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WC

WEYERHAEUSER CO (WY)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered net sales of $1.708B, GAAP EPS of $0.11, and Adjusted EBITDA of $294M, with EBITDA up 25% sequentially; Wood Products led the quarter on pricing and cost improvements while Timberlands and RE&ENR were broadly steady .
  • Management guided Q1 2025 to be stronger: Timberlands earnings and Adjusted EBITDA approximately $20M higher vs Q4; Wood Products “slightly higher” excluding price effects; RE&ENR comparable; FY 2025 RE&ENR Adjusted EBITDA ~$350M .
  • Natural Climate Solutions (NCS) execution accelerated: ~50,000 forest carbon credits monetized in Q4 and full-year NCS Adjusted EBITDA reached $84M (+79% YoY), on track for $100M by YE 2025 .
  • Capital return/catalyst: base dividend raised to $0.21 (from $0.20), supplementing $735M total cash returned in 2024; estimate comparisons to Wall Street consensus were unavailable at time of writing due to data access limits .

What Went Well and What Went Wrong

What Went Well

  • Wood Products margins and pricing improved: lumber realizations +9% q/q; OSB realizations +5% q/q; Wood Products Adjusted EBITDA rose to $161M (+77% q/q), driven by better pricing and lower manufacturing costs .
  • NCS momentum: ~50,000 forest carbon credits sold in Q4 with premium pricing; pipeline of seven new projects in progress supports 2025 ramp toward $100M Adjusted EBITDA target .
  • Strategic growth: announced ~$500M TimberStrand facility in Arkansas; expected to add 10M cubic feet capacity, boost total EWP capacity ~24%, and generate >$100M annual Adjusted EBITDA at full run-rate .

What Went Wrong

  • Lumber environment remained challenged, constraining Western log realizations and Timberlands profitability; Q4 Timberlands operating margins held at ~12% amid demand softness and export mix pressures .
  • Japan export markets were soft on demand and currency; China volumes were intentionally reduced as logs flexed to domestic customers, limiting export contributions in Q4 .
  • Unallocated expenses rose sequentially (variable comp and intersegment/LIFO), with Unallocated Adjusted EBITDA declining to -$69M (vs -$54M in Q3) .

Financial Results

Metric ($USD Millions unless noted)Q4 2023Q3 2024Q4 2024
Net Sales1,774 1,681 1,708
Net Earnings219 28 81
Diluted EPS ($)0.30 0.04 0.11
Adjusted EBITDA321 236 294
Gross Margin342 250 304

Segment breakdown

Segment Metric ($MM)Q4 2023Q3 2024Q4 2024
Timberlands Net Sales534 493 497
Timberlands Net Contrib. to Pretax Earnings186 57 62
Timberlands Adjusted EBITDA143 122 126
RE&ENR Net Sales77 89 86
RE&ENR Net Contrib. to Pretax Earnings50 51 46
RE&ENR Adjusted EBITDA67 77 76
Wood Products Net Sales1,302 1,235 1,263
Wood Products Net Contrib. to Pretax Earnings119 27 106
Wood Products Adjusted EBITDA159 91 161

Key operating KPIs

KPIQ4 2023Q3 2024Q4 2024
Lumber Volumes (MM Board Ft.)1,190 1,116 1,114
Lumber Realizations ($/MBF)442 404 442
OSB Volumes (MM Sq Ft 3/8")683 708 717
OSB Realizations ($/MSF 3/8")344 305 321
EWP Solid Section Realizations ($/CCF)3,385 3,251 2,996
EWP I-Joist Realizations ($/MLF)2,766 2,644 2,508

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Timberlands Earnings & Adjusted EBITDA vs Q4Q1 2025N/A~+$20M higher vs Q4 New
RE&ENR Earnings & Adjusted EBITDAQ1 2025N/AComparable to Q4 New
RE&ENR Adjusted EBITDAFY 2025N/A~$350M New
Wood Products Earnings & Adjusted EBITDA (ex lumber/OSB price effects)Q1 2025N/ASlightly higher vs Q4 New
Interest ExpenseFY 2025N/A~$270M New
Effective Tax Rate (ex special items)FY 2025N/A16–19% New
Capital ExpendituresFY 2025N/A~$440M (excludes ~$500M TimberStrand project spend 2025–2027) New
NCS Adjusted EBITDA GoalYE 2025$100M target reiteratedOn track for $100M Maintained
Base DividendQ1 2025$0.20$0.21 (+5%) Raised

Earnings Call Themes & Trends

TopicQ2 2024 (Prior-2)Q3 2024 (Prior-1)Q4 2024 (Current)Trend
Housing (Single-family)Holding ~1M units; resilient despite rates Seasonal moderation into winter; constructive 2025 view Expect improvement vs 2024; buyers view 6–7% rates as new normal Improving
Repair & RemodelSofter YTD; DIY weaker; Pro steadier Soft; some late-Q3 uptick; choppiness near-term Slight improvement expected in 2025 with more existing-home sales Gradually improving
Tariffs/Macro (Canada)Duty increases discussed as potential tailwind —25% blanket tariffs scenario: likely upward pricing; WY ~80% U.S. lumber capacity Potentially inflationary for pricing
Export Markets (Japan/China)Japan steady; China inventories fell; increased China volumes Japan soft; reduced China shipments planned Japan expected to improve; China volumes significantly reduced in Q1 Japan improving; China mixed
NCS – Forest Carbon2 Southern projects expected approval; >100k credits in 2024 2 approvals; momentum building ~50k credits sold in Q4; 7 projects in progress; 2025 credit sales to materially increase Accelerating
NCS – Renewables (Solar/Wind)~70 solar agreements; 3 solar under construction First solar site online soon; wind sites increasing to 8 First solar site operational; 7 wind sites operating; additional coming Building
CCS PermittingCCS outlook; long timelines implied Timeline delays 1–2 years; permitting bottlenecks Longer than expected; still confident medium-term Delayed but progressing
EWP Share Recapture vs Open WebSeasonal demand; stable pricing Expect recapture as lumber normalizes Slower recapture due to low lumber prices; expected over time Gradual
Lumber Capacity/Operating RatesQ2 lumber low-80% ops; OSB mid-90% ops Lumber mid–high 70%, OSB high 90s, EWP low–mid 70s Q4 lumber ~low 80s; OSB high 90s; EWP low–mid 70s; Q1 expected up for EWP Stabilizing/up modestly

Management Commentary

  • “Adjusted EBITDA was $294 million, a 25% increase over the third quarter… we grew our timberlands through acquisitions in Alabama, announced plans to expand our engineered wood products portfolio, advanced our Natural Climate Solutions business…” — CEO (prepared remarks) .
  • “Timberstrand facility… ~$500 million investment… adds 10 million cubic feet… increases total company EWP capacity by ~24%… expected to generate over $100 million of annual adjusted EBITDA” — CEO (prepared remarks) .
  • “We returned $735 million back to shareholders based on 2024 results and actions… increased our base dividend by 5.3% and repurchased $153 million… completed ~$900 million under our $1 billion authorization” — CFO .

Q&A Highlights

  • Tariffs: A potential 25% blanket tariff on Canadian products would likely lift U.S. prices; WY’s lumber production ~80% U.S., Canadian exposure smaller for lumber but larger for OSB/EWP imports to U.S. .
  • Lumber pricing uplift and channel inventories: Weather and skepticism about tariff timing are tempering pre-buying, limiting immediate price uplift; clarity could change behavior .
  • Operating rates: Q4 lumber ~low 80%, OSB high 90s, EWP low–mid 70s; minimal U.S./Canada split differences .
  • Harvest flexibility: Some flexibility to increase harvest, especially in the South, but constrained by sustainable harvest practices .
  • NCS credits: ~15k credits sold in 2024 previously; 2025 credit sales expected to be 5–10x YoY increase, driven by new projects and premium pricing .

Estimates Context

  • Wall Street consensus (S&P Global) for EPS, revenue, and EBITDA was unavailable at time of writing due to data access limits; estimate comparison and beat/miss analysis could not be performed. Values would normally be sourced from S&P Global’s consensus dataset, but were not retrievable in this session.

Key Takeaways for Investors

  • Sequential inflection: Wood Products EBITDA rose to $161M (+77% q/q) on stronger lumber/OSB pricing and lower manufacturing costs; this is the key earnings lever near term .
  • Near-term setup: Q1 2025 guide calls for Timberlands +$20M vs Q4 and Wood Products slightly higher ex price changes; monitor lumber/OSB realizations (WY sensitivity: +$10/MBF ≈ +$50M annual EBITDA; +$10/MSF OSB ≈ +$30M annual EBITDA) .
  • NCS growth vector: 2025 will emphasize forest carbon credit sales, with material YoY expansion and broader renewables pipeline (first solar site operational; 7 wind sites); this diversifies earnings and cash flow .
  • Capital returns durability: Base dividend lifted to $0.21 with a flexible cash return framework (75–80% of Adjusted FAD via dividend/repurchase); WY returned $735M in 2024 despite industry headwinds .
  • Strategic capacity add: The TimberStrand Arkansas project (2025–2027 build) is a meaningful EWP margin/capacity expansion with strong timberlands integration and expected >$100M annual Adjusted EBITDA at maturity .
  • Macro watchlist: Potential tariff actions could be inflationary for U.S. lumber pricing; Japan export demand expected to improve; China volumes flexing to domestic customers in Q1 .
  • Risk management: CCS timelines are extending; management remains confident but expects 1–2 year delays; underlying housing/R&R trends support gradual improvement into 2025 .