Mark McHugh: Yes. As we detailed in our supplement, we sold about $3.4 million worth of carbon credits in New Zealand in the first quarter. And that’s relative to 0 in Q1 2023. Recall that we elected to defer NZU sales in early 2023 due to the significant volatility that we were seeing in the carbon market that we ultimately ended up resuming sales later in the year as the market recovered. So we’ve continued to be opportunistic as it relates to how we’ve approached carbon credit sales in New Zealand. Overall, the regulatory backdrop, I would say, has stabilized relative to last year. The government has indicated that they’re not contemplating any significant changes to the ETF in the near term, which is really driving some of that volatility last year.
That said, the most recent NZU auction failed to reach full subscription, so the pricing has backed up some from where it was at the start of the year. Overall, though, pricing, which has recently been in the range of NZD50 to NZD60 per unit, still relatively strong from a historical perspective. So we’ve continued to be active in that market.
Matthew McKellar: Thanks very much. That’s all for me. I’ll turn it back.
Operator: Thank you. Our next caller is Mark Weintraub with Seaport Research Partners. You may go ahead.
Mark Weintraub: Thank you. So I guess, just sort of two related questions. One is to the extent that you can provide an update on where you are in the process on the 115,000 acres Pacific Northwest and the 100,000 acres in the U.S. South. And then also, though, in conjunction with that, if one of the alternatives for New Zealand that is being considered is a potential exit of the position. I would imagine to get to the $1 billion you — that would take you pretty far away, given you’ve already done the 55,000-acre sale. And so I’m just sort of trying to understand would you potentially — and is there a scenario where you might end up selling more than the $1 billion or — more than $1 billion? Or are there ways you’re juggling that, so that wouldn’t happen? Or how should we just think that all through?
Mark McHugh: Yes. Like I said earlier, Mark, we’ve really laid out a number of different options, any — number of combinations of which could ultimately get us to that $1 billion target. Our objective as we sit here today is not to deliberately exceed that target, certainly not as it relates to our capital allocation objectives in terms of the deleveraging and the return of capital to shareholders. But recognize that if we do find compelling values in the market for some of these different assets that we’re exploring sale alternatives around, we certainly have the ability to redeploy that capital into acquisitions through like-kind exchanges. And so the top priority is to achieve the new leverage targets, return capital to shareholders and then we’ll evaluate how much further beyond that, that we wish to go.
Look, as a general matter, we don’t comment on M&A until there’s a closed transaction or at least a signed contract. That said, we recognize that there’s going to be an elevated level of interest around our disposition plans given the $1 billion target that we announced last November. We also recognize that there’s invariably going to be chatter in the industry regarding assets that we’ve taken to market or considering taking to market. So given these factors, we try to be more transparent and specific around some of the efforts that we currently have underway. But just given that you’re still in the evaluation phase on a number of these different potential transactions, again, we don’t want to comment much more beyond that.
Mark Weintraub: Fair enough. But if I heard you right, I mean there’s a scenario though where you are not prevented from moving forward on doing something in the U.S. until you sort of decided what you’re doing with New Zealand though, you could do something in the U.S. And then ultimately, if you were to do something in New Zealand, you may then just reposition some of those monies to acquire. Is that — so again, there’s no reason to be thinking you’re going to delay making decisions in the U.S. Is that fair?
Mark McHugh: Yes. I think that’s fair. I mean look, when we laid out — at the outset of this plan, we laid out two objectives. And it was really to concentrate capital in the markets we think that have the most favorable long-term growth prospects and the most favorable cash flow attributes. And so we don’t have $1 billion of assets that I would characterize as nonstrategic. But we have $1 billion worth of assets that we could characterize as less strategic and potentially able to recycle that capital into kind of higher returning areas or areas of which we feel as though we have a unique ability or opportunity to add value. And so again, we’ve identified those properties that we believe are less strategic and will help us to achieve our $1 billion target within the parameters that we’ve laid out in terms of the features under which we’re kind of evaluating different transactions.
And as we proceed through that, as we see transaction outcomes, we’ll recalibrate our plans and expectations thereafter.
Mark Weintraub: Okay. Appreciate it. Thanks, Mark.
Operator: Our next caller is Anthony Pettinari from Citi. You may go ahead.
Gregory Andreopoulos: Good morning. This is Gregory on for Anthony this morning. Although it has been covered already in the prepared remarks and Q&A, but I did want to just bring something up that was said in the prepared remarks. I think what was mentioned about Southern Yellow Pine was there’s a significant discount right now between Southern Yellow Pine and other species. So I just was wondering if you could provide a little bit more context on what other species you’re comping Southern Yellow Pine to when you say that? And then time line for that discount to narrowing like key drivers? And then I had one follow-on after that.
Douglas Long: Sure. This is Doug. I’ll talk to that. So yes, as Mark mentioned, we do believe this historically unprecedented discount the Southern Yellow Pine lumber is trading at compared to SPF and other Western grades will eventually correct. And there are a few factors there at play. As you mentioned, there are different species preferences for different end uses. But in the long run, we think we’ll see increasing substitution for Southern Yellow Pine for SPF as the market adapts to those. In the near term, as I mentioned, there’s some weakness in repair and remodel activity. And that particularly plays out in our higher-grade logs and those are going to be used in outdoor and DIY where Southern Yellow Pine is favored for treating on outdoor use.
