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Weyerhaeuser to Build TimberStrand Facility in AR, Expands EWP Capacity
WYWeyerhaeuser(WY) ZACKS·2024-11-19 16:56

Core Viewpoint - Weyerhaeuser Company is set to invest approximately 500milliontobuildanewTimberStrandfacilityinArkansas,whichwillsignificantlyexpanditsengineeredwoodproductscapacityintheSouthernUnitedStates[1][5].InvestmentandFacilityDetails−Theconstructionofthenewfacilityisexpectedtobeginin2025,withoperationsstartingby2027[2].−ThefacilitywillutilizeTimberStrandtechnologyandwillhaveanannualproductioncapacityofabout10millioncubicfeet,effectivelydoublingWeyerhaeuser′stotalNorthAmericancapacity[3].−TheMonticellofacilitywillsourcemostofitsfiberlogrequirementsfromWeyerhaeusertimberlandsinArkansasandwillincludeabiomass−fueledcogenerationsystemtomeetitselectricalneedsandreduceenvironmentalimpact[4].MarketandStrategicPositioning−ThenewfacilityaimstosupportagrowingmarketforTimberStrandintheSouthernUnitedStatesandwillhelpexpandWeyerhaeuser′scustomerbaseamidrisingdemandinhousingandindustrialapplications[5].−Theinvestmentalignswiththecompany′slong−termsustainabilitygoalsandgreenhousegasemissionsreductiontargets[5].FinancialProjections−Weyerhaeuseranticipatesincurringaround500 million to build a new TimberStrand facility in Arkansas, which will significantly expand its engineered wood products capacity in the Southern United States [1][5]. Investment and Facility Details - The construction of the new facility is expected to begin in 2025, with operations starting by 2027 [2]. - The facility will utilize TimberStrand technology and will have an annual production capacity of about 10 million cubic feet, effectively doubling Weyerhaeuser's total North American capacity [3]. - The Monticello facility will source most of its fiber log requirements from Weyerhaeuser timberlands in Arkansas and will include a biomass-fueled cogeneration system to meet its electrical needs and reduce environmental impact [4]. Market and Strategic Positioning - The new facility aims to support a growing market for TimberStrand in the Southern United States and will help expand Weyerhaeuser's customer base amid rising demand in housing and industrial applications [5]. - The investment aligns with the company's long-term sustainability goals and greenhouse gas emissions reduction targets [5]. Financial Projections - Weyerhaeuser anticipates incurring around 500 million in capital expenditures for the facility through 2027, with expectations to generate over 100millioninannualadjustedEBITDAatfullcapacity[6].TimberlandsBusinessExpansion−Inthesecondquarter,WeyerhaeuserannouncedstrategictimberlandacquisitionsinAlabama,covering84,300acresfor100 million in annual adjusted EBITDA at full capacity [6]. Timberlands Business Expansion - In the second quarter, Weyerhaeuser announced strategic timberland acquisitions in Alabama, covering 84,300 acres for 244 million, with the first transaction closing in Q2 2024 [8]. - These acquisitions are expected to enhance existing operations and generate high cash flow and harvest volumes per acre within the Southern Timberlands business [9]. - Overall, Weyerhaeuser has invested approximately 775milliontowardsexpandingitsTimberlandsportfolio,aimingfor775 million towards expanding its Timberlands portfolio, aiming for 1 billion in disciplined investments by the end of 2025 [9]. Share Price Performance - Weyerhaeuser's shares have underperformed compared to the Zacks Building Products - Wood industry, with a decline of 3.8% against the industry's growth of 27.2% over the past year [10]. Recent Financial Results - The company reported a decline in both earnings and net sales year-over-year due to lower fee harvest volumes, decreased domestic sales, and increased manufacturing and raw materials costs [11].