Release Date: April 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you discuss capital allocation and supporting the dividend, especially considering the stock is trading at a near record discount to NAV?
A: Eric Cremers, President and CEO, emphasized the priority of maintaining an investment-grade balance sheet and the near-sacrosanct nature of dividends. He mentioned that share repurchases become more attractive when the stock price is low, but M&A and investing in mills are also key considerations. The decision on debt paydown will depend on refinancing costs compared to other capital allocation options.
Q: Are you surprised by the lack of capacity curtailments in the lumber industry given the current market conditions?
A: Eric Cremers noted that many mills are currently operating below breakeven, which could lead to more curtailments soon, especially with upcoming increases in duties on Canadian lumber.
Q: Could you provide insights into your operating rate in lumber for Q1 and how your order books are trending?
A: Eric Cremers explained that despite breakeven EBITDA, their mills are running at full capacity because they are efficient and still profitable at the mill level. The order books are kept intentionally short in anticipation of better market conditions, allowing them to sell at higher prices later.
Q: What are your expectations for lumber prices and sawlog prices in Q2?
A: Eric Cremers expects lumber prices to improve and sawlog prices to increase by about 6% in Q2, driven by seasonal factors and market dynamics.
Q: Can you discuss the visibility and expectations for lot sales in your real estate segment, particularly in the Sonoma Valley community?
A: Wayne Wasechek, CFO, indicated that lot availability is closely managed to align with market demand, with more lots expected to come to market in the latter half of the year as new sub-developments are completed.
Q: What is the current state of the timberlands market for M&A, and how are you positioning for potential opportunities?
A: Eric Cremers described the market as relatively quiet with high demand for quality timberland but few high-quality assets available. He highlighted the company's readiness to engage in transactions that offer strategic value, reflecting a disciplined approach to M&A.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
