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Weyerhaeuser reports third quarter results

- Net earnings of $99 million, or $0.13 per diluted share

- Net earnings before special items of $59 million, or $0.08 per diluted share

- Announced agreement to sell 555,000 acres of Michigan timberlands for $300 million

Oct 25, 2019

SEATTLE, Oct. 25, 2019 /PRNewswire/ -- Weyerhaeuser Company (NYSE: WY) today reported third quarter net earnings of $99 million, or 13 cents per diluted share, on net sales of $1.7 billion. This compares with net earnings of $255 million, or 34 cents per diluted share, on net sales of $1.9 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 a net after-tax benefit of $40 million for special items, primarily relating to a product remediation insurance recovery, the company reported third quarter net earnings of $59 million, or eight cents per diluted share. This compares with net earnings before special items of $214 million for the same period last year and $123 million for the second quarter of 2019.

Adjusted EBITDA for the third quarter of 2019 was $308 million compared with $505 million for the same period last year and $343 million for the second quarter of 2019.

"In the third quarter, we again delivered strong operating performance despite challenging market conditions," said Devin W. Stockfish, president and chief executive officer. "We also announced the pending sale of 555,000 acres in Michigan, which will further optimize our timberlands portfolio. Looking forward, we continue to expect that U.S. housing activity will follow a modest growth trajectory. We remain intently focused on achieving operational excellence in every aspect of our business and fully capitalizing on every available market opportunity to drive value for our shareholders."

WEYERHAEUSER FINANCIAL HIGHLIGHTS


2019


2019


2018

(millions, except per share data)


Q2


Q3


Q3

Net sales


$1,692


$1,671


$1,910

Net earnings


$128


$99


$255

Net earnings per diluted share


$0.17


$0.13


$0.34

Weighted average shares outstanding, diluted


746


747


757

Net earnings before special items(1)(2)


$123


$59


$214

Net earnings per diluted share before special items(1)


$0.16


$0.08


$0.28

Adjusted EBITDA(1)


$343


$308


$505



(1)

Net earnings before special items is a non-GAAP measure that management believes provides helpful context in understanding the company's earnings performance. Additionally, 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 and special items. Net earnings before special items and Adjusted EBITDA should not be considered in isolation from, and are not intended to represent an alternative to, our GAAP results. Reconciliations of Net earnings before special items and Adjusted EBITDA to GAAP earnings are included within this release.



(2)

Second quarter 2019 after-tax special items include a $5 million benefit from finalizing the noncash settlement charge incurred in first quarter 2019 related to the transfer of pension assets and liabilities through the purchase of a group annuity contract. Third quarter 2019 after-tax special items include a $51 million benefit related to a product remediation insurance recovery and an $11 million legal charge. Third quarter 2018 after-tax special items include a $41 million tax benefit related to a voluntary contribution to our US qualified pension plan.

 

TIMBERLANDS








FINANCIAL HIGHLIGHTS


2019


2019



(millions)


Q2


Q3


Change

Net sales


$532


$523


($9)

Contribution to pretax earnings


$102


$72


($30)

Adjusted EBITDA


$175


$154


($21)

Q3 2019 Performance – In the West, average sales realizations for domestic and export logs declined and domestic sales volumes were seasonally lower. Log and haul costs increased as Western harvest activity shifted to higher elevation units. In the South, average sales realizations decreased slightly compared with the second quarter due to mix, and higher fee harvest volumes were partially offset by slightly higher forestry spending.

Q4 2019 Outlook – Weyerhaeuser expects fourth quarter earnings will be comparable with the third quarter and Adjusted EBITDA will be slightly lower. In the South, the company anticipates lower fee harvest volumes and slightly lower average log sales realizations. In the West, the company expects seasonally lower road and unit logging costs and modestly higher average domestic sales realizations, partially offset by lower log sales volumes.

In September 2019, the company announced an agreement to sell its 555,000 acres of Michigan timberlands. The transaction is subject to customary closing conditions and is expected to close in the fourth quarter of 2019.

REAL ESTATE, ENERGY & NATURAL RESOURCES








FINANCIAL HIGHLIGHTS


2019


2019



(millions)


Q2


Q3


Change

Net sales


$81


$69


($12)

Contribution to pretax earnings


$35


$32


($3)

Adjusted EBITDA


$71


$60


($11)

Q3 2019 Performance – Earnings and Adjusted EBITDA decreased due to lower real estate sales. The number of acres sold declined and the average price per acre increased due to geographic mix.

Q4 2019 Outlook – Weyerhaeuser anticipates fourth quarter earnings and Adjusted EBITDA will be lower than the third quarter. The company continues to expect full year 2019 Adjusted EBITDA for the segment will be approximately $270 million.

WOOD PRODUCTS








FINANCIAL HIGHLIGHTS


2019


2019



(millions)


Q2


Q3


Change

Net sales


$1,210


$1,204


($6)

Contribution to pretax earnings


$81


$143


$62

Pretax benefit for special items


$—


($68)


($68)

Contribution to pretax earnings before special items


$81


$75


($6)

Adjusted EBITDA


$128


$123


($5)

Q3 2019 Performance – Seasonally higher sales volumes for most products were more than offset by higher unit manufacturing costs, primarily due to scheduled downtime in engineered wood products and modest hurricane-related downtime in the company's Southern lumber operations.

Average sales realizations for oriented strand board and lumber were comparable with the second quarter average, reflecting the company's regional mix. Although the published North Central benchmark price for oriented strand board improved during the third quarter, published pricing for other regions trended lower. Similarly, third quarter price improvement for Southern yellow pine lumber trailed the benchmark Framing Lumber Composite.

Third quarter special items consist of a $68 million pretax benefit from product remediation insurance proceeds.

Q4 2019 Outlook – Weyerhaeuser anticipates fourth quarter earnings before special items and Adjusted EBITDA for Wood Products will be lower than the third quarter, but higher than the fourth quarter of 2018, before any improvement in average sales realizations. The company expects seasonally lower sales volumes across most products, higher Western log costs, and modest improvement in other operating costs.

ABOUT WEYERHAEUSER

Weyerhaeuser Company, one of the world's largest private owners of timberlands, began operations in 1900. We own or control approximately 12 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 2018, we generated $7.5 billion in net sales and employed approximately 9,300 people who serve customers worldwide. We are listed on the Dow Jones Sustainability North America Index. 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 October 25, 2019, to discuss third quarter results.

To access the live webcast and presentation online, go to the Investor Relations section on www.weyerhaeuser.com on October 25, 2019.

To join the conference call from within North America, dial 855-223-0757 (access code: 8899987) at least 15 minutes prior to the call. Those calling from outside North America should dial 574-990-1206 (access code: 8899987). Replays will be available for two weeks at 855-859-2056 (access code: 8899987) from within North America and at 404-537-3406 (access code: 8899987) 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 with respect to the following: our earnings, earnings before special items, Adjusted EBITDA; average log sale realizations; log sale volumes; fee harvest volumes as well as road and logging costs in our timber business; sales volumes as well as log and manufacturing operating costs for Wood Products. 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 Japanese yen, the Chinese yuan and the Canadian dollar, and the relative value of the euro to the yen;
  • restrictions on international trade and tariffs imposed on imports or exports;
  • the availability and cost of shipping and transportation;
  • economic activity in Asia, especially Japan and China;
  • performance of our manufacturing operations, including maintenance and capital 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;
  • changes in global or regional climate conditions and governmental response to such changes;
  • the risk of loss from fires, floods, windstorms, hurricanes, pest infestation and other natural disasters;
  • energy prices;
  • our operational excellence 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;
  • the accuracy of our estimates of costs and expenses related to contingent liabilities;
  • changes in accounting principles; and
  • other matters described under "Risk Factors" in our annual reports 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) 861-0342

RECONCILIATION OF ADJUSTED EBITDA TO NET EARNINGS (LOSS)

We reconcile Adjusted EBITDA to net earnings (loss) for the consolidated company and to operating income (loss) 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 June 30, 2019:

 (millions)


Timberlands



Real Estate

& ENR



Wood

Products



Unallocated

Items



Total


Adjusted EBITDA by Segment:





















Net earnings


















$

128


Interest expense, net of capitalized interest



















91


Income taxes



















(37)


Net contribution to earnings (loss)


$

102



$

35



$

81



$

(36)



$

182


Non-operating pension and other postretirement benefit costs(1)












10




10


Interest income and other












(6)




(6)


Operating income (loss)



102




35




81




(32)




186


Depreciation, depletion and amortization



73




3




47




1




124


Basis of real estate sold






33










33


Adjusted EBITDA


$

175



$

71



$

128



$

(31)



$

343




(1)

Non-operating pension and other postretirement benefit costs includes a pretax special item consisting of a $6 million benefit from finalizing the noncash settlement charge incurred in first quarter 2019 related to the transfer of pension assets and liabilities through the purchase of a group annuity contract.

The table below reconciles Adjusted EBITDA for the quarter ended September 30, 2019:

 (millions)


Timberlands



Real Estate

& ENR



Wood

Products



Unallocated

Items



Total


Adjusted EBITDA by Segment:





















Net earnings


















$

99


Interest expense, net of capitalized interest



















91


Income taxes



















3


Net contribution to earnings (loss)


$

72



$

32



$

143



$

(54)



$

193


Non-operating pension and other postretirement benefit costs












15




15


Interest income and other












(6)




(6)


Operating income (loss)



72




32




143




(45)




202


Depreciation, depletion and amortization



82




4




48




1




135


Basis of real estate sold






24










24


Special items included in operating income (loss)(1)









(68)




15




(53)


Adjusted EBITDA


$

154



$

60



$

123



$

(29)



$

308




(1)

Operating income (loss) includes pretax special items consisting of a $68 million product remediation insurance recovery and a $15 million legal charge.

 

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

 (millions)


Timberlands



Real Estate

& ENR



Wood

Products



Unallocated

Items



Total


Adjusted EBITDA by Segment:





















Net earnings


















$

255


Interest expense, net of capitalized interest



















93


Income taxes(1)



















(15)


Net contribution to earnings (loss)


$

126



$

36



$

213



$

(42)



$

333


Non-operating pension and other postretirement benefit costs












17




17


Interest income and other












(13)




(13)


Operating income (loss)



126




36




213




(38)




337


Depreciation, depletion and amortization



80




4




37




1




122


Basis of real estate sold






46










46


Adjusted EBITDA


$

206



$

86



$

250



$

(37)



$

505




(1)

Income taxes includes a $41 million tax benefit related to our $300 million pension contribution. There were no pretax special items in third quarter 2018.

RECONCILIATION OF NET EARNINGS BEFORE SPECIAL ITEMS TO NET EARNINGS

We reconcile net earnings before special items to net earnings and net earnings per diluted share before special items to net earnings per diluted share, as those are the most directly comparable U.S. GAAP measures. We believe the measures provide meaningful supplemental information for investors about our operating performance, better facilitate period to period comparisons, and are widely used by analysts, lenders, rating agencies and other interested parties.

The table below reconciles net earnings before special items to net earnings:



2019


2019


2018

(millions)


Q2


Q3


Q3

Net earnings


$128


$99


$255

Legal charge



11


Pension settlement charge


(5)



Product remediation recovery



(51)


Tax adjustment




(41)

Net earnings before special items


$123


$59


$214

The table below reconciles net earnings per diluted share before special items to net earnings per diluted share:



2019


2019


2018



Q2


Q3


Q3

Net earnings per diluted share


$0.17


$0.13


$0.34

Legal charge



0.02


Pension settlement charge


(0.01)



Product remediation recovery



(0.07)


Tax adjustment




(0.06)

Net earnings per diluted share before special items


$0.16


$0.08


$0.28

 

Weyerhaeuser Company

Exhibit 99.2

Q3.2019 Analyst Package

Preliminary results (unaudited)


Consolidated Statement of Operations




Q1



Q2



Q3



Year-to-Date


in millions


March 31,

2019



June 30,

2019



September 30,

2019



September 30,

2018



September 30,

2019



September 30,

2018


Net sales


$

1,643



$

1,692



$

1,671



$

1,910



$

5,006



$

5,840


Costs of sales



1,322




1,390




1,399




1,452




4,111




4,247


Gross margin



321




302




272




458




895




1,593


Selling expenses



21




21




20




20




62




66


General and administrative expenses



89




80




85




78




254




236


Research and development expenses



1




2




1




2




4




6


Product remediation recoveries, net









(68)







(68)





Other operating costs, net



36




13




32




21




81




68


Operating income



174




186




202




337




562




1,217


Non-operating pension and other

postretirement benefit costs



(470)




(10)




(15)




(17)




(495)




(54)


Interest income and other



10




6




6




13




22




36


Interest expense, net of capitalized interest



(107)




(91)




(91)




(93)




(289)




(278)


Earnings (loss) before income taxes



(393)




91




102




240




(200)




921


Income taxes



104




37




(3)




15




138




(80)


Net earnings (loss)


$

(289)



$

128



$

99



$

255



$

(62)



$

841



Per Share Information





Q1



Q2



Q3



Year-to-Date




March 31,

2019



June 30,

2019



September 30,

2019



September 30,

2018



September 30,

2019



September 30,

2018


Earnings (loss) per share, basic and diluted


$

(0.39)



$

0.17



$

0.13



$

0.34



$

(0.08)



$

1.11


Dividends paid per common share


$

0.34



$

0.34



$

0.34



$

0.34



$

1.02



$

0.98


Weighted average shares outstanding (in thousands):

























Basic



746,603




745,486




745,626




754,986




745,901




756,531


Diluted



746,603




746,232




746,514




757,389




745,901




759,116


Common shares outstanding at end of period (in thousands)



744,767




744,905




745,071




749,199




745,071




749,199



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




Q1



Q2



Q3



Year-to-Date


in millions


March 31,

2019



June 30,

2019



September 30,

2019



September 30,

2018



September 30,

2019



September 30,

2018


Net earnings (loss)


$

(289)



$

128



$

99



$

255



$

(62)



$

841


Non-operating pension and other postretirement benefit costs



470




10




15




17




495




54


Interest income and other



(10)




(6)




(6)




(13)




(22)




(36)


Interest expense, net of capitalized interest



107




91




91




93




289




278


Income taxes



(104)




(37)




3




(15)




(138)




80


Operating income



174




186




202




337




562




1,217


Depreciation, depletion and amortization



123




124




135




122




382




361


Basis of real estate sold



48




33




24




46




105




80


Special items included in operating income



20







(53)







(33)




28


Adjusted EBITDA(1)


$

365



$

343



$

308



$

505



$

1,016



$

1,686




(1)

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, and special items. 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

Q3.2019 Analyst Package

Preliminary results (unaudited)


Special Items Included in Net Earnings (Income Tax Affected)




Q1



Q2



Q3



Year-to-Date


in millions


March 31,

2019



June 30,

2019



September 30,

2019



September 30,

2018



September 30,

2019



September 30,

2018


Net earnings (loss)


$

(289)



$

128



$

99



$

255



$

(62)



$

841


Early extinguishment of debt charge(1)



9













9





Environmental remediation charge


















21


Legal charges



15







11







26





Pension settlement charges



345




(5)










340





Product remediation recoveries, net









(51)







(51)





Tax adjustment












(41)







(41)


Net earnings before special items(2)


$

80



$

123



$

59



$

214



$

262



$

821





Q1



Q2



Q3



Year-to-Date




March 31,

2019



June 30,

2019



September 30,

2019



September 30,

2018



September 30,

2019



September 30,

2018


Net earnings (loss) per diluted share


$

(0.39)



$

0.17



$

0.13



$

0.34



$

(0.08)



$

1.11


Early extinguishment of debt charge(1)



0.01













0.01





Environmental remediation charge


















0.03


Legal charges



0.02







0.02







0.04





Pension settlement charges



0.47




(0.01)










0.46





Product remediation recoveries, net









(0.07)







(0.07)





Tax adjustment












(0.06)







(0.06)


Net earnings per diluted share before special items(2)


$

0.11



$

0.16



$

0.08



$

0.28



$

0.36



$

1.08




(1)

During first quarter 2019, we recorded a $12 million pretax ($9 million after-tax) charge related to the early extinguishment of debt. This charge is included in Interest expense, net of capitalized interest in the Consolidated Statement of Operations.

(2)

Net earnings before special items is a non-GAAP measure that management believes provides helpful context in understanding the company's earnings performance. Net earnings before special items should not be considered in isolation from, and is not intended to represent an alternative to, our GAAP results.


Selected Total Company Items




Q1



Q2



Q3



Year-to-Date


in millions


March 31,

2019



June 30,

2019



September 30,

2019



September 30,

2018



September 30,

2019



September 30,

2018


Pension and postretirement costs:

























Pension and postretirement service costs


$

8



$

8



$

8



$

10



$

24



$

28


Non-operating pension and other postretirement benefit costs



470




10




15




17




495




54


Total company pension and postretirement costs


$

478



$

18



$

23



$

27



$

519



$

82


 

Weyerhaeuser Company

Q3.2019 Analyst Package

Preliminary results (unaudited)


Consolidated Balance Sheet


in millions


March 31,

2019



June 30,

2019



September 30,

2019



December 31,

2018


ASSETS

















Current assets:

















Cash and cash equivalents


$

259



$

212



$

153



$

334


Receivables, less discounts and allowances



398




408




368




337


Receivables for taxes



163




157




149




137


Inventories



451




425




393




389


Assets held for sale









251





Prepaid expenses and other current assets



141




132




141




152


Current restricted financial investments held by variable interest entities



362




362




362




253


Total current assets



1,774




1,696




1,817




1,602


Property and equipment, net



1,917




1,901




1,860




1,857


Construction in progress



102




134




187




136


Timber and timberlands at cost, less depletion



12,586




12,516




12,192




12,671


Minerals and mineral rights, less depletion



291




288




284




294


Deferred tax assets



18




33




31




15


Other assets



444




461




461




312


Restricted financial investments held by variable interest entities












362


Total assets


$

17,132



$

17,029



$

16,832



$

17,249



















LIABILITIES AND EQUITY

















Current liabilities:

















Current maturities of long-term debt


$



$



$



$

500


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



302




302







302


Borrowings on line of credit



245




140




440




425


Accounts payable



243




271




242




222


Accrued liabilities



411




510




487




490


Total current liabilities



1,201




1,223




1,169




1,939


Long-term debt, net



6,156




6,153




6,150




5,419


Deferred tax liabilities



34




17




25




43


Deferred pension and other postretirement benefits



542




515




506




527


Other liabilities



398




397




383




275


Total liabilities



8,331




8,305




8,233




8,203


Total equity



8,801




8,724




8,599




9,046


Total liabilities and equity


$

17,132



$

17,029



$

16,832



$

17,249


 

Weyerhaeuser Company

Q3.2019 Analyst Package

Preliminary results (unaudited)


Consolidated Statement of Cash Flows




Q1



Q2



Q3



Year-to-Date


in millions


March 31,

2019



June 30,

2019



September 30,

2019



September 30,

2018



September 30,

2019



September 30,

2018


Cash flows from operations:

























Net earnings (loss)


$

(289)



$

128



$

99



$

255



$

(62)



$

841


Noncash charges to earnings (loss):

























Depreciation, depletion and amortization



123




124




135




122




382




361


Basis of real estate sold



48




33




24




46




105




80


Deferred income taxes, net



(123)




(43)




2




86




(164)




111


Pension and other postretirement benefits



478




18




23




27




519




82


Share-based compensation expense



9




7




7




13




23




31


Change in:

























Receivables, less allowances



(77)




(10)




40




46




(47)




(55)


Receivables and payables for taxes



(31)




6




7




(124)




(18)




(109)


Inventories



(60)




28




30




27




(2)




(9)


Prepaid expenses and other current assets



(5)




8




2




(6)




5




(7)


Accounts payable and accrued liabilities



(82)




127




(58)




(63)




(13)




(133)


Pension and postretirement benefit contributions and payments



(14)




(13)




(9)




(323)




(36)




(355)


Other



9




(17)




(10)




(19)




(18)




(18)


Net cash from operations


$

(14)



$

396



$

292



$

87



$

674



$

820


Cash flows from investing activities:

























Capital expenditures for property and equipment


$

(41)



$

(71)



$

(87)



$

(94)



$

(199)



$

(238)


Capital expenditures for timberlands reforestation



(18)




(13)




(11)




(11)




(42)




(45)


Proceeds from note receivable held by variable interest entities



253













253





Other



18




1




1




(10)




20




19


Net cash from investing activities


$

212



$

(83)



$

(97)



$

(115)



$

32



$

(264)


Cash flows from financing activities:

























Cash dividends on common shares


$

(254)



$

(253)



$

(253)



$

(256)



$

(760)



$

(741)


Net proceeds from issuance of long-term debt



739













739





Payments of long-term debt



(512)













(512)




(62)


Proceeds from borrowings on line of credit



245




140




490







875





Payments on line of credit



(425)




(245)




(190)







(860)





Payments on debt held by variable interest entities









(302)







(302)





Proceeds from exercise of stock options



2




2




4




4




8




52


Repurchases of common shares



(60)










(273)




(60)




(273)


Other



(8)




(4)




(3)







(15)




(8)


Net cash from financing activities


$

(273)



$

(360)



$

(254)



$

(525)



$

(887)



$

(1,032)



























Net change in cash and cash equivalents


$

(75)



$

(47)



$

(59)



$

(553)



$

(181)



$

(476)


Cash and cash equivalents at beginning of period



334




259




212




901




334




824


Cash and cash equivalents at end of period


$

259



$

212



$

153



$

348



$

153



$

348



























Cash paid during the period for:

























Interest, net of amount capitalized


$

127



$

59



$

124



$

113



$

310



$

285


Income taxes


$

50



$

1



$

(5)



$

22



$

46



$

80


 

Weyerhaeuser Company

Timberlands Segment

Q3.2019 Analyst Package

Preliminary results (unaudited)


Segment Statement of Operations (1)


in millions


Q1.2019



Q2.2019



Q3.2019



Q3.2018



YTD.2019



YTD.2018


Sales to unaffiliated customers


$

431



$

401



$

398



$

459



$

1,230



$

1,425


Intersegment sales



125




131




125




128




381




409


Total net sales



556




532




523




587




1,611




1,834


Costs of sales



413




405




429




436




1,247




1,289


Gross margin



143




127




94




151




364




545


Selling expenses



1










1




1




2


General and administrative expenses



22




25




24




23




71




69


Research and development expenses



1




1




1




2




3




5


Other operating income, net



(1)




(1)




(3)




(1)




(5)




(7)


Operating income and Net contribution to earnings


$

120



$

102



$

72



$

126



$

294



$

476




(1)

In January 2019, we changed the way we report our Canadian Forestlands operations, which are primarily operated to supply Weyerhaeuser's Canadian Wood Products manufacturing facilities. As a result, we no longer report related intersegment sales in the Timberlands segment and we now record the minimal associated third-party log sales in the Wood Products segment. These collective transactions did not contribute any earnings to the Timberlands segment. We have conformed prior year presentations with the current year.


Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization(2)


in millions


Q1.2019



Q2.2019



Q3.2019



Q3.2018



YTD.2019



YTD.2018


Operating income


$

120



$

102



$

72



$

126



$

294



$

476


Depreciation, depletion and amortization



73




73




82




80




228




238


Adjusted EBITDA(2)


$

193



$

175



$

154



$

206



$

522



$

714




(2)

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


Selected Segment Items


in millions


Q1.2019



Q2.2019



Q3.2019



Q3.2018



YTD.2019



YTD.2018


Total decrease (increase) in working capital(3)


$

(24)



$

46



$

2



$

(32)



$

24



$

(2)


Cash spent for capital expenditures


$

(26)



$

(25)



$

(28)



$

(25)



$

(79)



$

(82)




(3)

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(4)






Q1.2019



Q2.2019



Q3.2019



Q3.2018



YTD.2019



YTD.2018


Third Party


Delivered logs:

























Net Sales


West


$

205



$

194



$

172



$

238



$

571



$

766


(millions)


South



159




156




168




157




483




472




North



29




17




24




25




70




70




Total delivered logs



393




367




364




420




1,124




1,308




Stumpage and pay-as-cut timber



9




10




10




13




29




39




Recreational and other lease revenue



15




15




15




16




45




44




Other revenue



14




9




9




10




32




34




Total


$

431



$

401



$

398



$

459



$

1,230



$

1,425


Delivered Logs


West


$

106.92



$

104.07



$

99.07



$

125.67



$

103.50



$

129.91


Third Party Sales


South


$

35.35



$

35.45



$

35.03



$

34.88



$

35.27



$

34.75


Realizations (per ton)


North


$

59.68



$

62.10



$

57.35



$

60.97



$

59.37



$

62.00


Delivered Logs


West



1,920




1,864




1,729




1,897




5,513




5,900


Third Party Sales


South



4,499




4,400




4,795




4,521




13,694




13,591


Volumes (tons, thousands)


North



494




263




429




414




1,186




1,131


Fee Harvest Volumes


West



2,385




2,455




2,183




2,305




7,023




7,108


(tons, thousands)


South



6,492




6,367




6,802




6,478




19,661




19,859




North



627




378




560




537




1,565




1,509




(4)

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

 

Weyerhaeuser Company

Real Estate, Energy & Natural Resources Segment

Q3.2019 Analyst Package

Preliminary results (unaudited)


Segment Statement of Operations


in millions


Q1.2019



Q2.2019



Q3.2019



Q3.2018



YTD.2019



YTD.2018


Net sales


$

118



$

81



$

69



$

96



$

268



$

205


Costs of sales



56




39




32




54




127




103


Gross margin



62




42




37




42




141




102


General and administrative expenses



7




7




6




6




20




19


Other operating income, net









(1)







(1)





Operating income and Net contribution to earnings


$

55



$

35



$

32



$

36



$

122



$

83



Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization(1)


in millions


Q1.2019



Q2.2019



Q3.2019



Q3.2018



YTD.2019



YTD.2018


Operating income


$

55



$

35



$

32



$

36



$

122



$

83


Depreciation, depletion and amortization



3




3




4




4




10




11


Basis of real estate sold



48




33




24




46




105




80


Adjusted EBITDA(1)


$

106



$

71



$

60



$

86



$

237



$

174




(1)

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


Selected Segment Items


in millions


Q1.2019



Q2.2019



Q3.2019



Q3.2018



YTD.2019



YTD.2018


Cash spent for capital expenditures


$



$



$



$



$



$



























 

Segment Statistics





Q1.2019



Q2.2019



Q3.2019



Q3.2018



YTD.2019



YTD.2018


Net Sales

Real Estate


$

96



$

59



$

45



$

76



$

200



$

148


(millions)

Energy and Natural Resources



22




22




24




20




68




57



Total


$

118



$

81



$

69



$

96



$

268



$

205


Acres Sold

Real Estate



38,834




47,031




18,057




61,681




103,922




99,742


Price per Acre

Real Estate


$

2,424



$

1,063



$

2,415



$

1,209



$

1,806



$

1,452


Basis as a Percent of Real Estate Net Sales

Real Estate



50

%



56

%



53

%



61

%



53

%



54

%

 

Weyerhaeuser Company

Wood Products Segment

Q3.2019 Analyst Package

Preliminary results (unaudited)


Segment Statement of Operations (1)


in millions


Q1.2019



Q2.2019



Q3.2019



Q3.2018



YTD.2019



YTD.2018


Net sales


$

1,094



$

1,210



$

1,204



$

1,355



$

3,508



$

4,210


Costs of sales



967




1,070




1,067




1,080




3,104




3,225


Gross margin



127




140




137




275




404




985


Selling expenses



19




20




20




18




59




61


General and administrative expenses



35




34




35




32




104




97


Research and development expenses






1










1




1


Product remediation recoveries, net









(68)







(68)





Other operating costs, net



4




4




7




12




15




14


Operating income and Net contribution to earnings


$

69



$

81



$

143



$

213



$

293



$

812




(1)

In January 2019, we changed the way we report our Canadian Forestlands operations, which are primarily operated to supply Weyerhaeuser's Canadian Wood Products manufacturing facilities. As a result, we now record the minimal associated third-party log sales in the Wood Products segment. These transactions do not contribute any earnings to the Wood Products segment. We have conformed prior year presentations with the current year.


Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization(2)


in millions


Q1.2019



Q2.2019



Q3.2019



Q3.2018



YTD.2019



YTD.2018


Operating income


$

69



$

81



$

143



$

213



$

293



$

812


Depreciation, depletion and amortization



46




47




48




37




141




109


Special items









(68)







(68)





Adjusted EBITDA(2)


$

115



$

128



$

123



$

250



$

366



$

921




(2)

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


Segment Special Items Included in Net Contribution to Earnings (Pretax)


in millions


Q1.2019



Q2.2019



Q3.2019



Q3.2018



YTD.2019



YTD.2018


Product remediation recoveries, net


$



$



$

68



$



$

68



$




























Selected Segment Items


in millions


Q1.2019



Q2.2019



Q3.2019



Q3.2018



YTD.2019



YTD.2018


Total decrease (increase) in working capital(3)


$

(155)



$

75



$

32



$

71



$

(48)



$

(152)


Cash spent for capital expenditures


$

(30)



$

(53)



$

(65)



$

(79)



$

(148)



$

(199)



(3)

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


Q1.2019



Q2.2019



Q3.2019



Q3.2018



YTD.2019



YTD.2018


Structural Lumber

Third party net sales


$

444



$

495



$

487



$

581



$

1,426



$

1,831


(volumes presented

Third party sales realizations


$

392



$

388



$

389



$

491



$

390



$

511


in board feet)

Third party sales volumes(4)



1,133




1,274




1,253




1,184




3,660




3,585



Production volumes



1,145




1,193




1,189




1,106




3,527




3,446


Engineered Solid

Third party net sales


$

116



$

134



$

138



$

132



$

388



$

400


Section

Third party sales realizations


$

2,218



$

2,214



$

2,188



$

2,208



$

2,206



$

2,150


(volumes presented

Third party sales volumes(4)



5.2




6.1




6.3




6.0




17.6




18.6


in cubic feet)

Production volumes



5.9




6.0




5.3




6.3




17.2




19.0


Engineered

Third party net sales


$

70



$

86



$

90



$

91



$

246



$

261


I-joists

Third party sales realizations


$

1,709



$

1,662



$

1,665



$

1,668



$

1,676



$

1,629


(volumes presented

Third party sales volumes(4)



41




52




54




54




147




160


in lineal feet)

Production volumes



44




47




48




46




139




154


Oriented Strand

Third party net sales


$

160



$

156



$

159



$

215



$

475



$

724


Board

Third party sales realizations


$

223



$

213



$

214



$

321



$

217



$

335


(volumes presented

Third party sales volumes(4)



717




733




740




669




2,190




2,162


in square feet 3/8")

Production volumes



729




736




747




665




2,212




2,146


Softwood Plywood

Third party net sales


$

44



$

44



$

42



$

53



$

130



$

158


(volumes presented

Third party sales realizations


$

383



$

380



$

346



$

439



$

369



$

446


in square feet 3/8")

Third party sales volumes(4)



115




115




121




122




351




355



Production volumes



98




104




100




106




302




308


Medium Density

Third party net sales


$

38



$

45



$

44



$

48



$

127



$

138


Fiberboard

Third party sales realizations


$

846



$

833



$

831



$

828



$

836



$

835


(volumes presented

Third party sales volumes(4)



44




55




53




59




152




165


in square feet 3/4")

Production volumes



45




61




47




61




153




168



(4)

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

 


Weyerhaeuser Company

Unallocated Items

Q3.2019 Analyst Package

Preliminary results (unaudited)


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


Contribution to Earnings


in millions


Q1.2019



Q2.2019



Q3.2019



Q3.2018



YTD.2019



YTD.2018


Unallocated corporate function and variable compensation expense


$

(19)



$

(12)



$

(19)



$

(19)



$

(50)



$

(56)


Liability classified share-based compensation



(4)







(1)




4




(5)




2


Foreign exchange gain (loss)



(3)




2




(1)




(2)




(2)




(2)


Elimination of intersegment profit in inventory and LIFO



(5)




(5)




6







(4)




(18)


Other, net



(39)




(17)




(30)




(21)




(86)




(80)


Operating income (loss)



(70)




(32)




(45)




(38)




(147)




(154)


Non-operating pension and other postretirement benefit costs



(470)




(10)




(15)




(17)




(495)




(54)


Interest income and other



10




6




6




13




22




36


Net contribution to earnings (loss)


$

(530)



$

(36)



$

(54)



$

(42)



$

(620)



$

(172)



Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization(1)


in millions


Q1.2019



Q2.2019



Q3.2019



Q3.2018



YTD.2019



YTD.2018


Operating income (loss)


$

(70)



$

(32)



$

(45)



$

(38)



$

(147)



$

(154)


Depreciation, depletion and amortization



1




1




1




1




3




3


Special items



20







15







35




28


Adjusted EBITDA(1)


$

(49)



$

(31)



$

(29)



$

(37)



$

(109)



$

(123)



(1)

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



Unallocated Special Items Included in Net Contribution to Earnings (Pretax)


in millions


Q1.2019



Q2.2019



Q3.2019



Q3.2018



YTD.2019



YTD.2018


Environmental remediation insurance charge


$



$



$



$



$



$

(28)


Legal charges



(20)







(15)







(35)




Special items included in operating income (loss)



(20)







(15)







(35)




(28)


Pension settlement charges(2)



(455)




6










(449)




Special items included in net contribution to earnings (loss)


$

(475)



$

6



$

(15)



$



$

(484)



$

(28)




(2)

During first quarter 2019, we recorded a $455 million pretax noncash settlement charge related to the transfer of pension assets and liabilities through the purchase of a group annuity contract. This charge was updated based on final pension asset and liability amounts during second quarter 2019, resulting in a $6 million pretax benefit for the quarter and a net $449 million pretax charge for year-to-date 2019.


Unallocated Selected Items


in millions


Q1.2019



Q2.2019



Q3.2019



Q3.2018



YTD.2019



YTD.2018


Cash spent for capital expenditures


$

(3)



$

(6)



$

(5)



$

(1)



$

(14)



$

(2)



























 

SOURCE Weyerhaeuser Company


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