Greetings, and welcome to the Weyerhaeuser's Second Quarter 2021 Earnings Conference Call. It is now my pleasure to introduce your host, Beth Baum, Vice President of Investor Relations and Enterprise Planning. Thank you. Ms. Baum, you may begin. Thank you, Rob. Good morning, everyone. Thank you for joining us today to discuss Weyerhaeuser's Second Quarter 2021 Earnings. This call is being webcast at www.weyerhaeuser.com. Our earnings release and presentation materials can also be found on our website. Please review the warning statements in our press release and on the presentation slides concerning the risks associated with forward-looking statements, as forward-looking statements will be made during this conference call. We will discuss non-GAAP financial measures and a reconciliation of GAAP can be found in the earnings materials on our website. On the call this morning are Devin Stockfish, Chief Executive Officer, and Nancy Loewe, Chief Financial Officer. I will now turn the call over to Devin Stockfish. Thank you, Beth. Good morning, everyone, and thank you for joining us today. This morning, Weyerhaeuser reported second quarter net earnings of $1 billion, or $1.37 per diluted share, on net sales of $3.1 billion. I'm extremely proud of our team's accomplishments in the second quarter. Their collective efforts delivered the company's strongest quarterly adjusted EBITDA on record at $1.6 billion, surpassing last quarter's record by 43%. Our year-to-date adjusted EBITDA is almost $2 billion higher than the first half of 2020. Wood Products delivered another record quarter at $1.4 billion of adjusted EBITDA, surpassing last quarter's record by 56%. Turning now to our second quarter business results. I'll begin the discussion with Timberlands on pages five through eight of our earning slides. Timberlands earnings and adjusted EBITDA improved by approximately 5% compared with the first quarter. In the West, adjusted EBITDA increased slightly in the second quarter. Western domestic markets remained favorable despite the decline in lumber prices late in the quarter and a healthy supply of logs to the market. Demand remained strong as mills took precautionary measures to bolster log inventories in response to an early fire season resulting from persistent dry conditions and a period of extremely high temperatures. This steady demand pull drove our sales volumes modestly higher during the second quarter. Salvage operations from last year's fires in Oregon are continuing to supply an abundance of smaller diameter logs to the market. Consequently, prices for smaller diameter logs in Oregon have experienced some downward pressure. As a result of this dynamic, our domestic sales realizations were slightly lower in the quarter. To date, we've harvested nearly two-thirds of our planned salvage volume in Oregon. Salvage productivity has slowed somewhat as warm summer weather arrived early, and we began to transition salvage harvest operations into higher elevation tracks, which generally have lower productivity and higher operating costs. Forestry and road costs were seasonally higher during the quarter, as we do a significant amount of this work during the warmer summer months. Turning to our export markets. In Japan and China, demand for our logs remained strong and our sales realizations increased significantly. Global logistics constraints, particularly with respect to shipping container availability and strong North American lumber prices, continued to impact the availability of imported lumber into Japan and China. This has resulted in strong demand for locally produced lumber and increased demand for imported logs. Additionally, a ban on Australian logs continues to reduce the supply of imported logs to China. Our China sales volumes increased in the quarter as we intentionally flexed volume from the domestic market to capitalize on strong demand signals and pricing from our Chinese customers. Moving to the South. Southern Timberlands adjusted EBITDA increased by approximately 10% compared with the first quarter. Southern sawlog markets improved due to record lumber and panel pricing for most of the quarter, and supply limitations resulting from persistent wet weather. Fiber markets also strengthened as mill inventories remained lean and wet conditions constrained supply. As a result, our sales realizations were slightly higher than the first quarter. Fee and sales volumes were significantly higher in the quarter, despite impacts from multiple heavy rain events across the Gulf South. The wet weather in the quarter did, however, limit our ability to catch up on delayed harvests from the first quarter snow and ice events. Log and haul costs increased slightly, and forestry and road costs were seasonally higher. Although southern export represents a small component of our operations, we continue to see strengthening demand signals from China and India, resulting in increases in both sales volumes and realizations in the second quarter. However, container availability and increased freight rates continue to be a notable headwind. In the North, adjusted EBITDA decreased slightly compared to the first quarter due to significantly lower sales volumes associated with seasonal spring breakup conditions, partially offset by significantly higher sales realizations. Turning to Real Estate, Energy, and Natural Resources on pages 9 and 10. Earnings and adjusted EBITDA decreased by approximately 5% compared with the first quarter due to timing of real estate sales and mix of property sold, but were significantly higher than the year ago quarter. Earnings increased by more than 230% compared with the second quarter of 2020. Demand for HBU properties has been very strong year-to-date, and average price per acre remains elevated compared to historical levels. We continue to capitalize on this market and have been increasing our prices in many regions. This is resulting in a steady stream of high-value transactions with significant premiums to timber. In Energy and Natural Resources, production of construction materials increased as demand remained strong during the quarter. Wood Products, pages 11 through 13. Wood Products earnings and adjusted EBITDA improved by almost half a billion dollars compared with the prior quarter. Our lumber, OSB, and distribution businesses all established new quarterly adjusted EBITDA records in the second quarter. These exceptional results were delivered notwithstanding ongoing challenges with transportation and resin availability in the quarter. I want to specifically call out and thank our supply chain and logistics teams for their tremendous work in helping us successfully navigate these headwinds. In the lumber market, average framing lumber composite pricing increased 29% compared with the first quarter. Lumber demand was strong during the first half of the quarter, but began to soften as do- it -yourself repair and remodel activity weakened toward the latter part of May. The drop-off in the do- it -yourself segment, largely a result of changing consumer spending habits coming out of COVID restrictions, and to some extent, record-high lumber prices, resulted in lower sales activity and higher inventories at the home centers and treaters. As a result, lumber prices peaked in late May and retreated at a rapid pace for the remainder of the quarter. Inventories at home centers and treaters increased, inventory levels at dealers and distributors serving the home building and professional repair and remodel segments remained below normal at quarter end. Buyer positioning remains cautious, with a reluctance to build meaningful inventory positions in a dynamic pricing environment. Adjusted EBITDA for lumber increased $291 million, or 57%, compared with the first quarter. Our sales realizations increased by 25% and sales volumes increased moderately. Log costs increased slightly in the second quarter, primarily for Canadian logs. OSB markets experienced historic strength in the second quarter as demand continued to outpace supply. Inventories remained lean throughout the channel, and supply constraints persisted due to resin availability and transportation challenges. As a result, pricing continued to accelerate to record levels before peaking at the end of the quarter. Average OSB composite pricing increased 52% compared with the first quarter. OSB adjusted EBITDA increased by $172 million, or 57%, compared to the first quarter. Our sales realizations improved by 48%. Production and sales volumes decreased modestly, and unit manufacturing costs increased, primarily due to a planned extended maintenance outage to complete a capital project at our Elkin OSB mill. Fiber costs were slightly higher in the quarter, primarily for Canadian logs. Engineered Wood Products adjusted EBITDA increased $11 million compared to the first quarter, a 26% improvement. Sales realizations improved across all products, and we continue to benefit from the price increases announced over the last year for solid section and I-joist products. This was partially offset by higher raw material costs for oriented strand board web stock, resin, and veneer. Sales and production volumes increased for solid section and I-joist products. In distribution, adjusted EBITDA increased $36 million compared to the first quarter, a 92% improvement, as strong demand drove higher sales volumes for most products and the business captured improved margins. With that, I'll turn the call over to Nancy to discuss some financial items and our third-quarter outlook. Thank you, Devin, and good morning, everyone. I'll begin with our key financial items, which are summarized on page 15. We generated over $1.3 billion of cash from operations in the second quarter and over $2 billion year- to- date. These are our highest first-half operating cash flows on record. Adjusted Funds Available for Distribution or adjusted FAD for year- to- date second quarter 2021 totaled nearly $1.9 billion, with approximately $1.2 billion related to second quarter operations, as highlighted on page 16. Year- to- date, we have returned $255 million to our shareholders through payment of our quarterly base dividend. As a reminder, we target a total return to shareholders of 75%-80% of our annual adjusted FAD. In the case of 2021, the majority will be returned through the variable supplemental component of our new dividend framework. Turning to the balance sheet, we ended the quarter with approximately $1.8 billion of cash and just under $5.3 billion of debt. During the second quarter, we repaid our $225 million variable rate term loan due in 2026 and incurred no early extinguishment charges. We plan to repay our $150 million 9% note when it matures in the fourth quarter. Looking forward, key outlook items for the third quarter and full year 2021 are presented on pages 17 and 18. In our Timberlands business, we expect third-quarter earnings and adjusted EBITDA will be approximately $25 million lower than second quarter. Turning to our Western Timberland operations, domestic mills ended the second quarter with ample inventory. We anticipate slightly lower domestic log sales realizations in the third quarter, absent significant fire-related disruption. This is primarily due to modestly lower pricing for smaller diameter saw logs. We expect large log pricing will remain favorable due to limited supply and strong export demand. We anticipate seasonally higher forestry and road spending as those activities accelerate with favorable weather conditions. Typical of the drier, warmer summer months, harvest activity will focus on higher elevation tracts where operations are less productive, resulting in slightly lower fee harvest volumes and higher per-unit log and haul costs. Moving to the export markets. In Japan, log demand remains strong. We expect our third quarter sales realizations and log sales volumes to be generally comparable to the second quarter. In China, we anticipate significantly higher sales volumes and slightly higher sales realizations. Although Chinese log demand generally moderates during the summer rainy season, we expect demand for U.S. logs will remain strong as imports from other countries remain constrained. In the South, we anticipate significantly higher fee harvest volumes, as well as higher per-unit log and haul costs during the third quarter due to a seasonal increase in thinning activity. Although our saw log and fiber log pricing should be comparable to the second quarter, we expect average sales realizations will be slightly lower due to a higher percentage mix of fiber logs. We also expect seasonally higher forestry and road costs as most of this activity is completed during these drier summer months. In the North, sales realizations are expected to be lower due to mix, while fee harvest volumes are expected to be significantly higher as we come out of the spring breakup season. I'll wrap up the Timberlands outlook with a comment on the sale of our North Cascades Timberlands, which was completed on July 7th. In the third quarter, we will record a cash inflow of $261 million and a gain of approximately $30 million related to this transaction. The gain will be reported as a special item within the Timberlands segment. Turning to our Real Estate, Energy, and Natural Resources segment, we expect third quarter adjusted EBITDA will be comparable to third quarter 2020, earnings will be approximately $20 million higher than one year ago due to a lower average land basis on the mix of properties sold. As Devin mentioned, we continue to capitalize on exceptionally strong demand and pricing for HBU properties. In addition, we've seen strong year-to-date production of construction materials. As a result, we are increasing our guidance for full year 2021 adjusted EBITDA to $290 million. We now expect land basis as a percentage of real estate sales to be approximately 30%-35% for the year. For our Wood Products segment, third-quarter benchmark pricing for lumber has significantly reduced from record levels, and benchmark pricing for oriented strand board has also recently declined. As a result, we are expecting adjusted EBITDA will be significantly lower in the third quarter. For lumber, our quarter- to- date realizations are approximately $425 lower, and current realizations are approximately $535 lower than the second quarter average. For OSB, our current realizations are still significantly higher than the second quarter average due to the length of our order files. Our quarter- to- date OSB realizations are approximately $155 higher, and current realizations are approximately $125 higher than the second quarter average. As a reminder, for lumber, every $10 change in realizations is approximately $11 million of EBITDA on a quarterly basis. For OSB, every $10 change in realizations is approximately $8 million of EBITDA on a quarterly basis. For lumber, as prices have retreated, we expect higher sales volumes as inventories at home centers and treaters normalize and demand signals improve for do-it-yourself activity. We are also anticipating improved unit manufacturing costs during the quarter. We anticipate this will be partially offset by slightly higher costs for Canadian and Western logs. For oriented strand board, we expect demand will remain favorable due to continued strength in new residential construction activity. We expect improved operating rates following the second quarter outage to complete the capital project at our Elkin OSB mill previously mentioned. With increased operating rates, we anticipate higher third quarter sales volumes and improved manufacturing costs. These improvements are expected to be partially offset by higher fiber costs. For Engineered Wood Products, we expect higher sales realizations for our solid section and I-joist products as we continue to benefit from previously announced price increases. In May 2021, we announced another increase, which ranges from 15%-25% and will be captured over the next several quarters. We anticipate significantly higher raw material costs, primarily for oriented strand board web stock, as the cost of web stock lags benchmark OSB pricing by approximately one quarter. For our distribution business, we're expecting the recent declines in commodity pricing will result in reduced margins and significantly lower adjusted EBITDA. Business results are expected to remain strong compared to a historical perspective. I'll wrap up with a couple of additional comments on our total company financial items. Each year in the second quarter, we finalize prior year-end estimates for pension assets and liabilities. As a result, we recorded $138 million improvement in our net funded status, as well as a reduction in our non-cash, non-operating pension and post-employment expense. Slide 18 includes our current full-year outlook for pension and post-employment items. It also shows the $40 million capital expenditure increase we announced back in June for some additional high-return projects across our businesses. Turning to taxes, we now expect our effective tax rate to be between 20%-24%, based on the forecasted mix of earnings between our REIT and taxable REIT subsidiary. The $90 million tax refund associated with our 2018 pension contribution has now been approved, and we expect to receive the refund in the third quarter of 2021. Now I'll turn the call back to Devin and look forward to your questions. Great. Thanks, Nancy. Before wrapping up this morning, I'll make a few comments on the housing and repair and remodel markets. U.S. housing activity continues at an impressive pace, with total housing starts in the second quarter averaging 1.6 million units on a seasonally adjusted basis, and total permits averaging 1.7 million units. Single-family starts in June reached their highest monthly level since May of 2007. Notwithstanding a slight pullback in the second quarter as home builders navigated supply chain disruptions, year-to-date momentum is strong, and our customers continue to expect robust housing activity over the back half of the year. Our near-term and longer-term housing outlook remains very favorable and is bolstered by encouraging long-term housing demand fundamentals. Turning to repair and remodel, although demand for small do-it-yourself projects has softened from the elevated levels established in the pandemic, demand for larger professional remodels remains healthy. Our long-term outlook for repair and remodel continues to be favorable, supported by an aging housing stock, rising home equity, and low interest rates. In closing, we delivered our best financial performance on record in Q2, and we're well-positioned to capitalize on favorable demand fundamentals for U.S. housing. Looking forward, we remain focused on industry-leading performance across our operations and are on track to deliver our 2021 OpEx target of $50 million-$75 million. Our balance sheet is extremely strong, and with year-to-date adjusted FAD of nearly $1.9 billion, we expect to return significant amounts of cash to shareholders through the variable supplemental component of our new dividend framework. Finally, I'm pleased to announce that we will hold a virtual Investor Day on September 22nd. Russell Hagen and I will give an update on our key longer-term strategic capital allocation and sustainability initiatives. Event details and registration instructions will be included in a press release later this morning. We're excited to share that update, and we'll look forward to speaking with you all again in September. Now I'd like to open up the floor for questions. My first question comes from Anthony Pettinari with Citi. Please proceed with your question. Good morning. Morning. Morning. Devin, can you talk a little more about how you see the lumber market currently? Price declines seem to have moderated over the last week or so. You talked about inventories below historic levels. I would think that prices are below cash costs for a decent chunk of your competitors. I'm not sure if you'd agree with that. Specifically, you talked about anticipating a pickup in demand in 3Q. I'm just wondering, are you seeing that right now at the end of July, or is that something that you'd anticipate to see in August or September? Just wondering if you can give any more color there. Absolutely. Well, just a little bit of context and then we'll address the different pieces of the question. Obviously, lumber and OSB pricing for that matter, reached historically high levels this spring. That was really a function of housing and repair and remodel just being very strong through most of the spring into May. We've seen the pricing come off significantly here recently. Although I will mention pricing is still reasonably strong by historical measures. I'd say what's been going on of late is really primarily a function of the smaller do-it-yourself market. We've seen that over the past couple of months come down 15%-20% in terms of our sales into that market in June and July relative to the spring. That's caused a little bit of inventory to build up in the home improvement warehouse and treater segments, which that's really been sort of the pricing pressure as the producers look to move that product that would have gone into those markets to other customers. In terms of how we're looking at the current situation and as we head into fall. I think the do-it-yourself market should be picking back up here. In fact, even just this week, we've seen a little bit of a pickup there in terms of sales activity into the home improvement warehouse and the treater. I think that's going to start picking up, and we would expect that to accelerate. As we get into the fall, you'll see cooler weather. You'll see kids going back to school. Vacation season will be winding down. Frankly, I think just the moderation in lumber prices. I suspect some of the downtick in the do-it-yourself was a little bit of sticker shock with the high lumber prices and all the press that that was getting. In terms of the pricing environment, we think, first of all, wouldn't be surprised at all to have seen the lumber prices over-correct a little bit. We've seen that in the past when prices have come down. We're expecting that to settle into a range that's certainly higher than historical levels, albeit probably not at the record levels that we saw earlier in the spring. Couple of comments just on inventory. I think it's differential depending on what part of the channel you're talking about. I think in the home improvement warehouse and treater segment, it's probably still a little bit elevated relative to normal. When you look at the builder and the dealer portions, I think that's probably a little lower than normal, as they really haven't wanted to build inventory in a dynamic pricing environment. I will say with respect to your question about cash costs, certainly I think in British Columbia, with the increase in log prices and some of the other dynamics there, it's entirely possible that a segment of the B.C. manufacturers have gone below cash costs, where pricing went. We'll see how that develops. I do think, overall, probably the cost floor in North America has gone up a little bit because of that dynamic relative to history. Again, we're expecting residential construction should remain strong. The pro segment of repair and remodel should stay strong, and that do-it-yourself segment should start picking up here as we head into fall. Overall, we're expecting pricing to settle into a new range that's still very strong pricing by any historical context. Okay. That's very helpful. Just shifting gears, can you talk about the market for higher quality Timberlands? We saw a pretty big transaction announced this morning, I think at an attractive price. There seems to be a lot of M&A just sort of accelerating across sectors. Can you talk about valuations you're seeing for high-quality industrial Timberlands? Have they risen versus maybe 2019? Is there any ESG premium that you're seeing creep in? Should we think about Weyerhaeuser as sort of a net buyer or net seller in this environment? Well, I think no doubt we're starting to see the activity pick up a little bit. It was a little slow, I'd say, for the first half of the year, but certainly we see that picking up. In terms of valuations, we've definitely seen a pickup in interest in quality timberland, and that's a statement both in the West and in the South. You can see that in some of the valuations of recently announced deals. I think there is a lot of interest in this space. The ESG piece, the carbon piece, I think that may be playing into it a little bit. I do think certainly we're seeing those valuations tick up a bit. Certainly, that's what we're seeing in the market. With respect to our activity, as we've always said, we are always looking to optimize and improve the quality of our Timberlands to grow the value of our timber base. That's something we're doing day in, day out. Sometimes that's on the sell side, but that's also on the buy side. You've seen us with Oregon and Alabama, a couple transactions of late. We're always looking. We look at every deal that comes through. I think we'll continue to be active in that space. Russell and his team are looking at deals. They're having lots of conversations. You've got to be disciplined, we'll remain disciplined and execute on deals that make good financial sense and that are value accretive for us. We expect to be active. We'll continue to look in terms of just growing and optimizing and improving our timber base. Okay. That's helpful. I'll turn it over. Thanks. Our next question is from George Staphos with Bank of America. Please proceed with your question. Thanks very much. Hi, Nancy. Hi, Devin. Hey, Beth. Hope you're doing well. Thanks for taking my question. Congratulations on the quarter. Thank you. The first question, I want to come back to something that Anthony had teed up. We've heard about dealers and distributors keeping their inventories low and something of a standoff, right? No one wants to order and then see, just as those sticks of lumber showing up for price to head lower, yet you're, as a dealer or distributor, taking on the risk that prices and demand start to tick up on you and you're left with low inventories. What do you think will break that logjam? Are you seeing any signs at all that the distributors and dealers are beginning to rebuild inventory? Maybe not, just because of where prices are, we're going to be in this period of very low hand-to-mouth kind of ordering, which might not be the best thing for you. How do you see that shaking out? Yeah. Well, you're exactly right. That's the dynamic that plays out in our markets day in, day out, and has for a very long time. When you have pricing that's in a falling environment, people are going to be very cautious about building inventories. I think what really starts to bring people back into the market is one of two things. First, they get a sense that you've really started to bottom out in terms of what's going on in the pricing environment. You look at what's going on today. In fact, the print last night, it showed that we saw the smallest downtick in pricing that we've seen in 10 or 11 weeks. I think because of the fires in British Columbia, there's some other dynamics that are going on that perhaps are starting to give people the feel that we've reached a floor and things will start normalizing upwards. That usually gives people some confidence to start building inventory. The second thing is, it's always a matter of, if you're in that space, you have to make sure that you're supplying your customers. To the extent that you feel like there's any risk whatsoever that you're going to have enough inventory to meet your customer demands, then people will have to come in. I'd say with the fire situation, with some of the transportation challenges, what we're hearing from the builder customers in terms of their outlook for the back half of the year, it's a careful dance for them to make sure that they don't get too low and get caught short. We've seen what happens when that dynamic is played out, and that usually results in pricing ticking up relatively quickly. I wouldn't say in terms of the dealer distributor network, we've seen them really start to build material inventories at this point. Although, as I said earlier, we have seen the home improvement warehouse and treaters start coming back. Even this week, there's been a little bit of an uptick that we've noticed. To the extent that that gains momentum and starts pulling inventory out of the system, you could see that dynamic change here relatively quickly. Okay. Thanks for that, Devin. That's very helpful. I want to switch gears for my second question, kind of a two-part on timber. We've heard of some disruptions in China as they've been, in particular with Taicang, remediating, redoing the way they handle timber. From what we've gathered, inventories are relatively high. I was a little pleasantly surprised that you're still seeing strong demand on timber into China. If you could explain why you think that's happening and to some degree, why the U.S. is gaining share versus other regions. In the South, I want to say prices have begun to pick up on frontage, a couple, 3 bucks a ton year-over-year. You're starting to see some commentary now that prices are lifting for more than seasonal reasons. Do you buy that, or are you fairly skeptical of that, and you think we're still in a flat, perhaps deflationary period on a real basis, in terms of timber? Thank you. Well, thanks. I'll cover the China question first. The China market has been very strong for us this year. Pricing's been well above what we've seen, really, in a number of years. Part of that has been the supply chain challenges from European exporters, the ban on Australian logs. All of those things have come together and really opened that market back up for North American logs. That's been a really nice market for us. As you mentioned, the inventory levels at the ports at the end of June did go up 5.5 million cubic meters, which is up from May. Takeaway at the port's down a little bit overall, and I'll get to Weyerhaeuser-specific comments momentarily, but there are a few things that are driving that, George. First of all, there's always a little bit of a tick down in demand when you get into the hot, rainy season. We see that every year into China, that's a piece of it. There are also some regulatory issues. They've had some increased environmental inspections, the big one you mentioned, which is just a changing dynamic at the port, which is one of the largest log import facilities. What they're doing is essentially they're trying to push the sawmills deeper inland. There's a little bit of a dynamic going on there, where they're trying to move some of those mills away from that port. That happens from time to time in China. It will get resolved. We're still very optimistic that you're still going to need a lot of logs imported into that China market. I think that's really more of a temporary issue. For us, in particular, our Chinese customer log demand is still very strong. Pricing is strong, we're actually contemplating, or expecting rather, to have our export volume into China up quarter-over-quarter Q3 versus Q2. A little bit of dynamic going on there, just from the items I mentioned, but we're still very positive about that market over the back half of the year. Moving to the Southern market, obviously we have seen a bit of an uptick in pricing, and I think there are two things going on there. One of them is certainly the weather dynamic. When you see multiple wet weather events in the South, that keeps the logging out of the woods for a period of time, which limits the supply to the sawmills and the pulp mills. That's been going on over the course of the summer and the spring. That's really particularly on the pulp log that's kept inventories pretty low for this time of year, and so that's been a piece of it. I do think there's also an increment of that, which is in certain geographies, the new sawmill capacity that's come in, and we've been talking about this for several years. If you put 7 billion board feet of new capacity into the South, in those wood baskets where that new capacity is coming, you see a tensioning effect. I don't think it's going to be a hockey stick by any stretch of the imagination. It's just going to be slow, steady improvement across different geographies. We think that's going to slowly tension a number of wood baskets, and again, it's going to be specific to each geography. That will continue to happen. We've seen a number of mills announced even just recently, and we expect that to continue here for the foreseeable future because the South is a great place to manufacture lumber. Clearly. Thanks for the thoughts, Devin. Good luck with the quarter. See you guys. Thank you. Our next question is from Mark Connelly with Stephens. Please proceed with your question. Devin, it's been a long time since Weyerhaeuser has talked much about silviculture gains. It used to be a big topic of conversation. Can you talk about how advances in silviculture are affecting the trends in your yield versus other issues that we talk about more, like the weather? Yeah. I think part of the reason we don't talk about it as much is it's just become part of our day-to-day operation. We have an R&D team that works on seedling improvements and different silviculture regimes to maximize the yield across our portfolio. You're probably right. We don't talk about it as much maybe as we used to, just because it's become part of our normal course. I would say that is something I think over time will continue to be a competitive advantage for us. I think we do silviculture and forestry very well. We have a lot of great folks, a lot of PhDs, a lot of foresters that are working every day to make sure that we're driving the best yield across our land base. I think it is an important part. I will say, even when you think about climate change, for example, the ability of our teams to really make sure that we're using the right seedlings, for example, as the climate gets warmer and really targeting the seedlings that we're planting across our landscape to ensure that we're maximizing the growth and the survival in a changing landscape. It is definitely something that's still very important and core to what we do, even if we're not talking about it on a day-to-day basis as much. That's helpful. Just switching gears, the home builders are talking a lot about affordability, about labor challenges, but I feel like we've been talking about this for a couple of years, and we haven't actually seen big shifts in the way homes are being constructed. Do you think that those changes are actually coming any time soon? If they are, is that going to require a change on your part or a big investment? Well, I think when we talk to folks throughout the supply chain, there is an awareness of the need to get more efficient in how we build homes. That's at the home builders, that's at the big dealers, really across the board, just for a variety of reasons, to make housing more affordable, number one, and to overcome some of the labor challenges that we've seen for many years. There's a desire to make improvements there. I think you're right. The improvements that we've seen to date have really been around the margins. I think it's tough to really fundamentally change how we build houses, and that's going to be a slow process. I'm not sure if we're having this conversation three, four, five years from now, you're going to see a real material change in the way that we build homes. You'll probably see continued improvements around the margin. It's an established supply chain in terms of how we build these homes. We just haven't seen big improvements to date, and I'm not sure I'm overly optimistic that that's going to change in the near term. We talk to our customers, we're very close with them, and I think we're a very nimble supplier. To the extent that we need to adjust how we do business to meet our customer needs, we'll be well positioned to do that. Thanks, Devin. That's helpful. Our next question is from Susan Maklari with Goldman Sachs. Please proceed with your question. Thank you. Good morning, everyone. Morning. Morning. My first question is around your thoughts on capacity, especially as we think about the emerging kind of stories around the forest fires out West and some of your peers taking capacity offline in Canada. Can you talk a little bit to your outlook for your business and the potential implications from these natural events as they do potentially come together? Yeah. I guess a comment here on the near term and then maybe some observation longer term. In the near term, obviously we're seeing a fire situation in the West, and we can speak to that here in a moment. No issues on our land, but certainly it's been a rough start to the fire season overall. British Columbia, even worse, I would say at this point. Nothing in the near term that we're expecting from our production, specifically around natural disasters or fires. That being said, every year we have to stay nimble and adjust as we see these things play out. That's something on a day-to-day basis that can change, but nothing to announce here at this point. I will say over time, certainly the environment that we're seeing with forest fires in the West and some of the natural hurricanes, other events in the South, it's something that you have to bake into your long-term planning. As we see British Columbia, for example, having another serious fire season, well obviously, over time, those trees are not available for Wood Products manufacturing. As we think about our long-term planning, we do take that into consideration as we decide where are we going to put capital to work. Okay, that's very helpful. My second question is, you mentioned in your comments that you announced a 15%-25% increase in your Engineered Wood Products in May. When you think about the dynamics around alternative products like framing lumber, those prices coming down, can you talk to your ability to realize and sustain that pricing going forward? Well, the EWP market as a whole has been very tensioned. We primarily send that product into new residential construction. Unlike lumber and OSB that have a little heavier component of repair and remodel, the EWP market is primarily residential construction, which really hasn't seen any sort of noticeable slowdown, and nor are we expecting that for the back half of the year. The dynamic there is a little different than lumber and OSB. Part of the issue there, too, is with the run-up in OSB web stock prices, the resin challenges, veneer pricing. Some of the input costs for making EWP have gone up quite a bit as well. There's that balance in terms of the pricing for EWP to overcome some of those raw material costs. Absent something happening on the residential construction market, I think we feel pretty good about capturing that pricing increase that we announced in May. Okay. All right. That's very helpful. Thank you. Good luck. Thank you. Our next question is from Mark Wilde with Bank of Montreal. Please proceed with your question. Good morning, Devin, Nancy, Beth. Morning. Good morning. Devin, I'd like to kind of come back on that last question because we have seen virtually all of the big Western Canadian lumber producers take some production cuts over the last couple of weeks. They're pointing to fires, they're pointing to inventories, they're pointing to prices that are at or below cash. I'm also aware that there are some producers in the Pacific Northwest and the U.S. that have just gone to reduced scheduling in July. Can you talk about your activity levels in July, in terms of both production in Canada and production on the West Coast of the U.S., and whether you've ratcheted it back at all? Mark, thanks for the question. We have not to date had any material reductions in our production in either the West or British Columbia. I would say, this is a general comment across the portfolio of manufacturing, we're probably dialing back in the sense that we're not trying to run those extra shifts and overtime hours that we were earlier in the spring when you had the pricing at all-time peaks. It's really dialed back to a more normal operating posture. That's something that we look at closely all the time. The fire situation is something I do think we're keeping a close eye on. As I mentioned, no real impacts to our timberlands at this point, we've still got reasonable log decks across the Northwest in Washington and Oregon. That's something that obviously we'll watch closely. British Columbia, we only have the one mill in British Columbia. I would say the fire situation up there is probably even a little worse than it is in Washington and Oregon. A lot of the logging activity has ceased at this point in B.C., in a number of operating areas just because of the fire situation. If that doesn't change at some point here in the near term, I think log availability at our B.C. mill is going to be challenged, at which point we would obviously have to take some downtime. At this point, we haven't. Just to kind of follow up on that B.C. situation. B.C. log costs, just from a formula standpoint, are due to go up again in October. Can you talk about what impact that might have on your operations there? It's a pretty significant increase, as I understand it. Yeah. Significant increase, the one that was announced on July 1st, significant increase. Log costs in B.C. have certainly gone up. I think that just adds additional challenge to the issue from a cost floor standpoint across the industry that we already had in B.C. For us, Weyerhaeuser specific, we've been focused on having a low-cost mill. I think we're probably top quartile, if not top decile from a cost structure standpoint at our Princeton mill. That being said, the log costs and other costs associated with operating B.C. have gone up, and I think that's raised the cost for us. We, at this price, I think we can still operate that profitably, but certainly, it's getting closer even for our top cost mill or low-cost mill rather. Okay. That's really helpful. For a follow-on, I just wondered if we go back a couple of months ago and think about that variable supplemental that you'd talked about paying in the first quarter of 2022. There seemed to be kind of a little bit of an opening that you might want to pay some of that in 2021. Is it safe to assume with what we've seen go on in the markets the last couple of months, you're just going to wait till the first quarter of 2022 now? Well, you're right in that the new dividend framework anticipates the supplemental dividends typically going to be paid out in Q1 for the prior fiscal year. As you know, Mark, the primary reason there is just to ensure that we're matching that variable component to the cash flow that we're generating for the year. We've said previously we haven't definitively ruled out the possibility of some sort of interim supplemental dividend later in the year. Really, you think about where we are, we're in a little bit of a unique situation in that through the end of the second quarter, we've already generated nearly $1.9 billion of adjusted FAD. We have a very significant cash balance. That's something the board's continuing to assess in terms of both those factors and how we see the rest of the year playing out. I'd still say at this point, we haven't ruled that out for at some point later in the year. I would say, even if we were to do that, which again, the board is going to consider over the back half of the year, we'd still expect the vast majority of that supplemental dividend for the 2021 cash flow would be paid out in Q1 of 2022. Okay. All right. That's helpful. I'll turn it over. Thanks. Our next question is from Paul Quinn with RBC Capital Markets. Please proceed with your question. Yeah. Thanks very much. Morning, guys. Thanks. Hey, I noticed you increased your CapEx budget. Just wondering if you could give us some more details on the major projects you've got there. Elkin, I guess, was an issue in Q2 in terms of production. Is that project finished now to get the volumes back in Q3? We did announce an increase in our 2021 CapEx by $40 million. As we said, about $20 million of that is Wood Products, about $10 million or so is on the Timberlands side, and then we had some IT projects largely that were focused in our mills. That's the breakdown. When you think about that $40 million, a couple of things to keep in mind for context. If you go back to 2020, we did reduce our CapEx budget in 2020, we had a number of projects in the queue really across the Wood Products business that we think will generate strong returns, continue to position the business to be low cost, highly efficient, very reliable. We have a variety of projects in the queue. They run the gamut from CDKs to upgrading sorter stacker. The Elkin project, which we completed, was the forming line. Just a variety of projects across the mill, largely focused on de-bottlenecking, reducing costs, and improving reliability. There's not one thing necessarily that I would highlight in those projects. Really, as I said, it's just a broad range of projects, and it's all based on the individual mill roadmaps that we have to get each of our manufacturing assets up to top quartile performance. Okay. If I turn over to lumber capacity in North America, a number of projects have been announced that've got totaling sort of $1.7 billion in 2021 coming up, another $2.2 billion in 2022. Does that level of capacity addition worry you in terms of future lumber pricing or supply into the marketplace? It really doesn't, for a couple of reasons. When we think about the North American market as a whole, which is the way we typically think about it, we do think you're going to continue to see capacity coming into the U.S. South. We know that's a great place to manufacture lumber. I don't think you're going to see much in the way of new capacity coming into the Pacific Northwest, primarily just it's such a tensioned wood basket, I think the log costs associated with that probably will prevent folks from putting too much capacity there. I do think over time, we're going to lose capacity in British Columbia because of the fiber availability issue that you're well aware of. I think on a net-net basis, we will see more capacity overall in North America. Look, we need it, right? If you think about the amount of housing that we're anticipating over the next five to 10 years, we won't be able to cover that without some continued capacity additions across North America. I think we will continue to see that. I think the demand signal will keep that more or less in tension. It's not something that overly worries me at this point. Okay, just lastly, you guys have put up back-to-back record quarters. Your stock is flat through the year here to date versus somebody like a Rayonier which is up 25%. What are investors missing here? Any urgency at Weyerhaeuser to be able to do something to help shareholders here? Well, as we always say, and I'll emphasize it here again, we are extremely focused on driving long-term value for our shareholders, and we do that in a number of ways. We're actively managing our portfolio to constantly improve the value of our underlying assets. You've seen a number of timber transactions to that effect, our CapEx programs in Wood Products. We have an unrelenting focus on operational excellence and driving industry-leading performance. You've seen that in terms of our OPEX results over the years as well as our competitive positioning from an EBITDA margin. I think importantly, over the last year, we've made a series of capital allocation decisions that have really positioned us very well for the future. We've paid down over $1 billion of debt. Our balance sheet's strong. We have a new base plus variable supplemental dividend structure that is really going to enable us to return significant amounts of cash to shareholders over time. As you've seen with the FAD that we've generated through the first half of the year, we're positioned to deliver a very meaningful supplemental dividend payment in the first quarter of 2022. That's something I think the market's probably just starting to digest the magnitude of what that variable dividend is going to be. I think as our investor base and the market gets more familiar with the new dividend structure, starts to see the benefit as we pay out that variable dividend, we should start seeing the share price better reflect the underlying value. The other thing I'd say is we're optimistic that the other actions that we're taking to position the company for the future, including our increased focus on Natural Climate Solutions and some of the other business development opportunities, are really going to be a catalyst to drive investor interest and enhance our market valuation over time. I hope you're right. Best of luck. Thank you. Our next question is from Mark Weintraub with Seaport Global. Please proceed with your question. Thank you. Maybe just first, carrying on on the last question, the current dividend yield's a little over 2%, because obviously you'd cut the ordinary dividend and then increase it, but not nearly back to the prior level. Hear you, large supplemental dividend. Can you kind of relay again sort of what would be the thought process on the core dividend? How much upside might there be to the core dividend? Do you think that investors haven't yet really embraced the new framework that you're using, and you're getting hurt by the fact that your core dividend level is low? Well, again, Mark, I think it's a relatively new dividend structure, and so the market is digesting it. I would say with respect to the base dividend, couple of things. As we've said, we certainly do intend to grow the base dividend over time. That's a core part of our overall dividend philosophy and framework. We want that base dividend to be sustainable and supportable from the cash that we generate across our businesses over business cycles. The growth in the base dividend's largely going to be driven from the growth in our more stable Timberlands and ENR businesses. That can come from a variety of different angles, the organic growth in the business, taking costs out, disciplined acquisitions. The key is incremental cash flow that's sustainable across the bottom of market cycles. Certainly we intend to grow that over time. I'd note, just as you think about the overall dividend framework, obviously, when the pricing environment's strong or even reasonable, we're going to generate significant cash flow that will get distributed out to the shareholders over and above that base dividend. I think the short answer to your question is the market's still digesting how this is going to work. I think as they start to see the variable dividend come into play, as they start to see the base dividend grow over time, there will be an increased appreciation for how this is going to work over time. Thank you. Two quick follow-ups on the demand for lumber in particular. You had mentioned there'd been decline in the do- it- yourself, but that the big renovation business you thought could hold up. Order of magnitude, how much of your lumber is going into the do- it- yourself typically versus, say, the big renovation type projects? Yeah. For us, we have a big business into the Home Improvement Warehouse segment, that can be up to, in the south, up to 30%, in the Pacific Northwest, maybe slightly less than that. It's a decent part of our overall lumber business. When you think about the market as a whole, the Do-It-Yourself segment is somewhere in the neighborhood of 20%, we think, of overall Repair and Remodel demand. We do sell a lot into the big box stores, of course, you look at that across the overall market, the Do-It-Yourself is a much smaller portion of the overall Repair and Remodel spend. Okay. Just to make sure I understood that, do- it- yourself is half of the repair remodel, or it's 20% of the 40% or so? It's 20%. Yeah. Okay. So when you think about... Pretty small. Okay. Yeah. When you think about repair and remodel spend in total, the do- it- yourself segment, we think, is about 20%. Those numbers are hard to come up with in terms of a concrete look, but I think that estimate is borne out from some of the stuff we've seen from the Harvard Joint Center as well and some of the other sources that we look at. We triangulate that, and we think it's about the 20%. Okay. You mentioned kind of housing builders still quite optimistic. Certainly they got a lot of backlog and a lot of homes to build. That said, they're confronting supply chain issues, et cetera. Are those supply chain issues creating any impact, you think, on the demand that you're seeing, maybe stretching things out as opposed to killing it? Are you seeing negative impact because of the supply chain issues affecting the builders? Yeah. I think that's been the primary issue. To the extent that you've seen slowdown in building, I think the largest reason behind that has been the building product supply chain issues. When you go and talk to the builders, what we hear is they're having troubles getting everything from appliances to paint to windows, really just it runs the gamut. I think on some level, they've slowed the sales activity a little bit to try to catch up with some of that. Again, as we talk to those customers, they're optimistic for the back half of the year. The demand is there, notwithstanding some of the affordability challenges, I think, from the buyer community. The demand for housing still is incredibly strong, and we think based on those conversations and other discussions we've had with customers in the supply chain, that we're still going to build a lot of houses in the U.S. this year. Right. Just on, there's no doubt they've slowed the sales pace. I guess the question was more, are you seeing that there is a slow in their production pace, too, right now or not so much? Yeah. I definitely think we've seen a little bit of that. In the conversations that we've had, you've heard anecdotes like we have to tell buyers that we can't sell them a house right now. We'll put them on a wait list. They'll have to come back in a couple of months. I think there has been a little bit of that. The magnitude of how much, that's kind of hard to pin down exactly, but directionally, we think that's right. Okay. Then, just real quick. In the past, you've given us sometimes sort of a bracketing ex pricing, what the impact of various changes in the Wood Products might be versus the prior quarter. Is that something you can share with us? Order magnitude, the improved efficiencies, and things like that? Yeah. I think ex price Wood Products EBITDA would be up quarter-over-quarter. I'm not going to give you a magnitude because I think just in terms of what's going on with the home improvement warehouse sales volumes, there's a little bit of question there as to whether that's up some or up materially. Certainly, we expect sales volume to be up and we expect cost to be down. Ex price, EBITDA would be up in the quarter for Wood Products. Okay. Thanks so much. Thank you. Our last question comes from Kurt Yinger with D.A. Davidson. Please proceed with your question. Great. Thanks, and good morning, everyone. Morning. Just on the Wood Products side, sorry, on the Timberlands side. The fundamentals for lumber look pretty solid. Export demand sounds pretty healthy. You lap the salvage activity, and you sound pretty optimistic on potential gains in southern pricing. Do you think we're finally at an inflection point where that business can start to see a sustained improvement in profitability? What would you consider kind of the big factors that could get in the way of that? I would say, and I'm going to answer this by West and by South, because there are slightly different dynamics going on in each market. In the West, we're seeing good pricing this year. It's a very tensioned wood basket. As long as lumber demand and lumber pricing is reasonable, that's going to be a good, strong business. We saw a little bit, obviously, of a dip in harvest levels as a result of the Oregon fires last year. We'll work through that salvage this year, and you'll start to see the harvest levels kind of ticking up slowly here over time. We feel really good about that business. I think it'll continue to be strong here for the foreseeable future. The South, obviously, we've had some disconnects between demand and supply, just in terms of the amount of inventory out in the woods coming out of the Great Recession. We've talked about that quite a bit. I do think that there are markets within the South, geographies within the South that are starting to tension up a little bit. That's largely a function of new capacity coming in. That's continuing to happen. We've got, for example, several mills that have been announced, the Biewer mill, the Idaho Forest Group mill in Mississippi, the Tolko mill that was just announced in Louisiana. Those are in good wood baskets for us. As we continue to see that play out over time, I think that will just put pressure on pricing to slowly recover. I don't think that's going to happen overnight. It's a process that's going to play out over a number of years, but directionally, I'm feeling good about where we're going there. From an overall margin standpoint, putting aside pricing, we are very focused on operational excellence. Our operating performance, I think, is very good in that business, but we're trying to improve every day. That's part of our OPEX program. We put new targets out every year to increase the efficiency and lower costs. I feel good about the margin improvement opportunity there as well. We've got good businesses, we've got good people. The overall story around housing and repair and remodel demand to drive wood demand through the system, I think is positive. We feel good about both of those businesses. Got it. Okay. That's helpful. Maybe just looking at the second half for Timberlands. It looks like the harvest should be up pretty meaningfully from the first half, maybe 15% or so. Q3 profitability down versus Q2 sounds like there's some seasonal costs in there. Is there any way, as we look, I guess, ahead to the fourth quarter, that we could see that incremental volume have kind of a greater overall impact on profitability? Yeah. A couple things there. Q3 that's always a lower earnings quarter for us because we do more forestry and roadwork in that quarter. In the West, we typically move up the hill to higher cost elevation units or higher elevation units. That's a typical seasonal pattern. In Q2, we did ramp up harvest certainly relative to Q1. There has been a lot of rainy weather in the South. We weren't able to catch up as much of the Q1 issues that we saw with the ice storms as we had anticipated. I expect we'll catch most of that up over the back half of the year, absent weather events that are hard to control. You'll see the harvest activity pick up. Cost activity or costs typically in Q4 are a little better because it's the reverse of the dynamics I just mentioned. I can dimension it that way, but probably not just in terms of giving you a specific number. Okay. No, that's great. Thank you. All right, that's all I had. Appreciate the color. All right. Well, I think that was our final question. Thanks to everyone for joining us this morning, and thank you for your continued interest in Weyerhaeuser. Have a great day. This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.