Eric Cremers: Yes. So George, so can we bring Waldo up faster? This is a very complex project with enormous Gantt charts involved. We met with the bid group just last week and they are running ahead of schedule, which I think is great news. So we expect to finish the project in a timely manner, which is by mid next year, as we spoke about and then ramp up production after that. I don’t think it’s going to be possible for us to beat the schedule. There’s enormous work streams involved with each part of the process — different pieces of processing equipment that we’re putting into the mill. Whether it’s a plan or the sawmill or the kilns just a lot going on. We’re out there pouring concrete right now, and we’re making great progress, but I do not think we can ramp up that project faster.
And then the second part of your question, if it’s a boom year, what would we do differently? Well, I think we would put on as many hours as we possibly could at our sawmills there is a breaking point for people, and there is a breaking point for — you need to do your preventative maintenance, so you run your equipment into the ground. So I think what we would do is just try to get every last piece of lumber out the mill that we possibly can in that kind of an environment.
Operator: Your next question comes from the line of Kurt Yinger with D.A. Davidson.
Kurt Yinger: Just wanted to start off on timberland. The cost structure in the North at least here in Q3 was a bit higher than I expected. I know contractor availability was one factor that had been a challenge a couple of quarters ago, but curious if there’s anything else kind of noteworthy on the cost front that might have hit this quarter we were just off.
Wayne Wasechek: Yes, Kurt, this is Wayne. I think generally speaking, in the north seasonally, that tends to be our higher cost quarter from a log and haul standpoint, and that’s really driven by 2 factors. One, on the logging side, we’re further in the back country, we’re in steeper terrain. So based on that, that results in a higher higher logging costs. And then when you’re further back, then you have longer haul distances, so then that also increases your haul costs but the other factor I would say compared to last quarter is we also had slightly higher diesel fuel prices. So we saw an uptick in Q3 compared to Q2. So that was also a component that we experienced this quarter.
Kurt Yinger: Got it. Okay. And then Eric, I mean, you touched on how in the past, you guys have been very nimble on the capital allocation front, and I think you’ve built a terrific track record there. I guess when you look at kind of the current balance sheet and cash generation in light of kind of the current lumber market, how do you think about the capacity to be more aggressive with share repurchases if kind of this discount persists?
Eric Cremers: Yes. So good point, Kurt. We still have a fair bit of capacity. We’ve got $125 million outstanding on our existing $200 million authorization. That number was set at $200 million for a reason, and it’s because we thought we had the capacity to go to that level. I would tell you what influences the thinking probably more than anything is M&A activity. What other projects do we have ongoing that may use up some of that capital. Now certainly, we have our Waldo expansion, which is going to — we’re not done with paying for that project yet. So that’s going to work off some cash off the balance sheet. But yes, to get back to your question, we still have more capacity to do stuff, but I’ll reiterate what I said in my prepared remarks, which is we’re going to be very careful, very cautious.
We’re in uncertain territories here. What’s going to happen in the Middle East. I don’t know, Israel drop a nuclear bomb in rand, Who knows? But you can see markets really dislocate really fast in this kind of an environment. So we’ll be slow and patient and careful when we’ll buy back what we think are deep discounts to NAV. And certainly, we have the room to do more.
Operator: Your next question comes from the line of Mark Weintraub with Seaport Research Partners.
Mark Weintraub : Eric, you referenced stock trading at a steep discount to NAV, certainly using metrics we tend to all use. It certainly looks that way. And then you also talked about use of capital and either going to share repurchase, but also considering M&A activity. So maybe sort of putting those two things together. One, what are you seeing out there in the timber markets and with timberland pricing? And sort of relatedly, if — let’s start there and then I’ll have a follow-up.
Eric Cremers: Yes. So the timberland M&A market, it’s relatively quiet right now. We suspect sellers are holding off with their properties, perhaps waiting for lumber prices to improve or interest rates to come down or carbon deals become more mainstream is probably a host of factors there. We still want to grow our timberland footprint through M&A, but we’re only going to do it if we think we can do it in a shareholder-friendly value creating sort of a way, basically buying timber with IRRs that are above our cost of capital. And given how hard and fast our cost of capital has run up, it is very hard for us to find deals that are going to create that value. So our opportunity, Mark, is to find opportunities that are off the beaten path, that are not being broadly auctioned and we’ve shown that we can do that.
We did that with liter. If you recall, we did that a couple of years ago. And so we might be looking at things like that right now. So that’s — in my mind, that’s the only way you can create value in this environment because timberland prices, they go to broad auction, they’re sky high.
Mark Weintraub : Right. And so just kind of just following up on that. So do you just look at it, is the acquisition better than your cost of capital and therefore, greenlight go forward? Or given the fact that you are trading at a very large discount to NAV, that would seem to make the decision to acquire timberlands rather than buy back your stock, even not much more difficult. So maybe kind of just your philosophy on that? And then second would be, I mean, are there conversely opportunities to potentially south timberlands and arbitrage the value spreads? Or does that not make sense for a number of different factors?
Eric Cremers: Yes, Mark, there’s no doubt the buying back stock has become more attractive to us than buying timberland, look at how quiet we’ve been in the market here this year. In the market in terms of buying timberland and look at how active we’ve been here buying back stock. There’s no doubt the pendulum to swing back towards buying stock. Now that said, we do want to grow our timberland footprint I think the outlook for timberland values is fantastic. And so we’re always going to be looking at trying to add to our timberland portfolio. But you’re right. Right now, it’s got to compete with share repurchases. And right now, share repurchases, they’ve been winning out. Now your second question, would we consider selling timberland to raise cash to fund I think as a public company trying to maximize shareholder value.
