Q1 results exceeded expectations, with adjusted EBITDA surging 120% sequentially, primarily driven by the rebound in wood product prices and the completion of a large conservation easement transaction in Strategic Land Solutions.

Adjusted EBITDA came in at $308 million, up 120% sequentially; net sales were $1.7 billion; Western domestic log prices modestly increased sequentially, while Southern log prices were flat.

On the business front, the company previewed two new products, AeroStrand and ProPanel, which received positive feedback, and the innovation pipeline remains robust. The distribution network has expanded to 22 locations, with new sites in Billings and Gallatin supporting the penetration of high-value-added products. Western domestic log demand improved due to better lumber prices and seasonally low supply, but the Japanese export market was weighed down by weak housing consumption, while shipments to China remain limited. Strategic Land Solutions completed a $94 million conservation easement transaction in Florida, retaining the timberland for ongoing operations. In Wood Products, lumber and OSB prices both increased sequentially, but engineered wood products faced pressure due to weakness in single-family housing.

For the second quarter, EBITDA from the Timber segment is expected to be flat, Wood Products EBITDA is estimated to be flat (excluding price fluctuations), and the full-year guidance for Strategic Land remains $425 million. Recent lumber spot prices are significantly higher than in the first quarter, while OSB is slightly higher.

Positive signals: Management is confident in price elasticity driven by reduced wood supply, and progress with new products and exports to the Indian market is positive. Negative signals: The Japanese export market remains sluggish, the Middle East conflict is pushing up costs (monthly average headwind of approximately $10 million), and the housing market continues to be constrained by consumer confidence and affordability.