Weyerhaeuser Company (WY) Earnings Call Transcript & Summary

Well, welcome to the 9:55 session at Citi's 2023 Global Property CEO Conference. I'm Anthony Pettinari with Citi Research, and we're very pleased to have with us Weyerhaeuser and CEO, Devin Stockfish. This session is for Citi clients. Disclosures are available on the webcast and at the AV desk. And for those in the or on the webcast, you can sign on to liveqna.com and enter code GPC23 to submit any questions if you don't want to raise your hand. So Devin, I'll turn it over to you to introduce Weyerhaeuser and provide some background.

All right. Great. Well, thanks, Anthony. I appreciate the introduction and the opportunity to talk to you about Weyerhaeuser Company. I'm going to keep my remarks pretty brief so that we have plenty of time for Q&A. I will just note, we do have a recently updated and expansive deck available on our website on weyerhaeuser.com. Also, I'll be making some forward-looking statements today, so the typical cautionary language applies. Well, let me just start with a brief overview of the company for those that aren't as familiar with the story. We are the largest private owner of timberlands in North America. We have nearly 11 million acres of timberlands across United States, high-quality, highly productive land base. We're also one of North America's largest producers of wood products. We have 35 manufacturing facilities across the U.S. and Canada, most of which are in proximity -- close proximity to our timberland ownership. And then lastly, we have a Real Estate, Energy and Natural Resources segment. It's really focused on maximizing the value of every acre we own. We do that through real estate sales, energy natural resource leases as well as our new Natural Climate Solutions business. I suspect we'll talk a little bit about that during the Q&A. We manage all of these businesses within a tax-efficient REIT structure. Each of these businesses is scale, industry-leading performance. I think, in fact, we are one of the largest REITs in the United States. Just a few comments on 2022. Through all of the disruptions of 2022, of which there were many, we did make some fairly significant improvements. We delivered our second highest adjusted EBITDA on record as a company. We continue to grow our Timberlands business, our Natural Climate Solutions business. We captured additional operational excellence improvements. All of our manufacturing businesses. We're #1 from an EBITDA margin standpoint. Our Western business number one, from an EBITDA per acre standpoint. So a lot of really good improvements. We continue to drive safety improvements, a lot of work we're doing on ESG. Again, we can cover off on that during the Q&A. From a high level, the investment thesis at Weyerhaeuser is really focused on 4 things: an unmatched portfolio of assets, industry-leading performance, a strong ESG foundation and disciplined capital allocation. I will just say briefly on the ESG side, I think that's perhaps something that may be a little underappreciated about our company. I mean we've been operating our timberland sustainably for over 100 years. Integrity has always been a big part of how our company has operated. But I think you'd be hard-pressed to find a better ESG story than Weyerhaeuser, particularly around the carbon space. When you think about the millions of acres of timberlands that we have and the CO2 that we sequester out of the atmosphere, the wood products that we produce that store that carbon. We are substantially carbon-negative, a statement, not many other companies can make. We sequester more than 4x the amount of CO2 every year that we admit. And I think that's something that's going to provide a really interesting opportunity for those that are interested in climate and carbon investing going forward. On the capital allocation side, we really have 3 fundamental priorities around capital allocation. Returning cash to shareholders through a combination of dividend and share repurchase. Investing in our business all while maintaining an appropriate capital structure. For those of you that are familiar with the company, we came out with a new cash return framework a couple of years ago. And it really has 2 components. One is the sustainable quarterly base dividend, and that's really set to be sustainable across business cycles. It's supported by our Timberlands, Real Estate and ENR business. We've committed to grow that dividend 5% annually through 2025. In fact, we just raised the dividend last month. And then the second piece, which is really where we get to our targeted 75% to 80% cash return target is given back through a combination of supplemental dividends and share repurchase. If you look back last year, we returned over $1.75 billion of cash to our shareholders through a combination of dividends and share repurchase. Since we put this framework in place 2 years ago, we've returned over $3.8 billion of cash. So a really powerful framework that I think demonstrates our commitment to returning cash, but also has a lot of flexibility to pivot between dividends and share repurchase, depending on market conditions. As we look forward over the next several years, we've got several very specific targets that we've committed to. We laid these out at our Investor Day a few years ago. We intend to deploy $1 billion of capital for timberlands acquisitions. We made some good progress last year with a very nice acquisition in the Carolinas. We're intending to grow our lumber business 5% per year, really just through organic investments back into the business that will also deliver cost reductions and efficiency savings. We've targeted $100 million per year for our new Natural Climate Solutions business by the end of 2025. We think there's some really good opportunities there. We've committed to $175 million to $250 million of incremental operational excellence improvements in the business between 2022 and 2025, feel very good about some opportunities in that space. We'll, of course, continue to focus on our ESG work, including the work around highlighting the carbon opportunities. And with our portfolio and the industry-leading performance that we have, we expect to generate a fairly significant amount of cash over the next several years, and we'll afford to returning the vast majority of that back to our shareholders through the dividends and share repurchase. So again, a lot of work really across all 4 aspects of our investment thesis to drive value and feel very good about how Weyerhaeuser is positioned to really create value for all of our stakeholders, including our shareholders. So with that, Anthony, maybe we'll just pause there and go to questions.

Great. Thank you Devin, for that overview. Maybe we can start with your core timberlands business and maybe just start in the South. Can you talk a little bit about how demand and prices for logs have sort of trended relative to expectations early in the year?

Yes. Well, I think we've been talking about this for a number of years is just that improvement in sawlog pricing, and for those that follow the space, it's been a slow path. But I think over the last couple of years, in particular, you've started to see a little bit more pickup in terms of log pricing. I think there are really 2 things driving that primarily. Number one, we have seen a lot of new manufacturing capacity coming into the South. And this has been a story for a number of years, really going back to 2017, 2018, you started to see a pickup. The U.S. South really is the premier place in North America, perhaps the world to manufacture lumber and other wood products. And so you're seeing a significant amount of investment in new capacity, expanded capacity all across the South. And how that impacts the log dynamic is every time you have a new mill or an expansion come into a geography, you can draw an 80-mile circle around that new mill. And within that region, you're going to see the tension of the wood basket, and you'll see prices start to tick up. So what we've really seen over the last 5, 6, 7 years, as all these new mills have come into the South, kind of region by region, you see tensioning happen. And we've seen that really start to translate into log price appreciation over the last few years. I think that's a piece of it. The second piece is really just around supply chain. And when you look across many of these geographies in the South, there is a shortage of logging capacity and trucking capacity. And that was exacerbated by the pandemic, but I don't think we're really at a point now where that's been solved, even coming out of the pandemic. And what that's meant for log prices is for mills in the South, they have kept by and large, a little bit fuller log decks to sort of derisk some of those supply chain disruptions and make sure they don't run out of logs at their mills. And I think that dynamic has propped up prices a little bit as well. But we've definitely seen a pickup in log prices over the last few years, and we expect that to continue as more capacity comes in, as the export programs that we're all working on continue to expand slowly, but surely, we expect those log prices to continue to go up over time.

And can you talk about how your southern footprint is sort of positioned to benefit from maybe some of those capacity adds? And are you seeing meaningful differences between maybe states or subregions within the South?

Yes, sure. The nice thing about our portfolio is we have scale in every operating region. So -- when you look across the Atlantic Coast from North Carolina down through Florida, we have the largest landholding across that region. That's been an area that didn't see as much log price reduction coming out of the Great Recession. So it's been a stronger market. And so we certainly can participate in those stronger markets. But the exciting thing is a lot of the new capacity of late, and we've got a slide in our investor presentation that lays this out and coming into some of those regions that have been a little bit slower for that log price appreciation. So think Mississippi, parts of Alabama, parts of Louisiana. So I think we've got some real upside is that manufacturing capacity continues to come into those regions.

And at your Analyst Day, you outlined $1 billion program to grow the Timberlands portfolio by 2025. Just wondering if you could touch on that? And the Carolinas acquisition, which I think you referenced, how does that sort of fit into that?

Sure. Yes. And that $1 billion, just for reference, there's no magic to that number, really, the reason we came up with the $1 billion is on balance, we think we can put $250 million to work every year. Now just as a background, virtually every deal that comes to market we look at. We bid on a lot of deals. Last year, we only got 2 of them. I think in some respects, that shows that we're trying to be really disciplined about how we go about these acquisitions. You could see a year like last year where we had $300 million. You could see a year where we have $100 million. So it's more or less just an average over time. We're always in the market, that will always be the case. It always has been the case. If we can find $500 million in a particular year that meets our return thresholds, of course, we'll be happy to do those deals as well. The Carolina deal that we did last year was a little over 80,000 acres, primarily in North Carolina. This really was one of the best packages that has come to market in a very, very long time, a very high percentage of planted pine relative to natural high age class, good stocking level, really good markets. It's also approximate to our manufacturing operations so that we have some synergies there with the manufacturing side. And we can also export the -- or leverage the export market out of North Carolina. So a really good deal for us. I think -- and we've got a plan later in the year to lay out a little bit more of the details as we get further into that deal. But I think there's some upside even over and above what we underwrote or mitigation banking and solar on that deal. So really, really nice addition to our portfolio.

Can you talk about the current market for timberlands, maybe good quality industrial timberlands in the South, maybe how that compares versus pre-pandemic and maybe during the pandemic? I don't know if you can generalize like dollar per acre values that you're seeing? And then just finally, in terms of like return targets, whether it's EBITDA yield, EBITDA per acre IRR, whatever metric you want to use, is there specific metrics that you're targeting?

Yes, sure. One of the things that we've seen, and this is true really across the board for timberlands as a whole, is an increased appreciation, I think, for the value of timberlands, not just the timber, but also some of the alternative values that come off of timber. And we've seen a lot more transaction volume in the South than we have anywhere else. I think the values of land in the West continue to go up. But frankly, most people that have good quality timberlands in the West just aren't selling at these days. So you've seen more transaction volume in the South. I think coming out of the pandemic, a couple of things, Anthony. One, pre-pandemic, the really high-quality timberlands were still fetching a nice premium. That's been the case for a while. One of the things that we've seen lately is even the lower-quality packages are getting nice premium values. And you've seen we had a deal for $3,300 an acre in the Carolinas. The CatchMark deal was over $2,600 an acre, Rayonier's recent acquisition valued, I think, some land in Georgia at over $4,000 an acre, I mean you've really seen for the higher quality packages, the pricing in the South go up pretty dramatically. And I think that's a function of a few things. One, there's a general view, which I share that the value of timberlands is going up in the years to come. And so I think there's a desire to get some of those timberlands today, because this is probably the cheapest you're going to get them for a long time. That's a piece of it, and you've seen the REITs and you've seen the TMOs really coming after some of these packages. But you've also seen some new money coming into the space, whether that's Europeans or Asian money or IKEA buying timberlands, you've got JPMorgan coming into the space, some private equity coming into the space. So there's just been a lot more interest. And I think part of that is finally starting to see log prices go up. But I think the bigger piece is an appreciation for like I said, just the alternative values. When you think about a land base, you can do timber, and that's certainly for us, the core of what we do, but you've got solar, you've got wind mitigation conservation, carbon, carbon capture and storage, real estate development, HBU. There's just a lot of things that you can do with the landholding like that. And historically, that hasn't really been priced into the model. And I think increasingly so, people are looking at some of those other values and starting to underwrite that at least to some extent.

I have a question from an investor online. Those trends that you're seeing -- I'll paraphrase this, but those trends you're seeing in valuation, have they been impacted by a slowing housing market and in light of higher interest rates?

They really haven't. The thing to remember about the timber market generally is the investors, the companies that participate in this space have a very long-term view. So when you see either spikes or dips in housing from year-to-year or even interest rates. We get asked this question a lot, as interest rates have gone up, have you seen that impact discount rates in terms of how people price timberlands. And the short answer is no. When people make timberland acquisitions, they're looking out 25, 30, 45 years, that's a harvest rotation. And so you just don't see these near-term swings having big impacts on timber valuations. Now obviously, if you saw that trend play out over an extended period of time, of course, that would impact the valuations. But the short-term swings in housing or interest rates or lumber prices haven't historically had a big impact on timber valuations in the near term.

Great. And then maybe just rounding out Southern Timberlands. You referenced export programs, and that's something that's been kind of developing over the last few years, kind of where do we stand now? And what's the opportunity in the South for exports?

Yes. I think there's a good opportunity for us. It's been a little bit of a volatile dynamics. So you go back a few years, and we, along with several of our competitors, we're growing our export businesses to China. There's a significant need for fiber into that market. About 2 years ago, the Chinese government put new regulations in place, some phytosanitary regulations, because of a beetle that they found. And that has, by and large, prevented Southern yellow pine logs from being exported to China. I think that was more politics than science. And I suspect as the real estate market comes back and the Chinese population comes out of COVID, they're going to need more logs than they're going into that market. So I wouldn't be surprised at some point in the not-too-distant future, if that regulation changes. But at present, nobody is really exporting logs to China right now. So when we saw that come into play, we pivoted and have been growing our export program into India. And I think there's a really nice upside there over time. And I think we're going to send a fair bit more volume to India this year than last year. Still a small piece of our overall harvest in the South. But when we think about the Indias, the Chinas, Vietnams. We've seen some logs to Pakistan, to Turkey, I think over time, what you're going to see is the U.S. South is one of the few healthy wood baskets on the planet and in a world where countries need more fiber than they have. I think the U.S. South will increasingly be part of that solution. So I'm excited about it. I think that will provide an opportunity for us to tension some wood baskets and just provide a little bit more competition for those logs over time.

Great. Great. And then maybe switching from Southern Timberlands to your Pacific Northwest holdings. Can you talk about kind of price and demand dynamics for logs in the Pacific Northwest and maybe touch on export and domestic?

Sure. The Northwest in contrast to the south is an incredibly tensioned wood basket. And what I mean by that is there generally are not enough logs to go around. And so what that really means for us is you're going to see log prices really track lumber prices pretty closely. When you saw lumber prices get up to $1,500 or $1,000 last year, the log prices got up to historically high levels, and that's just because there are more buyers than there are sellers, so you can bid that price up really to, the point where mills, they still need to make a profit, but a lot more of the economics are going to go to the log seller than the lumber seller in the Northwest. And so between the domestic market and then we have an export market to Japan and China and Korea, it keeps things very tension. Now the flip side of that is when lumber prices come down as they have, you can't keep those log prices at those elevated levels because it puts all of the mills underwater. And so generally speaking, the Northwest, all of your costs that go into making lumber, the log is generally speaking, somewhere in the neighborhood of 2/3 of the overall cost. So it's a big piece of the cost structure in producing lumber. So what we've got on the ground right now is just as lumber prices have calmed down, there's usually a little bit of a lag, but we've seen those log prices come down accordingly. As soon as lumber prices go back up, you would expect to see log prices do the same.

Great. Great. And then just rounding out the Timberlands portfolio. You have Northern Timberland Holdings, which I think are close to maybe 10% of your acreage, but maybe 2% of EBITDA. What is the sort of the strategic value of that position?

Yes. I think the way we're thinking about that now is it's largely an opportunity around Natural Climate Solutions. So our initial pilot carbon, Forest carbon project is up in Maine. I think there are going to be some opportunities, we have some wind farms up there in the Maine region. I think with 1 million acres of timberland holdings, there are going to be some really interesting opportunities to help us facilitate growth in the Natural Climate Solutions space. So its a good team. We've got some good customers. But as you say, the return profile out of that portfolio for just timber probably wouldn't meet that return criteria, but I think there's going to be some interesting opportunity for us to grow that business using some of those other alternative values.

Great. That's a great segue to the $100 million natural climate solutions target that you outlined at your Analyst Day. Can you talk about kind of the different, I guess, categories within that, whether it's CCS or credits or solar, wind?

Yes, sure. So we really have 4 different pieces to that. The first 2 we've been doing for a while that continue to grow. So if you think about solar and wind, particularly on the solar side, there is an incredible amount of demand for solar. We are signing up a lot of solar deals. I think that's going to be a very nice increment of revenue growth for us. The challenge with solar, and this is a theme unfortunately across many of the aspects of Natural Climate Solutions is there's a pretty significant backlog of getting these deals through. So getting them permitted and tied into the grid, the infrastructure in the United States is really not well suited to do that quickly. And so that's going to be a challenge. But over time, that business will continue to grow. We feel very good about the renewables business. The second piece is the mitigation banking. And just for reference, what we mean by that, anytime you're building, whether it's infrastructure or development if you impact wet land, you need to have mitigation banking offset credits in order to be able to do that. And so with our portfolio, we've got lots of opportunities to develop mitigation banks by rebuilding streams or wet lands, things of that nature. And then you sell those mitigation banking credits to developers and infrastructure. That is also going to be a growth business for us, particularly given the amount of infrastructure spending that we're going to see in the years to come. I think we've got some really good opportunities to grow that business in a more disciplined and focused way over time. So those 2 things we've been doing, but I think we have some opportunity to accelerate. The 2 new ones are the carbon capture and storage and forest carbon. So carbon capture and storage, what this is really is basically taking our subsurface ownership. So unlike many other landowners for Weyerhaeuser, we own both the aboveground and the below-ground rights to our land base. On some of the land, we have geology that would support in liquefied CO2 underground. So that's 7,500 to 10,000 feet underground. We have a number of spots that we think will be good locations for companies like Occidental Petroleum or Denbury. Those are the first 2 agreements we've signed up. But Exxon, a lot of companies are talking about doing this. And what it is essentially is you go to a high emitting facility. So oil and gas, concrete, chemical, what have you, anything that's generating a lot of CO2, you put a scrubber on the smokestack essentially, you pull the CO2 out, you liquefy it, you send it through a pipeline and then an injection facility shoots it underground. So we've got 2 of those deals signed up. We've got a whole pipeline of other opportunities out there in the future. It's going to be a really nice business for us. It's essentially pure incremental revenue because we'll lease them a site to build the injection facility. But otherwise, we'll continue to manage the timber above ground, and we get paid a fee on a CO2 per ton basis for them to inject CO2 underground. And that's mean these are big geologic formations that will take 20 to 30 years to fill up. So you build several of these on top of each other. It's a nice revenue stream for us. Now the challenge is it takes a little while to get these up and running. So for those first 2 deals, those are going to come online in '25, '26. So it takes a little time to build the infrastructure. But once it's up and running, it's just pure recurring nice revenue stream. And then the last one is the forest carbon, and that's the 1 that probably we have the most leverage to over time, but it's still in its infancy in many respects. And that is essentially -- when you manage a forest, just the way you manage it day to day, over a period of time, you are going to sequester a certain amount of CO2, just the way trees pull CO2 out of the atmosphere. And that's just how we run it day to day. But foresters can change the way you manage forest. You can plant more trees per acre. You can do more fertilization, less thinning, longer harvest rotations. There are a number of things that you can do to change the way that you manage a forest to sequester more CO2 over time. And so the way these markets work with improved forest managed carbon offsets is, you say, okay, here's my baseline. This is how I've always run it. It's going to capture X amount of CO2. We're going to change the way that we do forestry and it's going to create some increment of CO2. And you can sell that increment as a carbon offset to all of these companies that have net-zero commitments. It's been a market that's had a lot of criticism, some of it, frankly, fair. There have been carbon projects that have come to market that have been of poor quality. What we're trying to do, because I think as the biggest player in the space and with the influence that we have around forestry, through our initial project through the work that we're doing with USDA and the industry, is to really create a higher quality carbon offset that comes to market. I think, a, we'll get paid a premium for it. But b, the biggest leverage to us is if this market develops, right? So we're going to sell carbon offsets. That's going to be a revenue stream. But the bigger leverage for us is if this market develops and gets credibility, the demand is there. There are a lot of companies that want to buy forest carbon offsets. They have a big gap between where they are today and getting to net zero. Whereas carbon, it's not going to get you all the way there, but it's an increment that's going to be lower cost than the other alternatives. If you can get the credibility there, I think the demand will be very strong. And why I say we have the most leverage to that piece is if carbon prices get up to, say, $30 per ton, you're not going to have $25 stumpage prices right next to $30 carbon prices, right? You're going to have to see those stumpage values move up. Otherwise, landowners will just shift into carbon. And so as you see the price of carbon go up with the carbon platform that Weyerhaeuser has with our 11 million acres that we can get land price appreciation, log price appreciation, you can sell forest carbon offsets. You can store it underground, but all the way through to the wood products, right? That carbon platform as the value of carbon goes up, we have a lot of opportunities across that platform to participate that. And we'll make that determination what makes sense for us as to where to kind of take some of those chips off the table. But I think over time, as that market develops, that's a really interesting opportunity for a company like ours.

Great. Great. Devin, I want to make sure we touch on Wood Products business. And maybe if you could talk a little bit about what you're seeing in terms of demand and pricing for lumber and the market conditions there?

Sure. Yes, it's been an interesting ride here over the last year or so. Obviously, we've seen some serious volatility in terms of housing and that's had an impact certainly on wood products demand. It's been interesting, coming out of Q4, which frankly, a lot of the builders were pretty pessimistic, and I think it was a shock to the system, just how quickly foot traffic and demand, particularly around single-family dropped off as we got into the late summer, fall. And so I think there is a pessimism coming into 2023 that, frankly, when we saw mortgage rates get down into the low 6s, a lot of people were surprised, myself included on how quickly people started moving back into the market. And so -- you saw that with the homebuilder sentiment, the new home sales numbers, et cetera, picked up a bit in January. And I think early February, I was kind of feeling like that trend was moving in the right direction. Of course, we saw mortgage rates tick back up a little bit here over the last several weeks. So between that and we've had a fair amount of weather events over the last 10 days or so, it's hard to say how that's translating into the spring building season just because there's been a little bit of noise. My take is, generally speaking, the homebuilding season, the spring is going to be fine. It's not going to be the way it was in '21 and '22, but it's kind of going to be somewhere between 2019 and 2020 from a start standpoint is kind of how it's feeling today, which is going to be obviously softer than what we've seen in the last couple of years. But ultimately, there's going to be demand for lumber and OSB. So I think we're going to be probably in a slightly better pricing environment here as we get into spring than we've seen over the last few months. Is it going to get back up to $800,000 numbers? I don't think so. But the one thing I will say is the inventories across the channel still feel pretty lean, particularly for where we are relative to the spring building season. So if you did see a significant pickup in demand, you could see pricing move relatively quickly if people don't have inventories to fall back on.

Got it. Got it. And I don't know if you could characterize how your lumber business is positioned versus OSB versus engineered wood products in the current market?

Yes. Well, I mean I'd just say at the outset, I think our portfolio relative to most of the competition is pretty well situated. And that's really just a function of all of the work we've done on the cost side. So in a cyclical business being on the low end of the cost curve always serves you well. So I think for lumber and OSB, it's not a matter of us being able to move product. We'll be able to make money. We'll be black at the bottom, all of the things that we've been working on for a long time. The margin impact will just be a function of what the pricing dynamic looks like. I think on lumber, you have seen some capacity coming out of late, particularly out of British Columbia, a little bit out of the Pacific Northwest. It's easier to take those incremental kind of changes, I think, on the lumber side with OSB. When you've got a big OSB mill, you're either turned on or you're turned off. And so it's a little bit harder to kind of ratchet that a little bit around the margins. So you really haven't seen that happen on the OSB side to this point. EWP, I think we look at this period, obviously, we've seen a lot of pricing improvement on the EWP side over the last several years. That will come down a little bit, because it's tied to the single-family housing market, but we're looking at this period as an opportunity to, frankly, pick up market share. We have a lot of customers that we could have added over the last several years had we had more product. I think this environment gives us an opportunity to step in with some new customers and some new markets. And so we're looking at from an EWP standpoint is this kind of an opportunity for us.

Great. Great. And as we kind of wrap up, you have a Wood Products business that can generate a lot of cash. Can you talk about sort of optimal capital structure and capital allocation for Weyerhaeuser?

Yes. Well, again, it goes back to our 3 priorities. Number one, returning cash to shareholders. We're really, I think, structured to return the vast majority of our cash back to shareholders. And so that's our target, 75% to 80% of our funds available for distribution, essentially our free cash flow is going to go back in dividends and share repurchase. We're going to continue to invest in the business. We've got about $420 million to $440 million a year in CapEx. That's going to be the range for the next several years. And that's really a function of the amount of capital projects that we think we can do effectively and deliver the right value. And we've got a long pipeline years into the future. And those have been a big part of the operating improvement that we've had. And then just maintaining appropriate capital structure. We've done a lot of work to strengthen the balance sheet. Over the last several years, we paid down $1.2 billion of debt. We've reduced our pension obligations by over $4 billion. Our leverage ratio is about 1% on a trailing 12-month basis. So we've done a lot of work there. I don't know that we necessarily are going to be allocating a lot of cash to paying down additional debt at this point. I feel pretty good about our gross debt level. But I mean those are the 3 priorities. And I think that really positions us well heading into this year, which may be a little choppier. But I think the good news from our standpoint is when you look beyond whatever this next 6, 9 months look like in housing, on the other side of this, there's an overwhelming demand for housing. And you saw that just even when interest rates kind of came down to get mortgages to the 6%. You get that to a 5 handle with the demographic tailwinds and the amount of underbuilding that we have in the U.S. We're going to have to build a lot of homes in the years to come, and they're going to be built out of wood, which is going to be a very nice tailwind for our business.

Great. Great. Well, we're coming up on time. Devin, thank you.

Yes. Thank you. Good to see everyone.