And certainly, we’ve seen that in terms of the fewer logs going into China from Europe from salvage and we’ve heard anecdotally a lot of the salvageable — economically salvageable wood is working through. So there won’t be as much cheap fiber to compete in this market. And then over the longer term, given that beetle infestation, the loss of Russian lumber into that market, at some point, the European economy will improve and the domestic demand for European lumber will improve. And I think you’ll see more of that number staying in that market over the long term. With respect to your question about LVL, I think that anecdotally, I think that’s true around the margins. You are seeing more of that coming into the U.S. I still think it’s more or less a rounding error at this point.
For us, in the market that we participate in on the EWP space, it comes with a heavy service component and there’s a customer service aspect that we’re able to provide to our customers that one of the reasons is why Joist is such a respected brand. It’s not just the quality but the service component. And I think that will be hard for people that are importing a small amount of LVL to compete with. So it’s something we’ll watch but I’m not overly concerned about it at this point.
Operator: Our next question is from Matthew McKellar with RBC Capital Markets.
Matthew McKellar: First would be now that you’re through monetizing your initial forest carbon credits for the pilot project in Maine, could you maybe share any key lessons learned through undertaking that first project? And talk to how you intend to apply those to the projects you’re developing in the U.S. South and elsewhere over the next couple of years.
Devin Stockfish: Sure. Well, we certainly learned some things going through that project. That’s why we called it a pilot project. I think the key things from my standpoint are number one and we certainly saw this, I think, in the price that we were able to get with these initial carbon credits, quality matters. And so we put in the time upfront to build out the internal team and expertise to do these things right. And I think that will certainly serve us well. These are complicated. And so again, that expertise to be able to navigate the — both the development but also the interactions with the third-party auditors and the ACR, that process, having people that really know what they’re doing serves you well and makes it more efficient.
And I think we’ve learned a number of things that will make that process go much more quickly going forward. I do think there’s still an opportunity to build out some of the infrastructure, particularly around third-party auditors for the amount of carbon credits that we expect to be coming to market in the years to come. We’re going to need more infrastructure to ensure that, that can be done efficiently. But the good news is, as we get through this project, if you bring quality projects to the market, we think there’s a lot of demand. And so we’re really pleased with where we are. We’re building out the pipeline. Two projects we expect to get approved in the first half. We’ve got 2 or 3 more in the pipeline. We expect to be monetizing additional credits this year and those just continue to build.
Each project you get layers on top of the prior ones and you build out a nice revenue stream over time. So I think we’re really well positioned and in good shape heading into 2024.
Matthew McKellar: Great. And maybe next, has there been any change at all in your confidence level or appetite around the target of acquiring that $1 billion in timberlands by 2025? It looks like you included your transaction, the Carolinas and Mississippi with FIA towards that target but that did come with a net cash inflow. So just wondering if there’s any change in your thinking even at the margin around being a net acquirer of timberlands with the view that prices should rise over time.
Devin Stockfish: No. We still have a high degree of conviction about the value of timberlands over time and our ability to generate strong returns off of that asset. So just a reminder, that $1 billion was really just a reflection of year-over-year through our programmatic M&A activities, we think we will, on average, bring in about $250 million of acquisitions. So there’s no magic to that $1 billion. We’re going to continue to buy timberlands today, tomorrow, years from now. That’s just our core business. We’re also always going to be optimizing. And so from time to time, you’ll see us trim the portfolio here and there. I think this FIA transaction was a great example of that. We picked up some really strong mature timber that’s going to generate nice cash flow close to our other operations, close to our mills, opportunities to create synergies there and divested some land which was fine land.
It was just — it was a little bit more scattered in upstate South Carolina, wasn’t near other operations, so just weren’t able to provide some of the synergies that we can provide in other places. So those kinds of transactions will happen from time to time. It’s pretty unique to be able to do those buy-sell transactions concurrently. When you find those opportunities, we’re certainly happy to entertain those. But on balance, we still expect to be a net acquirer over time because we think the value of timberlands is going up and we think we do a good job running them and continue to generate returns.
Operator: Our next question comes from Mike Roxland with Truist Securities.
Michael Roxland: Congrats on the year. Just 1 quick question on EWP. I just want to get some color on order files and how extended they may be into 1Q, particularly as you mentioned, Devin, that those filters are actively seeking products ahead of the spring construction season. So where do order files stand at present? And can you comment on where your EWP operating rate was in 4Q? I think you called out a high 70s range in 3Q.
Devin Stockfish: Yes. So you’re a little fuzzy there. I think you’re asking about order files. Across the different product lines, order files are pretty much in the normal range across lumber and OSB for this time of year. EWP, we have brought those down to a more normalized level last year. I think as we started off 2023, we were expecting a softer single-family housing market and so we had dialed back production. It took us a good part of the year to get caught back up. Our order file has extended out quite a bit from much of 2023. But heading into ’24, I think we’re in a better position which will be, I think, appreciated by our customers. As we look at operating rates in Q4 for EWP, we were in the low 80s in terms of operating rates for EWP and we’ll be up somewhat as we look to Q1 2024.
Michael Roxland: Appreciate that. And this even for the order files, I mean, how far do they extend in 1Q thus far? Is it February, March? I mean, how many weeks out do they extend, particularly given — can you comment around the strong interest from the builders?
