devin W. Stockfish: Thanks, everyone, for joining us this morning, and thank you for your continued interest in Weyerhaeuser Company. Have a great day.

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

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