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Weyerhaeuser reports second quarter results

-- Net earnings increased 18% compared with first quarter

-- Earnings before special items increased 21% compared with first quarter and 57% compared with one year ago

-- Highest Wood Products EBITDA on record

Jul 27, 2018

SEATTLE, July 27, 2018 /PRNewswire/ -- Weyerhaeuser Company (NYSE: WY) today reported second quarter net earnings of $317 million, or 42 cents per diluted share, on net sales of $2.1 billion. This compares with earnings of $24 million, or 3 cents per diluted share, on net sales of $1.8 billion for the same period last year.

Weyerhaeuser Company logo. (PRNewsFoto/Weyerhaeuser Company)

View our earnings release and financial statements in a printer-friendly PDF.

Excluding net after-tax special charges of $15 million, the company reported net earnings of $332 million, or 44 cents per diluted share for the second quarter. This compares with net earnings before special items of $212 million for the same period last year and $275 million for the first quarter of 2018.  Adjusted EBITDA for the second quarter was $637 million compared with $506 million for the second quarter of last year and $544 million for the first quarter of 2018.

"I am very pleased with our second quarter financial results, as each of our businesses delivered solid operational performance and capitalized on market conditions to drive strong year-over-year improvement, including the highest Wood Products EBITDA on record," said Doyle R. Simons, president and chief executive officer. "In addition, we delivered Weyerhaeuser's highest EBITDA since 2006, when the company's operations were nearly three times larger than they are today. Looking forward, housing market fundamentals remain strong, and we remain relentlessly focused on driving operational excellence and fully capitalizing on market conditions to drive value for shareholders."

WEYERHAEUSER FINANCIAL HIGHLIGHTS

2018


2018


2017

(millions, except per share data)

Q1


Q2


Q2

Net sales

$1,865


$2,065


$1,808

Net earnings

$269


$317


$24

Net earnings per diluted share

$0.35


$0.42


$0.03

Weighted average shares outstanding, diluted

759


761


756

Net earnings before special items(1)

$275


$332


$212

Net earnings per diluted share before special items

$0.36


$0.44


$0.28

Adjusted EBITDA(2)

$544


$637


$506








(1)

First quarter 2018 after-tax special items include charges of $21 million for environmental remediation and a $15 million benefit from product remediation insurance proceeds. Second quarter 2018 special items include $15 million of net after-tax charges for product remediation. Second quarter 2017 after-tax special items include a $147 million non-cash impairment charge for the Uruguay business, and charges of $31 million for product remediation, $8 million for countervailing and antidumping duties on Canadian softwood lumber the company sold into the United States and $2 million for Plum Creek merger-related costs. Beginning first quarter 2018, these duties are no longer reported as a special item.


(2)

Adjusted EBITDA is a non-GAAP measure that management uses to evaluate the performance of the company. Adjusted EBITDA, as we define it, is operating income, adjusted for depreciation, depletion, amortization, basis of real estate sold, unallocated pension service costs and special items. Adjusted EBITDA excludes results from joint ventures. Adjusted EBITDA should not be considered in isolation from and is not intended to represent an alternative to our GAAP results. A reconciliation of Adjusted EBITDA to GAAP earnings is included within this release.




TIMBERLANDS







FINANCIAL HIGHLIGHTS

2018


2018



(millions)

Q1


Q2


Change

Net sales

$733


$667


($66)

Contribution to pre-tax earnings

$189


$161


($28)

Adjusted EBITDA

$268


$240


($28)

2Q 2018 Performance - In the South, log sales volumes were comparable with the first quarter and average realizations declined slightly due to a greater proportion of pulpwood sales. Unit logging costs increased seasonally due to additional thinning activity. In the West, slightly higher average log sales realizations were more than offset by seasonally higher forestry, road and unit logging costs. Fuel costs increased in both regions.

3Q 2018 Outlook - Weyerhaeuser expects third quarter earnings and Adjusted EBITDA will be lower than the second quarter, but slightly higher than the third quarter of 2017. The company anticipates seasonally higher road and forestry costs and higher fuel and unit logging costs. In the West, average sales realizations are expected to be slightly lower than the second quarter and fee harvest volumes will be comparable. In the South, the company anticipates higher fee harvest volumes and comparable average log sales realizations.


REAL ESTATE, ENERGY & NATURAL RESOURCES







FINANCIAL HIGHLIGHTS

2018


2018



(millions)

Q1


Q2


Change

Net sales

$51


$58


$7

Contribution to pre-tax earnings

$25


$22


($3)

Adjusted EBITDA

$41


$47


$6

2Q 2018 Performance - Real Estate sales increased slightly compared with the first quarter and Energy and Natural Resources royalties were modestly higher. Adjusted EBITDA increased, but earnings were slightly lower due to a higher average land basis on the mix of properties sold.

3Q 2018 Outlook - Weyerhaeuser anticipates third quarter earnings and Adjusted EBITDA will be higher than the second quarter. We continue to expect full year 2018 Adjusted EBITDA for the segment will be approximately $250 million.


WOOD PRODUCTS







FINANCIAL HIGHLIGHTS

2018


2018



(millions)

Q1


Q2


Change

Net sales

$1,309


$1,525


$216

Contribution to pre-tax earnings

$270


$329


$59

Pre-tax charge (benefit) for special items

($20)


$20


$40

Contribution to pre-tax earnings before special items

$250


$349


$99

Adjusted EBITDA

$286


$385


$99

2Q 2018 Performance - Average sales realizations for lumber and oriented strand board improved significantly compared with the first quarter, and engineered wood products realizations increased modestly. Sales volumes rose seasonally for all product lines. These factors were partially offset by higher log, raw material and transportation costs.

Second quarter special items consist of a $20 million net pre-tax charge for finalization of product remediation costs.

3Q 2018 Outlook - Weyerhaeuser expects earnings before special items and Adjusted EBITDA will decrease compared with the second quarter. The company anticipates moderately lower average sales realizations for lumber and oriented strand board. As previously disclosed, sales volumes for oriented strand board will be lower due to an extended outage at our Grayling, Michigan mill for a scheduled press replacement.







UNALLOCATED







FINANCIAL HIGHLIGHTS

2018


2018



(millions)

Q1


Q2


Change

Contribution to pre-tax earnings

($92)


($38)


$54

Pre-tax charge for special items

$28


$ -


($28)

Contribution to pre-tax earnings before special items

($64)


($38)


$26

Adjusted EBITDA

($51)


($35)


$16

2Q 2018 Performance - Second quarter results include a small non-cash benefit from elimination of intersegment profit in inventory and LIFO due to reduced log and lumber inventories. This compares with a charge in the first quarter. Non-cash non-operating pension and post-retirement expense also decreased due to finalization of measurements of year-end pension plan assets and liabilities.

ABOUT WEYERHAEUSER

Weyerhaeuser Company, one of the world's largest private owners of timberlands, began operations in 1900. We own or control 12.4 million acres of timberlands in the U.S. and manage additional timberlands under long-term licenses in Canada. We manage these timberlands on a sustainable basis in compliance with internationally recognized forestry standards. We are also one of the largest manufacturers of wood products. Our company is a real estate investment trust. In February 2016, we merged with Plum Creek Timber Company, Inc. In 2017, we generated $7.2 billion in net sales and employed approximately 9,300 people who serve customers worldwide. We are listed on the North American and World Dow Jones Sustainability Indices. Our common stock trades on the New York Stock Exchange under the symbol WY. Learn more at www.weyerhaeuser.com.

EARNINGS CALL INFORMATION

Weyerhaeuser will hold a live conference call at 7 a.m. Pacific (10 a.m. Eastern) on July 27, 2018, to discuss second quarter results.

To access the live webcast and presentation online, go to the Investor Relations section on www.weyerhaeuser.com  on July 27, 2018.

To join the conference call from within North America, dial 855-223-0757 (access code: 5882807) at least 15 minutes prior to the call. Those calling from outside North America should dial 574-990-1206 (access code: 5882807). Replays will be available for two weeks at 855-859-2056 (access code: 5882807) from within North America and at 404-537-3406 (access code: 5882807) from outside North America.

FORWARD LOOKING STATEMENTS

This news release contains statements concerning the company's future results and performance that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934, including without limitation with respect to the following for the third quarter of 2018: earnings and Adjusted EBITDA for each of our Timber and Real Estate, Energy & Natural Resources business segments; earnings before special items and Adjusted EBITDA for our Wood Products business segment; log sales realizations, fee harvest volumes, road and forestry costs and fuel and unit logging costs in our timber business; and sales realizations for lumber and oriented strand board and sales volumes for oriented strand board for our Wood Products business. These statements generally are identified by words such as "believe," "project," "expect," "anticipate," "estimate," "intend," "strategy," "future," "opportunity," "plan," "may," "should," "will," "would," and expressions such as "will be," "will continue," "will likely result," and similar words and expressions. These statements are based on our current expectations and assumptions and are not guarantees of future performance.  The realization of our expectations and the accuracy of our assumptions are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include, but are not limited to:

  • the effect of general economic conditions, including employment rates, interest rate levels, housing starts, availability of financing for home mortgages and strength of the U.S. dollar;
  • market demand for our products, including market demand for our timberland properties with higher and better uses, which is related to, among other factors, the strength of the various U.S. business segments and U.S. and international economic conditions;
  • changes in currency exchange rates, particularly the relative value of the U.S. dollar to the yen and the Canadian dollar, and the relative value of the euro to the yen;
  • restrictions on international trade, tariffs imposed on imports and the availability and cost of shipping and transportation;
  • economic activity in Asia, especially Japan and China;
  • performance of our manufacturing operations, including maintenance requirements;
  • potential disruptions in our manufacturing operations;
  • the level of competition from domestic and foreign producers;
  • raw material availability and prices;
  • the effect of weather;
  • the risk of loss from fires, floods, windstorms, hurricanes, pest infestation and other natural disasters;
  • energy prices;
  • the successful execution of our internal plans and strategic initiatives, including restructuring and cost reduction initiatives;
  • the successful and timely execution and integration of our strategic acquisitions, including our ability to realize expected benefits and synergies, and the successful and timely execution of our strategic divestitures, each of which is subject to a number of risks and conditions beyond our control including, but not limited to, timing and required regulatory approvals;
  • transportation and labor availability and costs;
  • federal tax policies;
  • the effect of forestry, land use, environmental and other governmental regulations;
  • legal proceedings;
  • performance of pension fund investments and related derivatives;
  • the effect of timing of retirements and changes in the market price of our common stock on charges for share-based compensation;
  • changes in accounting principles; and
  • other matters described under "Risk Factors" in our 2017 Annual Report on Form 10-K, as well as those set forth from time to time in our other public statements and other reports and filings with the Securities and Exchange Commission.

Forward-looking statements speak only as of the date they are made, and we undertake no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events, or otherwise.

For more information contact:
Analysts - Beth Baum, 206-539-3907
Media - Nancy Thompson, 919-760-3484

RECONCILIATION OF ADJUSTED EBITDA TO NET EARNINGS

We reconcile Adjusted EBITDA to net earnings for the consolidated company and to operating income for the business segments, as those are the most directly comparable U.S. GAAP measures for each.

The table below reconciles Adjusted EBITDA for the quarter ended March 31, 2018:

DOLLAR AMOUNTS IN MILLIONS

Timberlands


Real Estate
& ENR


Wood
Products


Unallocated
Items


Total

Adjusted EBITDA by Segment:










Net earnings









$

269


Interest expense, net of capitalized interest









93


Income taxes









30


Net contribution to earnings

$

189



$

25



$

270



$

(92)



$

392


Non-operating pension and other postretirement benefit costs







24



24


Interest income and other







(12)



(12)


Operating income (loss)

189



25



270



(80)



404


Depreciation, depletion and amortization

79



4



36



1



120


Basis of real estate sold



12







12


Special items(1)(2)





(20)



28



8


Adjusted EBITDA

$

268



$

41



$

286



$

(51)



$

544



(1)

Pre-tax special items attributable to Wood Products include a $20 million benefit from product remediation insurance proceeds.


(2)

Pre-tax special items included in Unallocated Items consist of charges of $28 million for environmental remediation.

The table below reconciles Adjusted EBITDA for the quarter ended June 30, 2018:

DOLLAR AMOUNTS IN MILLIONS

Timberlands


Real Estate
& ENR


Wood
Products


Unallocated
Items


Total

Adjusted EBITDA by Segment:










Net earnings









$

317


Interest expense, net of capitalized interest









92


Income taxes









65


Net contribution to earnings

$

161



$

22



$

329



$

(38)



$

474


Non-operating pension and other postretirement benefit costs







13



13


Interest income and other







(11)



(11)


Operating income (loss)

161



22



329



(36)



476


Depreciation, depletion and amortization

79



3



36



1



119


Basis of real estate sold



22







22


Special items(1)





20





20


Adjusted EBITDA

$

240



$

47



$

385



$

(35)



$

637



(1)

Pre-tax special items included in Wood Products consist of net charges of $20 million for finalization of product remediation costs.

The table below reconciles Adjusted EBITDA for the quarter ended June 30, 2017:

DOLLAR AMOUNTS IN MILLIONS

Timberlands


Real Estate
& ENR


Wood
Products


Unallocated
Items


Total

Adjusted EBITDA by Segment:










Net earnings









$

24


Interest expense, net of capitalized interest









100


Income taxes









34


Net contribution to earnings

$

(12)



$

23



$

177



$

(30)



$

158


Non-operating pension and other postretirement benefit costs







8



8


Interest income and other







(9)



(9)


Operating income (loss)

(12)



23



177



(31)



157


Depreciation, depletion and amortization

87



4



36



2



129


Basis of real estate sold



10







10


Special items(1)

147





61



2



210


Adjusted EBITDA

$

222



$

37



$

274



$

(27)



$

506



(1)

Pre-tax special items include $147 million of impairment charges related to our Uruguayan operations; $50 million for product remediation; $11 million of countervailing and antidumping duties; and $2 million of Plum Creek merger-related costs.







Weyerhaeuser Company

Exhibit 99.2

Q2.2018 Analyst Package


Preliminary results (unaudited)











Consolidated Statement of Operations











in millions

Q1


Q2


Year-to-Date


March 31,
 2018


June 30,
 2018


June 30,
 2017


June 30,
 2018


June 30,
 2017

Net sales

$

1,865



$

2,065



$

1,808



$

3,930



$

3,501


Cost of products sold

1,348



1,447



1,336



2,795



2,608


Gross margin

517



618



472



1,135



893


Selling expenses

23



23



22



46



44


General and administrative expenses

78



80



76



158



163


Research and development expenses

2



2



4



4



8


Charges for integration and restructuring, closures and asset impairments

2





151



2



164


Charges (recoveries) for product remediation, net

(20)



20



50





50


Other operating costs (income), net

28



17



12



45



14


Operating income

404



476



157



880



450


Non-operating pension and other postretirement benefit costs

(24)



(13)



(8)



(37)



(30)


Interest income and other

12



11



9



23



18


Interest expense, net of capitalized interest

(93)



(92)



(100)



(185)



(199)


Earnings before income taxes

299



382



58



681



239


Income taxes

(30)



(65)



(34)



(95)



(58)


Net earnings

$

269



$

317



$

24



$

586



$

181



Per Share Information



Q1


Q2


Year-to-Date


March 31,
 2018


June 30,
 2018


June 30,
 2017


June 30,
 2018


June 30,
 2017

Earnings per share, basic and diluted

$

0.35



$

0.42



$

0.03



$

0.77



$

0.24


Dividends paid per common share

$

0.32



$

0.32



$

0.31



$

0.64



$

0.62


Weighted average shares outstanding (in thousands):










Basic

756,815



757,829



752,630



757,317



751,674


Diluted

759,462



760,533



756,451



759,992



755,625


Common shares outstanding at end of period (in thousands)

756,700



757,646



752,711



757,646



752,711



Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization (Adjusted EBITDA)*


in millions

Q1


Q2


Year-to-Date


March 31,
 2018


June 30,
 2018


June 30,
 2017


June 30,
 2018


June 30,
 2017

Net earnings

$

269



$

317



$

24



$

586



$

181


Non-operating pension and other postretirement benefit costs

24



13



8



37



30


Interest income and other

(12)



(11)



(9)



(23)



(18)


Interest expense, net of capitalized interest

93



92



100



185



199


Income taxes

30



65



34



95



58


Operating income

404



476



157



880



450


Depreciation, depletion and amortization

120



119



129



239



262


Basis of real estate sold

12



22



10



34



24


Unallocated pension service costs









2


Special items

8



20



210



28



222


Adjusted EBITDA*

$

544



$

637



$

506



$

1,181



$

960












*Adjusted EBITDA is a non-GAAP measure that management uses to evaluate the performance of the company. Adjusted EBITDA, as we define it, is operating income adjusted for depreciation, depletion, amortization, basis of real estate sold, unallocated pension service costs, and special items. Adjusted EBITDA excludes results from joint ventures. Our definition of Adjusted EBITDA may be different from similarly titled measures reported by other companies. Adjusted EBITDA should not be considered in isolation from and is not intended to represent an alternative to our GAAP results.




Weyerhaeuser Company

Total Company Statistics

Q2.2018 Analyst Package




Preliminary results (unaudited)












Special Items Included in Net Earnings (Income Tax Affected)











in millions

Q1


Q2


Year-to-Date


March 31,
 2018


June 30,
 2018


June 30,
 2017


June 30,
 2018


June 30,
 2017

Net earnings

$

269



$

317



$

24



$

586



$

181


Plum Creek merger and integration-related costs





2





12


Restructuring, impairment and other charges





147





147


Environmental remediation charges (recoveries)

21







21




Countervailing and antidumping duties charges (credits)(1)





8





8


Product remediation charges (recoveries), net

(15)



15



31





31


Net earnings before special items

$

275



$

332



$

212



$

607



$

379

































Q1


Q2


Year-to-Date


March 31,
 2018


June 30,
 2018


June 30,
 2017


June 30,
 2018


June 30,
 2017

Net earnings per diluted share

$

0.35



$

0.42



$

0.03



$

0.77



$

0.24


Plum Creek merger and integration-related costs









0.02


Restructuring, impairment and other charges





0.20





0.19


Environmental remediation charges (recoveries)

0.03







0.03




Countervailing and antidumping duties charges (credits)(1)





0.01





0.01


Product remediation charges (recoveries), net

(0.02)



0.02



0.04





0.04


Net earnings per diluted share before special items

$

0.36



$

0.44



$

0.28



$

0.80



$

0.50


(1)As of first quarter 2018, countervailing and antidumping duties are no longer reported as a special item.






















Selected Total Company Items


in millions

Q1


Q2


Year-to-Date


March 31,
 2018


June 30,
 2018


June 30,
 2017


June 30,
 2018


June 30,
 2017

Pension and postretirement costs:










Pension and postretirement service costs

$

10



$

8



$

7



$

18



$

17


Non-operating pension and other postretirement benefit costs

24



13



8



37



30


Total company pension and postretirement costs

$

34



$

21



$

15



$

55



$

47














Weyerhaeuser Company


Q2.2018 Analyst Package

Preliminary results (unaudited)



Consolidated Balance Sheet







in millions

March 31,
 2018


June 30,
 2018


December 31,
 2017


ASSETS






Current assets:






Cash and cash equivalents

$

598



$

901



$

824


Receivables, less discounts and allowances

481



491



396


Receivables for taxes

24



23



14


Inventories

445



414



383


Prepaid expenses and other current assets

118



146



98


Current restricted financial investments held by variable interest entities

253



253




Total current assets

1,919



2,228



1,715


Property and equipment, net

1,573



1,597



1,618


Construction in progress

275



282



225


Timber and timberlands at cost, less depletion

12,888



12,790



12,954


Minerals and mineral rights, less depletion

306



302



308


Goodwill

40



40



40


Deferred tax assets

244



168



268


Other assets

278



279



316


Restricted financial investments held by variable interest entities

362



362



615


Total assets

$

17,885



$

18,048



$

18,059








LIABILITIES AND EQUITY






Current liabilities:






Current maturities of long-term debt

$



$



$

62


Current debt (nonrecourse to the company) held by variable interest entities

209



209



209


Accounts payable

245



270



249


Accrued liabilities

457



543



645


Total current liabilities

911



1,022



1,165


Long-term debt

5,928



5,924



5,930


Long-term debt (nonrecourse to the company) held by variable interest entities

302



302



302


Deferred pension and other postretirement benefits

1,454



1,224



1,487


Other liabilities

299



295



276


Total liabilities

8,894



8,767



9,160


Total equity

8,991



9,281



8,899


Total liabilities and equity

$

17,885



$

18,048



$

18,059














Weyerhaeuser Company



Q2.2018 Analyst Package


Preliminary results (unaudited)






Consolidated Statements of Cash Flows











in millions

Q1


Q2


Year-to-Date


March 31,
 2018


June 30,
 2018


June 30,
 2017


June 30,
 2018


June 30,
 2017

Cash flows from operations:










Net earnings

$

269



$

317



$

24



$

586



$

181


Noncash charges (credits) to income:










Depreciation, depletion and amortization

120



119



129



239



262


Basis of real estate sold

12



22



10



34



24


Deferred income taxes, net

10



15



3



25



6


Pension and other postretirement benefits

34



21



15



55



47


   Share-based compensation expense

9



9



9



18



19


   Charges for impairments of assets

1





147



1



147


Change in:










Receivables, less allowances

(83)



(18)



(8)



(101)



(78)


Receivables and payables for taxes

5



10



(17)



15



(53)


Inventories

(66)



30



21



(36)



(7)


Prepaid expenses

(5)



4



(4)



(1)



(13)


Accounts payable and accrued liabilities

(173)



103



192



(70)



55


Pension and postretirement benefit contributions and payments

(16)



(16)



(15)



(32)



(37)


Other

19



(19)



(17)





(29)


Net cash from operations

$

136



$

597



$

489



$

733



$

524


Cash flows from investing activities:










Capital expenditures for property and equipment

$

(61)



$

(83)



$

(74)



$

(144)



$

(126)


Capital expenditures for timberlands reforestation

(20)



(14)



(13)



(34)



(36)


Proceeds from sale of nonstrategic assets

2





4



2



12


Other

3



24



45



27



44


Cash from (used in) investing activities

$

(76)



$

(73)



$

(38)



$

(149)



$

(106)


Cash flows from financing activities:










Cash dividends on common shares

$

(242)



$

(243)



$

(233)



$

(485)



$

(466)


Payments of long-term debt

(62)







(62)




Proceeds from exercise of stock options

25



23



26



48



81


Other

(7)



(1)



2



(8)



(8)


Cash from (used in) financing activities

$

(286)



$

(221)



$

(205)



$

(507)



$

(393)












Net change in cash and cash equivalents

$

(226)



$

303



$

246



$

77



$

25


Cash and cash equivalents at beginning of period

824



598



455



824



676


Cash and cash equivalents at end of period

$

598



$

901



$

701



$

901



$

701












Cash paid during the period for:










Interest, net of amount capitalized

$

105



$

67



$

72



$

172



$

192


Income taxes

$

17



$

41



$

47



$

58



$

106














Weyerhaeuser Company

Timberlands Segment


Q2.2018 Analyst Package




Preliminary results (unaudited)



Segment Statement of Operations


in millions


Q1.2018


Q2.2018


Q2.2017


YTD.2018


YTD.2017


Sales to unaffiliated customers

$

505



$

482



$

469



$

987



$

955



Intersegment sales

228



185



163



413



365



Total net sales

733



667



632



1,400



1,320



Cost of products sold

526



485



476



1,011



995



Gross margin

207



182



156



389



325



Selling expenses

1





1



1



2



General and administrative expenses

23



25



23



48



47



Research and development expenses

2



1



4



3



7



Charges for integration and restructuring, closures and asset impairments





147





147



Other operating costs (income), net

(8)



(5)



(7)



(13)



(14)



Operating income and Net contribution to earnings

$

189



$

161



$

(12)



$

350



$

136







Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization*


in millions


Q1.2018


Q2.2018


Q2.2017


YTD.2018


YTD.2017


Operating income

$

189



$

161



$

(12)



$

350



$

136



Depreciation, depletion and amortization

79



79



87



158



181



Special items





147





147



Adjusted EBITDA*

$

268



$

240



$

222



$

508



$

464



*See definition of Adjusted EBITDA (a non-GAAP measure) on page 1.










Segment Special Items Included in Net Contribution to Earnings (Pre-Tax)


in millions


Q1.2018


Q2.2018


Q2.2017


YTD.2018


YTD.2017


Restructuring, impairment and other charges

$



$



$

(147)



$



$

(147)







Selected Segment Items


in millions


Q1.2018


Q2.2018


Q2.2017


YTD.2018


YTD.2017


Total decrease (increase) in working capital(1)

$

(40)



$

70



$

(5)



$

30



$

(42)



Cash spent for capital expenditures

$

(28)



$

(29)



$

(25)



$

(57)



$

(55)



(1) Represents the change in prepaid assets, accounts receivable, accounts payable, accrued liabilities and log inventory for the Timberlands and Real Estate & ENR segments combined.





Segment Statistics(2)(3)



Q1.2018


Q2.2018


Q2.2017


YTD.2018


YTD.2017


Third Party
Net Sales
(millions)

Delivered logs:











  West

$

266



$

262



$

227



$

528



$

452



  South

157



158



148



315



296



  North

25



20



16



45



43



  Other

14



7



11



21



31



Total delivered logs

462



447



402



909



822



Stumpage and pay-as-cut timber

15



11



17



26



29



Products from international operations





21





40



Recreational and other lease revenue

14



15



15



29



29



Other revenue

14



9



14



23



35



Total

$

505



$

482



$

469



$

987



$

955



Delivered Logs

Third Party Sales

Realizations (per ton)

West

$

131.59



$

132.24



$

105.84



$

131.91



$

105.06



South

$

34.83



$

34.55



$

34.48



$

34.69



$

34.48



North

$

60.79



$

64.92



$

63.49



$

62.59



$

60.97



Delivered Logs

Third Party Sales

Volumes

(tons, thousands)

West

2,019



1,984



2,143



4,003



4,300



South

4,510



4,560



4,285



9,070



8,578



North

404



313



253



717



707



Other

317



81



292



398



802



Fee Harvest Volumes

(tons, thousands)

West

2,443



2,360



2,652



4,803



5,309



South

6,751



6,630



6,473



13,381



12,846



North

549



423



383



972



1,005



Other





444





815



(2) The Western region includes Washington and Oregon. The Southern region includes Virginia, North Carolina, South Carolina, Florida, Georgia, Alabama, Mississippi, Louisiana, Arkansas, Texas and Oklahoma. The Northern region includes West Virginia, Maine, New Hampshire, Vermont, Michigan, Wisconsin and Montana. Other includes our Canadian operations and managed Twin Creeks operations (our management agreement for the Twin Creeks Venture began in April 2016 and terminated in December 2017).




(3) Western logs are primarily transacted in MBF but are converted to ton equivalents for external reporting purposes.








Weyerhaeuser Company


Real Estate, Energy and Natural
Resources Segment


Q2.2018 Analyst Package



Preliminary results (unaudited)











Segment Statement of Operations




in millions


Q1.2018


Q2.2018


Q2.2017


YTD.2018


YTD.2017


Net sales

$

51



$

58



$

46



$

109



$

99



Cost of products sold

19



30



16



49



36



Gross margin

32



28



30



60



63



General and administrative expenses

7



6



7



13



14



Other operating costs (income), net











Operating income and net contribution to earnings

$

25



$

22



$

23



$

47



$

49







Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization*




in millions


Q1.2018


Q2.2018


Q2.2017


YTD.2018


YTD.2017


Operating income

$

25



$

22



$

23



$

47



$

49



Depreciation, depletion and amortization

4



3



4



7



7



Basis of real estate sold

12



22



10



34



24



Adjusted EBITDA*

$

41



$

47



$

37



$

88



$

80



*See definition of Adjusted EBITDA (a non-GAAP measure) on page 1.










Selected Segment Items




in millions


Q1.2018


Q2.2018


Q2.2017


YTD.2018


YTD.2017


Cash spent for capital expenditures

$



$



$

(1)



$



$

(1







Segment Statistics





Q1.2018


Q2.2018


Q2.2017


YTD.2018


YTD.2017


Net Sales
(millions)

Real Estate

$

34



$

38



$

27



$

72



$

64



Energy and Natural Resources

17



20



19



37



35



Total

$

51



$

58



$

46



$

109



$

99



Acres Sold

Real Estate

21,771



16,290



10,003



38,061



23,260



Price per Acre

Real Estate

$

1,539



$

2,258



$

2,714



$

1,847



$

2,537



























Weyerhaeuser Company




Wood Products Segment

Q2.2018 Analyst Package




Preliminary results (unaudited)













Segment Statement of Operations

in millions


Q1.2018


Q2.2018


Q2.2017


YTD.2018


YTD.2017

Net sales

$

1,309



$

1,525



$

1,293



$

2,834



$

2,447


Cost of products sold

1,005



1,119



1,002



2,124



1,928


Gross margin

304



406



291



710



519


Selling expenses

21



22



19



43



40


General and administrative expenses

34



31



32



65



64


Research and development expenses



1





1



1


Charges for integration and restructuring, closures and asset impairments

2





2



2



3


Charges (recoveries) for product remediation, net

(20)



20








Other operating costs (income), net

(3)



3



61





62


Operating income and Net contribution to earnings

$

270



$

329



$

177



$

599



$

349




Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization*

in millions


Q1.2018


Q2.2018


Q2.2017


YTD.2018


YTD.2017

Operating income

$

270



$

329



$

177



$

599



$

349


Depreciation, depletion and amortization

36



36



36



72



71


Special items

(20)



20



61





61


Adjusted EBITDA*

$

286



$

385



$

274



$

671



$

481


*See definition of Adjusted EBITDA (a non-GAAP measure) on page 1.







Segment Special Items Included in Net Contribution to Earnings (Pre-Tax)

in millions


Q1.2018


Q2.2018


Q2.2017


YTD.2018


YTD.2017

Countervailing and antidumping duties (charges) credits(1)

$



$



$

(11)



$



$

(11)


Product remediation (charges) recoveries, net

20



(20)



(50)





(50)


Total

$

20



$

(20)



$

(61)



$



$

(61)


(1) As of first quarter 2018, countervailing and antidumping duties are no longer reported as a special item.



Selected Segment Items

in millions


Q1.2018


Q2.2018


Q2.2017


YTD.2018


YTD.2017

Total decrease (increase) in working capital(2)

$

(226)



$

3



$

113



$

(223)



$

(9)


Cash spent for capital expenditures

$

(52)



$

(68)



$

(61)



$

(120)



$

(105)


(2) Represents the change in prepaid assets, accounts receivable, accounts payable, accrued liabilities and inventory for the Wood Products segment.


Segment Statistics

in millions, except for third party sales realizations

Q1.2018


Q2.2018


Q2.2017


YTD.2018


YTD.2017

Structural Lumber
(volumes presented

in board feet)

Third party net sales

$

569



$

681



$

538



$

1,250



$

1,016


Third party sales realizations

$

498



$

541



$

441



$

521



$

427


Third party sales volumes(3)

1,140



1,261



1,218



2,401



2,376


Production volumes

1,160



1,180



1,146



2,340



2,298


Engineered Solid
Section
(volumes presented

in cubic feet)

Third party net sales

$

129



$

139



$

130



$

268



$

247


Third party sales realizations

$

2,088



$

2,156



$

1,979



$

2,123



$

1,931


Third party sales volumes(3)

6.2



6.4



6.6



12.6



12.8


Production volumes

6.3



6.4



6.6



12.7



12.9


Engineered
I-joists
(volumes presented

in lineal feet)

Third party net sales

$

78



$

92



$

85



$

170



$

158


Third party sales realizations

$

1,585



$

1,630



$

1,522



$

1,609



$

1,503


Third party sales volumes(3)

49



57



57



106



106


Production volumes

56



52



53



108



103


Oriented Strand
Board
(volumes presented

in square feet 3/8")

Third party net sales

$

232



$

277



$

225



$

509



$

428


Third party sales realizations

$

314



$

367



$

295



$

341



$

279


Third party sales volumes(3)

739



754



764



1,493



1,533


Production volumes

734



747



754



1,481



1,512


Softwood Plywood

(volumes presented

in square feet 3/8")

Third party net sales

$

50



$

55



$

47



$

105



$

91


Third party sales realizations

$

438



$

461



$

380



$

450



$

379


Third party sales volumes(3)

115



118



123



233



241


Production volumes

97



105



99



202



196


Medium Density
Fiberboard 
(volumes presented

in square feet 3/4")

Third party net sales

$

43



$

47



$

51



$

90



$

98


Third party sales realizations

$

839



$

839



$

845



$

839



$

820


Third party sales volumes(3)

51



55



60



106



119


Production volumes

50



57



63



107



119


(3) Volumes include sales of internally produced products and products purchased for resale primarily through our distribution business.

Weyerhaeuser Company




Unallocated Items

Q2.2018 Analyst Package




Preliminary results (unaudited)















Unallocated items are gains or charges not related to or allocated to an individual operating segment. They include a portion of items such as share-based compensation expense, pension and postretirement costs, foreign exchange transaction gains and losses and the elimination of intersegment profit in inventory and LIFO.


Contribution to Earnings


in millions

Q1.2018


Q2.2018


Q2.2017


YTD.2018


YTD.2017

Unallocated corporate function and variable compensation expense

$

(18)



$

(19)



$

(17)



$

(37)



$

(36)


Liability classified share-based compensation



(2)





(2)



(6)


Foreign exchange gains (losses)

(2)



2







(3)


Elimination of intersegment profit in inventory and LIFO

(21)



3



(3)



(18)



(9)


Charges for integration and restructuring, closures and asset impairments





(2)





(14)


Other

(39)



(20)



(9)



(59)



(16)


Operating income (loss)

(80)



(36)



(31)



(116)



(84)


Non-operating pension and other postretirement benefit (costs) credits

(24)



(13)



(8)



(37)



(30


Interest income and other

12



11



9



23



18


Net contribution to earnings

$

(92)



$

(38)



$

(30)



$

(130)



$

(96)



Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization*


in millions

Q1.2018


Q2.2018


Q2.2017


YTD.2018


YTD.2017

Operating income (loss)

$

(80)



$

(36)



$

(31)



$

(116)



$

(84)


Depreciation, depletion and amortization

1



1



2



2



3


Unallocated pension service costs









2


Special items

28





2



28



14


Adjusted EBITDA*

$

(51)



$

(35)



$

(27)



$

(86)



$

(65)


*See definition of Adjusted EBITDA (a non-GAAP measure) on page 1.




Unallocated Special Items Included in Net Contribution to Earnings (Pre-Tax)


in millions

Q1.2018


Q2.2018


Q2.2017


YTD.2018


YTD.2017

Plum Creek merger and integration-related costs

$



$



$

(2)



$



$

(14)


Environmental remediation insurance (charges) recoveries

(28)







(28)




Total

$

(28)



$



$

(2)



$

(28)



$

(14)



Unallocated Selected Items


in millions

Q1.2018


Q2.2018


Q2.2017


YTD.2018


YTD.2017

Cash spent for capital expenditures

$

(1)



$



$



$

(1)



$

(1)


 

SOURCE Weyerhaeuser Company


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