Production Ramp-Up
Q: How can you increase production across product categories?
A: We have the most flexibility to increase production in lumber and expect a significant production increase in 2024 due to capital investments coming to fruition. Lumber allows us to add shifts and overtime to capitalize on strong markets. OSB is difficult to ramp up as operations run 24/7 with little flex. EWP has some flexibility but less slack in the system. Overall, we can best capture benefits in lumber and distribution.

Operational Excellence Initiatives
Q: What are your OpEx focus areas for 2024?
A: Despite achieving $77 million of OpEx savings over the last two years amid inflation, we will continue focusing on reliability in Wood Products, leveraging capital projects, improving recovery, and fostering innovation. In Timberlands, we'll work on reducing log and haul costs and improving road building. With OpEx ingrained in our culture and assuming normalized inflation, we expect an uptick in OpEx delivery this year compared to the last couple.

Lumber Segment Profitability
Q: How will you address lumber losses in Q4?
A: Q4 was challenging due to lumber prices hitting their lowest levels in several years while log prices didn't decline as much, creating a tough operating environment. We're ramping up OpEx across Wood Products in 2024, facing fewer inflationary headwinds and maximizing benefits from our capital projects like the Holden mill. We aim to be industry-leading in cost, production, and efficiency, and we believe we're on the path to recovery heading into Q1.

EWP Pricing and Demand
Q: What's your outlook for EWP realizations and demand?
A: EWP pricing actions have a lag, and Q1 realizations reflect prior price adjustments as the market rebalanced in 2023. Overall, EWP pricing remains very strong historically. We're receiving strong optimistic signals from builder customers and expect steady demand. With a stronger housing environment and mortgage rates decreasing, we believe the setup for EWP is good, and we'll be in a strong position as the market develops.

Timberland Valuations and Acquisitions
Q: How are timberland prices and transactions trending?
A: In 2023, transaction volumes were typical at around $2.5 billion, with more activity in the back half of the year. Good quality Southern timberlands have seen substantial appreciation, with prices increasing from around $2,000 per acre to as high as $4,000 per acre for high-quality properties. We expect a typical year in 2024 with $2 to $3 billion in transaction value and continued competitive interest in the asset class.

Impact of Oregon Regulations
Q: Do new Oregon policies affect your operations?
A: New regulations in Oregon, effective January 1, make the wood basket more tensioned, but we're well-positioned as they bring Oregon closer to Washington's regulations, under which we've long operated. Fiber supply may be challenged for some, but with our own fee timberlands, we don't anticipate issues with fiber availability for our mills. However, it may push log prices up due to less timber supply across the stable manufacturing base.

European Imports and EWP Competition
Q: How do European imports affect your markets?
A: European lumber imports decreased in the second half of 2023 due to pricing dynamics. The wind-down of salvage activity in Europe reduces cheap fiber competition. For EWP, while there's some increase in imported LVL, it's a rounding error at this point. Our market position relies on a strong service component and respected brands like Trus Joist, making it hard for small importers to compete.

Forest Carbon Credits
Q: What lessons from your pilot carbon project?
A: Quality matters in carbon projects; our upfront investment in internal expertise led to strong pricing for our initial credits. These projects are complex, but we've gained efficiencies for future ones. We're expanding our pipeline with two projects expected to be approved in the first half and more in development. We anticipate monetizing additional credits this year, building a steady revenue stream over time.

Pulpwood Demand and Mill Closures
Q: How do mill closures affect pulpwood demand?
A: The pulpwood market has been in decline due to mill closures, creating challenges. However, our scale and strong relationships with major consumers allow us to move our volume. We're exploring opportunities in Asia for pellet or pulpwood exports and potential future demand from biofuels and sustainable aviation fuels. We'll ensure we can move our pulpwood volume over time.

Capital Allocation Priorities
Q: How do you approach dividends vs. buybacks?
A: Our capital allocation framework commits to returning 75% to 80% of adjusted FAD to shareholders via base and supplemental dividends. We have flexibility to use share repurchases as we've done in recent years. The remaining adjusted FAD is allocated across opportunities, primarily timberland acquisitions as part of our plan to purchase $1 billion of timberlands over the next few years.

Key Capital Projects
Q: What are your key Wood Products projects?
A: Our Holden mill, a major rebuild project, is ramping up production and will fully operate this year, offering significant synergies as it's surrounded by our timberlands. Beyond Holden, we're investing in projects like adding CDKs, merchandisers, and saws across mills, each following a 5-year roadmap to become world-class. It's about executing well and completing projects on time and on budget.

EWP Order Files and Operating Rates
Q: What's the status of EWP orders and production?
A: EWP order files are now at normal levels, ranging from 3 to 5 weeks, after being extended last year due to earlier production cuts. Our EWP operating rates were in the low 80% range in Q4 and will increase as we head into Q1 2024. We're better positioned now to meet customer demand, which will be appreciated by our customers.

Pulpwood Harvest Planning
Q: How do end-market changes affect pulpwood plans?
A: We consider future optionality in our silviculture practices, adjusting trees per acre and thinning regimes to adapt to changing fiber needs. Despite reduced demand due to mill closures, we're exploring export opportunities and potential demand from biofuels to ensure we can move our pulpwood volume.