Weyerhaeuser's Q3 2025 Earnings Call: Contradictions Emerge on Timberland Acquisitions, Lumber and OSB Capacity, Pricing, and Market Stability

Date of Call: October 31, 2025

Financials Results

• Revenue: $1.7B net sales (GAAP) in Q3 2025
• EPS: $0.11 per diluted share GAAP; $0.06 per diluted share excluding special items; Adjusted EBITDA $217M

Guidance:

• Timberlands: Q4 earnings before special items and adjusted EBITDA expected ~ $30M lower vs Q3, driven by lower volumes and realizations in the West.
• Japan exports: Q4 volumes expected lower; realizations slightly higher due to freight benefits; demand to normalize over time.
• Real Estate/ENR: Full-year 2025 adjusted EBITDA raised to ~ $390M (up $40M); Basis on real estate sales 25–30%; NCS on track for $100M EBITDA by year-end.
• Wood Products: Q4 earnings/adj EBITDA expected slightly lower; lumber production ~10% lower Q‑Q if current posture maintained; OSB volumes comparable but higher unit costs from outages.
• Monticello CapEx: ~$130M in 2025; total facility investment ~$500M through 2027.

Business Commentary:

• Solid Financial Performance despite Market Challenges:
• Weyerhaeuser reported third-quarter GAAP earnings of $80 million, or $0.11 per diluted share, with adjusted EBITDA totaling $217 million.

• Despite a challenging market backdrop, the company's performance reflected a solid execution by teams and a robust portfolio.

• Strategic Timberlands Transactions:

• Weyerhaeuser completed acquisitions worth $459 million and anticipates cash proceeds from divestitures exceeding the cash outlay for acquisitions.

• These transactions aimed to improve timberland quality and value, aligning with strategic goals to enhance portfolio performance.

• Wood Products Challenges and Adjustments:

• The Wood Products segment reported a $48 million loss in lumber and a $3 million loss in OSB, with adjusted EBITDA at $8 million, a $93 million decrease from Q2.

• The segment was affected by low pricing due to reduced demand and an increase in log inventories, leading to production reductions.

• Timberlands Business Trends:

• Timberlands contributed $80 million to earnings, with adjusted EBITDA at $148 million, down $4 million from Q2.
• Decreased log sales realizations were due to downward pressure in domestic markets and softer demand in Japan, while fee harvest volumes increased slightly.

Sentiment Analysis:

Overall Tone: Neutral

• Management described Q3 as 'solid execution against a very challenging market backdrop,' highlighted a 'strong balance sheet' and raised Real Estate adjusted EBITDA guidance, but repeatedly noted historically weak lumber/OSB pricing, negative Q3 Wood Products EBITDA and seasonal near‑term softness, yielding a cautious but constructive tone.

Q&A:

• Question from Susan Maklari (Goldman Sachs): How are you thinking about lumber and OSB capacity; what signs would indicate further capacity reductions; how do you balance near-term actions with OpEx initiatives and share gains?
  Response: They monitor customer commitments, fee volumes, mill/regional profitability and competitive dynamics; they've reduced lumber posture already, will continue OpEx to defend cost position, and expect supply-side adjustments (downtime) if prices stay below cash breakeven.

• Question from Susan Maklari (Goldman Sachs): On timberlands: having reached your growth targets, how are you positioning the portfolio and what should we expect going forward on footprint?
  Response: They remain active and disciplined in timberland M&A, seeking high‑quality, capital‑efficient acquisitions and opportunistic divestitures to optimize portfolio value going forward.

• Question from George Staphos (BofA Securities): On timberland transactions, what has net cash generation been (per acre or per EBITDA) from acquisitions vs divestitures and how should we think about cash flow benefits?
  Response: Over the 2020 program they generated roughly $50M of incremental annual EBITDA via buy/sell activity; current buys priced ~21x EBITDA vs divestitures ~45x, and transactions are accretive to portfolio cash flow.

• Question from George Staphos (BofA Securities): What are you doing to lower lumber costs and reach breakeven at these low price levels?
  Response: Decade‑long OpEx and reliability programs keep them low on the cost curve; they'll continue efficiency, innovation and mill‑level cost improvements to move toward first‑quartile costs.

• Question from George Staphos (BofA Securities): If prices stayed at current lows, could you reach cash breakeven in 1–2 years via actions on your whiteboard?
  Response: Yes — mills have roadmaps to first‑quartile cost and many are largely there; ongoing OpEx and innovation provide a path, though market improvement would accelerate recovery.

• Question from Anthony Pettinari (Citigroup): With net leverage at ~4.3x LTM, what guardrails and levers would you use to manage leverage in a muted 2026 scenario?
  Response: They'll use multiple levers (capital allocation, portfolio transactions, share repurchases discipline) and maintain investment‑grade rating focus; leverage is cyclical and expected to normalize as EBITDA recovers.

• Question from Anthony Pettinari (Citigroup): With consolidation among public timber REITs, how should investors view Weyerhaeuser's competitive positioning?
  Response: Scale and an integrated model remain differentiators: 10.4M acres and large manufacturing footprint give Weyerhaeuser competitive advantage in local markets; consolidation doesn't materially change their regional competitive dynamics.

• Question from Mark Weintraub (Seaport Research Partners): On HBU prices rising this year, is that mix or genuine price improvement?
  Response: It's both: mix and geography matter quarter-to-quarter, but like‑for‑like prices for HBU properties have increased this year.

• Question from Mark Weintraub (Seaport Research Partners): Given high per‑acre values and multiples in transactions, does that make you more inclined to sell than buy; is there still capital seeking timberlands?
  Response: There remains strong capital interest and unallocated capital; they will balance buy vs sell — quality deals must clear the return bar, and they see continued demand in the market.

• Question from Mark Weintraub (Seaport Research Partners): What actions are you contemplating to narrow the gap between NAV and the public stock valuation?
  Response: They are focused on growing company value and cash flow through the cycle and will present more items and targets at Investor Day in December.

• Question from Kurt Yinger (D.A. Davidson): Will you remain acquisitive going forward or be a net seller; how do you balance buy vs sell?
  Response: They will consider all options — buy or sell — where disciplined returns exceed alternatives; current attractive alternatives raise the bar for timberland acquisitions but they remain active when value exists.

• Question from Kurt Yinger (D.A. Davidson): EWP realizations were up in Q3 and stable into Q4 — is that temporary, and how are you viewing competitive dynamics?
  Response: EWP demand tied to single‑family housing softened but they've preserved/expanded share via Trus Joist brand and service; pricing has been mitigated by market execution and they continue to push for share even in weak markets.

• Question from Ketan Mamtora (BMO Capital Markets): Pulpwood prices in the U.S. South are at multi‑decade lows and mills have closed — how are you mitigating pulpwood headwinds?
  Response: Their geographic diversification and integrated model allow rerouting volumes and shifting outlets (e.g., to OSB); the new Monticello EWP plant will consume pulpwood locally, and additional mitigation strategies will be discussed at Investor Day.

• Question from Ketan Mamtora (BMO Capital Markets): Would downstream M&A (e.g., lumber assets) be of interest given the extended downturn?
  Response: They pursue focused M&A when assets meet stringent criteria for strategic fit and shareholder value; bolt‑ons or larger deals are considered but must be accretive and complementary.

• Question from Hamir Patel (CIBC): Opportunity to grow Southern pine log exports — specifically prospects in India after China cutoffs?
  Response: India is a clear growth opportunity; they've been expanding India exports and testing Southeast Asia markets and plan to grow meaningful volumes there over time.

• Question from Matthew McKellar (RBC Capital Markets): Is Japan inventory destocking a short‑lived (one quarter) headwind and how has supply (European imports) trended recently?
  Response: They expect the destocking to be relatively short‑lived tied to a regulatory/permitting backlog that should normalize; European log/lumber costs have risen, making their customers relatively competitive and positioning them to gain share.

• Question from Hong Zhang (JPMorgan): With OSB pricing where it is, would you reduce OSB production relative to guidance of comparable Q4 volumes?
  Response: They'll monitor and adjust as necessary using the same considerations as lumber; current stance is to keep volumes comparable but will flex if economics warrant.

• Question from Michael Roxland (Truist Securities): What integrated producer advantages do you reference versus nonintegrated competitors?
  Response: Integration allows optimizing log flows and mixes to mills, flexible risk management on supply, rapid operational flex, and strategic plant siting to maximize timberland synergies.

• Question from Michael Roxland (Truist Securities): Any concern federal policy changes could curtail funding for Natural Climate Solutions (NCS)?
  Response: Not materially concerned; partner pipelines remain strong, CCS benefits from 45Q tax credit, and corporate interest in long‑term climate solutions persists despite political rhetoric.

Contradiction Point 1

Timberland Acquisition Strategy

It involves the company's strategy regarding timberland acquisitions, which is important for understanding Weyerhaeuser's growth and financial outlook.

Can you outline your timberlands portfolio strategy now that goals are achieved? What should investors expect moving forward? - Susan Maklari (Goldman Sachs Group, Inc., Research Division)

2025Q3: We've demonstrated our ability to create value through transactions. The target reached in 2021 was a reflection of expected disciplined M&A opportunities. We remain active in optimizing our portfolio. - David Wold(CFO)

How are you balancing capacity and improving profitability in the Wood Products segment? - Susan Maklari (Goldman Sachs)

2025Q2: We are currently in the process of closing on a $225 million acquisition of approximately 64,000 acres in North Carolina. We plan to fund this acquisition primarily through noncore timberland divestitures. - Devin Stockfish(CEO)

Contradiction Point 2

Lumber and OSB Capacity and Pricing

It involves the company's approach to managing capacity and pricing in the lumber and OSB markets, which directly impacts operating efficiency and profitability.

How are you assessing lumber and OSB capacity due to potential housing slowdowns and weak consumer confidence? What factors are influencing your operating posture? - Susan Maklari (Goldman Sachs Group, Inc., Research Division)

2025Q3: The environment is challenging, driven by housing market dynamics. We consider factors like consumer commitments, fee volumes, and balances to maximize profitability. We are well-positioned on the cost curve and focused on efficiency. - Devin Stockfish(CEO)

How are you balancing capacity in the Wood Products segment to improve profitability? - Susan Maklari (Goldman Sachs)

2025Q2: We are focused on operational excellence, which is key to staying competitive in a down market. We'll continue to monitor demand versus production. Despite soft demand, we are well-positioned to run more efficiently. We'll keep an eye on capacity and adjust as needed. - Devin Stockfish(CEO)

Contradiction Point 3

Lumber and OSB Pricing and Profitability

It involves the company's expectations for lumber and OSB pricing and their impact on profitability, which are critical for financial projections and investor expectations.

How are you adjusting lumber and OSB capacity amid housing slowdowns and weak consumer confidence? What factors are shaping your operating strategy? - Susan Maklari (Goldman Sachs Group, Inc., Research Division)

2025Q3: Industry capacity challenges are expected, and producers may need to adjust supply-side dynamics as lumber prices stabilize. - Devin Stockfish(CEO)

Regarding the Wood Products segment, how do you plan to balance capacity and improve profitability? - Susan Maklari (Goldman Sachs)

2025Q2: We'll keep an eye on capacity and adjust as needed. Opportunities for share repurchase and acquisitions in a down market are being considered. - Devin Stockfish(CEO)

Contradiction Point 4

Lumber Demand and Market Dynamics

It reflects differing perspectives on lumber demand and market dynamics, which directly impact the company's operational and strategic decisions.

How are you assessing lumber and OSB capacity adjustments due to potential housing slowdowns and weak consumer confidence, and what factors are shaping your operating posture? - Susan Maklari (Goldman Sachs Group, Inc., Research Division)

2025Q3: The environment is challenging, driven by housing market dynamics. We consider factors like consumer commitments, fee volumes, and balances to maximize profitability. - Devin Stockfish(President, CEO & Director)

Regarding lumber demand during the building season, are retailers willing to increase inventory amid expected higher summer tariffs, and are there shifts in order patterns between SPF and Southern Yellow Pine? - Unidentified Analyst (Goldman Sachs)

2025Q1: Lumber demand is steady, with some pullback due to elevated uncertainties. Inventory levels are lower than typical, which could lead to temporary supply disruptions if building activity picks up. - Devin Stockfish(CEO)

Contradiction Point 5

OSB Pricing and Market Stability

It highlights differing views on the stability of OSB pricing, which is crucial for operational planning and revenue projections.

How will you reduce costs in your lumber business amid low prices? Are you planning further capacity cuts? - George Staphos (BofA Securities, Research Division)

2025Q3: We are in a dynamic market. The OSB price is still relatively high compared to where it was this time last year. - Devin Stockfish(President, CEO & Director)

What needs to change to stabilize OSB pricing? - Hong Hang (JPMorgan)

2025Q1: Stability in OSB pricing is expected as we move into the building season. Buying activity has stabilized, and orders are expected to grow as we move forward. - Devin Stockfish(CEO)