Financial Trends -- 3/10
Deeply commodity-cyclical timber REIT sitting near the trough of a multi-year lumber/OSB downcycle.
Revenue declining four straight years (-32% cumulative to FY2025). Gross margin compressed ~2,540 bps
over five years. Adjusted EBITDA -75%. Free cash flow collapsed ~97% from the 2021 peak and turned
negative in two of the last three quarters. Total debt rising while revenue falls. The lone positive is
a slowly shrinking share count. Mandatory negative-FCF and debt-growth penalties applied.
Weight: 25%
Margins
Compressed
-2,540 bps over 5yr | Off cycle
FCF
Negative
-97% from peak | 2 of last 3 qtrs
Share Count
Declining
-3.6% over 5yr | No dilution
Quarterly Revenue Trajectory ($M)
No clean acceleration -- choppy and net-negative.
Revenue YoY ran -1.8% to -2.8% to +2.1% to -9.8% to -2.0% over the last five comparable quarters,
dominated by the -9.8% Q4'25 collapse. The Q1'26 sequential rebound is a tentative off-trough recovery
driven by lumber/OSB supply discipline (~50 industry mill curtailments), not by demand.
Gross Profit ($M)
Q1'26 gross margin recovered to 18.4% off the Q4'25 trough of 10.4%,
but remains below year-ago. GAAP gross margin troughed at 10.4% in Q4'25 versus a 20.8% peak in
Q2'24 -- roughly 1,040 bps peak-to-trough compression -- recovering to 18.4% in Q1'26, still ~240 bps below
the peak. Wood Products segment EBITDA went from $184M (Q1'24) to a -$20M trough (Q4'25), recovering to only
$71M in Q1'26, still 61% below the year-ago level.
Annual Financial Summary (FY ends December)
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Total Net Sales ($M) | $10,201M | $10,184M | $7,674M | $7,124M | $6,905M |
| Rev YoY | — | -0.2% | -24.6% | -7.2% | -3.1% |
| Gross Margin % | 40.2% | 35.5% | 21.9% | 18.4% | 14.8% |
| Adj EBITDA ($M) | $4,094M | $3,654M | $1,694M | $1,292M | $1,021M |
| Adj EBITDA YoY | — | -10.7% | -53.6% | -23.7% | -21.0% |
| Adj EPS ex-special | $3.37 | $3.03 | $1.02 | $0.53 | $0.20 |
| WA Diluted Shares (M) | 751.0 | 743.0 | 732.2 | 729.0 | 723.6 |
| GAAP Diluted EPS | $3.47 | $2.53 | $1.15 | $0.55 | $0.44 |
Key trends
- Revenue declining four straight years: $10.2B (2021) to $6.9B (2025), -32% cumulative, driven by the lumber/OSB price downcycle
- Adj EPS ex-special collapsed: $3.37 (2021) to $0.20 (2025), a ~94% decline as commodity realizations fell
- Margin compression through-cycle: Gross margin fell from 40.2% to 14.8% (~2,540 bps over five years)
- Share count declining: Diluted shares fell from 751.0M to 723.6M (-3.6% over 5 years), buyback-driven with no dilution
Quarterly Segment Revenue ($M)
- Wood Products (~66% of sales) is the swing factor: -8% YoY in Q1'26 ($1,287M to $1,164M), still recovering off the Q4'25 trough
- Real Estate/ENR (SLS) Q1'26 spiked to $207M on a $94M Florida conservation easement and a $192M Virginia land-sale gain -- lumpy and non-recurring
Free Cash Flow ($M, Annual)
FCF collapsed ~97% and turned negative quarterly. Annual FCF fell
from $2.7B (2021) to just $88M (2025), a 97% decline, with FCF margin from 26.6% to 1.3%. Quarterly FCF was
negative in 2025Q1 (-$23M), 2025Q4 (-$263M), and 2026Q1 (-$60M) -- negative in two of the last three quarters,
including the latest. This fails the positive-and-growing-FCF quality gate.
Debt & Leverage
- Total debt rose while revenue fell for three-plus consecutive quarters ($5,167M in Q1'25 to $5,572M in Q4'25), triggering the debt-growth penalty
- Leverage crept to ~5x net debt/EBITDA at the cycle trough versus a 3.5x mid-cycle target -- denominator-driven, but a real watch item
Penalty Modifiers Applied
| Modifier | Detail | Penalty |
|---|---|---|
| Negative FCF | Quarterly FCF negative in 2025Q1, 2025Q4, and 2026Q1 (latest quarter negative); hard cap at 6 | -2 |
| Debt outgrowing revenue | Total debt rose Q1'25 to Q4'25 ($5,167M to $5,572M) while revenue fell over the same span -- 3+ consecutive quarters | -1 |
| Share dilution | None -- diluted share count declining (no dilution) | None |
Score Rationale
Score of 3/10 reflects a weak, late-cycle commodity-cyclical -- the opposite of an accelerating, margin-expanding compounder. Base read against the rubric maps to a 1-2 on decelerating revenue, compressing margins, and hard-declining FCF; a base of 3 credits the declining share count, the off-trough Q4'25 to Q1'26 sequential recovery, and annual op income ticking up FY24 to FY25.
Why not higher:
- Revenue down four straight years (-32% cumulative), no clean acceleration (choppy, net-negative YoY)
- Gross margin compressed ~2,540 bps over five years; Adjusted EBITDA fell 75%
- FCF collapsed ~97% from peak and negative in two of the last three quarters -- fails the FCF gate
- Total debt rising while revenue falls (debt-growth penalty)
- Q1'26 headline GAAP strength largely non-recurring (~$192M Virginia land-sale gain + $94M Florida easement); adjusted EPS ex-special flat at $0.11
What prevents a lower score:
- Slowly declining share count, no dilution
- Tentative sequential rebound off the Q4'25 commodity trough (Wood Products EBITDA +$91M QoQ, total Adj EBITDA +120% QoQ)
Quality gate -- positive & growing FCF: NO. Annual FCF positive but shrinking sharply (FY25 just $88M, -85% YoY); quarterly FCF negative in two of the last three quarters. Not positive-and-growing.
Data sourced from Daloopa (company_id: 220). Fiscal year ends December 31. All financials in USD.