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Weyerhaeuser reports second quarter results

- Achieved net earnings of $72 million, or $0.10 per diluted share

- Increased Adjusted EBITDA by more than 12 percent compared to second quarter 2019

Jul 31, 2020

SEATTLE, July 31, 2020 /PRNewswire/ -- Weyerhaeuser Company (NYSE: WY) today reported second quarter net earnings of $72 million, or 10 cents per diluted share, on net sales of $1.6 billion. This compares with net earnings of $128 million, or 17 cents per diluted share, on net sales of $1.7 billion for the same period last year.

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

Excluding a net after-tax charge of $5 million for special items, primarily related to the early extinguishment of debt, the company reported second quarter net earnings of $77 million, or 11 cents per diluted share. This compares with net earnings before special items of $123 million for the same period last year and $138 million for the first quarter of 2020.

Adjusted EBITDA for the second quarter of 2020 was $386 million compared with $343 million for the same period last year and $413 million for the first quarter of 2020.

"In the second quarter, we delivered strong results across each of our businesses despite the disruptive impacts of the COVID-19 pandemic," said Devin W. Stockfish, president and chief executive officer. "I am extremely proud of the dedication and focus of our teams as they safely adapted business practices, efficiently pivoted operating postures, and capitalized on operational excellence opportunities while navigating unprecedented fluctuations in market demand. This includes delivering record low cost performance in lumber despite significant production curtailments."

"These operational efforts, in conjunction with improving market conditions and our prior actions to enhance financial flexibility, enabled us to generate solid cash flow and strengthen our balance sheet. Entering the third quarter, U.S. housing activity is improving, but against a backdrop of rising COVID-19 infection rates and the rollback of certain economic reopening plans. We remain focused on operating safely and efficiently, effectively capitalizing on a full range of market conditions, and driving long-term value for our shareholders through disciplined, prudent capital allocation."

 

WEYERHAEUSER FINANCIAL HIGHLIGHTS

 

2020

 

2020

 

2019

(millions, except per share data)

 

Q1

 

Q2

 

Q2

Net sales

 

$1,728

 

$1,631

 

$1,692

Net earnings

 

$150

 

$72

 

$128

Net earnings per diluted share

 

$0.20

 

$0.10

 

$0.17

Weighted average shares outstanding, diluted

 

747

 

747

 

746

Net earnings before special items(1)(2)

 

$138

 

$77

 

$123

Net earnings per diluted share before special items(1)

 

$0.18

 

$0.11

 

$0.16

Adjusted EBITDA(1)

 

$413

 

$386

 

$343

   

(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 2020 after-tax special items include an $11 million net charge related to the early extinguishment of debt and a $6 million benefit related to a product remediation insurance recovery. Special items for other periods presented are included in the reconciliation tables following this release.

 

TIMBERLANDS

FINANCIAL HIGHLIGHTS

 

2020

 

2020

   

(millions)

 

Q1

 

Q2

 

Change

Net sales

 

$503

 

$480

 

($23)

Net contribution to pretax earnings

 

$105

 

$75

 

($30)

Adjusted EBITDA

 

$173

 

$140

 

($33)

Q2 2020 Performance – In the West, log sales volumes and average sales realizations were comparable to the first quarter, as lower volumes and realizations for domestic and Japan export logs were offset by improved China export volumes and realizations. Forestry and road spending was seasonally higher, and export costs increased. In the South, harvest volumes decreased approximately 4 percent and average sales realizations declined slightly due to mix. In the North, fee harvest volumes decreased seasonally due to spring breakup.

Q3 2020 Outlook – Weyerhaeuser expects third quarter earnings and Adjusted EBITDA will be lower than second quarter. In the West, the company anticipates slightly lower average log sales realizations and seasonally higher road, forestry, and per unit logging and hauling costs. The company expects higher average Western domestic log realizations, slightly lower export log realizations, and a higher proportion of domestic log sales compared with the second quarter. In the South, the company expects seasonally higher forestry expenses, decreased fee harvest volumes and slightly lower average log sales realizations, primarily due to mix.

REAL ESTATE, ENERGY & NATURAL RESOURCES

FINANCIAL HIGHLIGHTS

 

2020

 

2020

   

(millions)

 

Q1

 

Q2

 

Change

Net sales

 

$112

 

$65

 

($47)

Net contribution to pretax earnings

 

$36

 

$19

 

($17)

Adjusted EBITDA

 

$101

 

$57

 

($44)

Q2 2020 Performance – The number of real estate acres sold decreased compared with the first quarter, and average price per acre declined due to the mix of properties sold. Average land basis as a percent of sales increased slightly due to mix. Energy & Natural Resources earnings and Adjusted EBITDA were comparable to the first quarter.

Q3 2020 Outlook – Weyerhaeuser anticipates third quarter earnings and Adjusted EBITDA will be comparable to the second quarter. The company now expects full year 2020 Adjusted EBITDA for the segment will be approximately $235 million, an increase from the $200 million previously expected.

WOOD PRODUCTS

FINANCIAL HIGHLIGHTS

 

2020

 

2020

   

(millions)

 

Q1

 

Q2

 

Change

Net sales

 

$1,235

 

$1,207

 

($28)

Net contribution to pretax earnings

 

$134

 

$159

 

$25

Pretax benefit for special items

 

$—

 

($8)

 

($8)

Net contribution to pretax earnings before special items

 

$134

 

$151

 

$17

Adjusted EBITDA

 

$184

 

$198

 

$14

Q2 2020 Performance – Market demand for wood products declined sharply in April due to the economic impact of COVID-19 but rebounded later in the quarter. In April, Weyerhaeuser reduced production volumes across its manufacturing facilities to align with customer demand. As the quarter progressed, the company dynamically adjusted operating rates in response to improving market conditions.

Average sales realizations for lumber increased 5 percent compared with the first quarter, and manufacturing costs improved across all product lines due to operational excellence and cost management initiatives. This was partially offset by lower sales volumes for most product lines.

Second quarter special items consist of an $8 million pretax benefit from product remediation insurance proceeds.

Q3 2020 Outlook – Weyerhaeuser expects third quarter earnings and Adjusted EBITDA will be significantly higher than second quarter. To date, third quarter benchmark pricing for lumber and oriented strand board is significantly higher than the second quarter average. The company also anticipates increased sales volumes across most product lines.

UNALLOCATED

FINANCIAL HIGHLIGHTS

 

2020

 

2020

   

(millions)

 

Q1

 

Q2

 

Change

Net charge to pretax earnings

 

($43)

 

($18)

 

$25

Pretax benefit for special items

 

($12)

 

$—

 

$12

Net charge to pretax earnings before special items

 

($55)

 

($18)

 

$37

Adjusted EBITDA

 

($45)

 

($9)

 

$36

Q2 2020 Performance – Second quarter results include a benefit from elimination of intersegment profit in inventory and LIFO compared with a charge in the first quarter. The second quarter benefit was due to lower end of quarter log and lumber inventory levels.

INCOME TAXES

FINANCIAL HIGHLIGHTS

 

2020

 

2020

   

(millions)

 

Q1

 

Q2

 

Change

Income tax (expense) benefit

 

$3

 

($60)

 

($63)

Income tax (expense) benefit attributable to special items

 

$—

 

($2)

 

($2)

Income tax (expense) benefit before special items

 

$3

 

($58)

 

($61)

Q2 2020 Performance – The provision for income taxes was a charge for second quarter, compared with a benefit for first quarter, as the company adjusted its estimated annual effective tax rate to reflect higher average sales realizations for lumber and oriented strand board.

ABOUT WEYERHAEUSER

Weyerhaeuser Company, one of the world's largest private owners of timberlands, began operations in 1900. We own or control approximately 11 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 in North America. Our company is a real estate investment trust. In 2019, we generated $6.6 billion in net sales and employed approximately 9,400 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 July 31, 2020 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 31, 2020.

To join the conference call from within North America, dial 855-223-0757 (access code: 3297624) at least 15 minutes prior to the call. Those calling from outside North America should dial 574-990-1206 (access code: 3297624). Replays will be available for two weeks at 855-859-2056 (access code: 3297624) from within North America and at 404-537-3406 (access code: 3297624) 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, but not limited to, with respect to our outlook and expectations concerning the following: earnings and Adjusted EBITDA for each of our businesses; log sale realizations and sales volumes; log export sales volumes; fee harvest volumes; road, forestry and logging and hauling costs; and sales volumes across all of our wood products lines. Forward-looking statements are generally identified by words such as "believe," "project," "expect," "anticipate," "estimate," "intend," "strategy," "future," "opportunity," "plan," "may," "should," "will," "would," and similar words and expressions. Forward-looking statements are based on our current expectations and assumptions. 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, general availability of financing for home mortgages and the relative strength of the U.S. dollar;
  • the effect of COVID-19 and other viral or disease outbreaks and their potential effects on our business, results of operations, cash flows, financial condition and future prospects;
  • market demand for the company's 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;
  • 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;
  • 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;
  • 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 employee 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 risks and uncertainties identified in our 2019 Annual Report on Form 10-K, as well as those set forth from time to time in our other public statements, reports, registration statements, prospectuses, information statements and other filings with the SEC.

It is not possible to predict or identify all risks and uncertainties that might affect the accuracy of our forward-looking statements and, consequently, our descriptions of such risks and uncertainties should not be considered exhaustive. There is no guarantee that any of the events anticipated by these forward-looking statements will occur, and if any of the events do occur, there is no guarantee what effect they will have on the company's business, results of operations, cash flows, financial condition and future prospects.

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.

RECONCILIATION OF ADJUSTED EBITDA TO NET EARNINGS

We reconcile Adjusted EBITDA to net earnings 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 March 31, 2020:

 

(millions)

 

Timberlands

   

Real Estate

& ENR

   

Wood

Products

   

Unallocated

Items

   

Total

 

Adjusted EBITDA by Segment:

                                       

Net earnings

                                 

$

150

 

Interest expense, net of capitalized interest

                                   

85

 

Income taxes

                                   

(3)

 

Net contribution (charge) to earnings

 

$

105

   

$

36

   

$

134

   

$

(43)

   

$

232

 

Non-operating pension and other postretirement benefit costs

   

     

     

     

9

     

9

 

Interest income and other

   

     

     

     

(1)

     

(1)

 

Operating income (loss)

   

105

     

36

     

134

     

(35)

     

240

 

Depreciation, depletion and amortization

   

68

     

3

     

50

     

2

     

123

 

Basis of real estate sold

   

     

62

     

     

     

62

 

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

   

     

     

     

(12)

     

(12)

 

Adjusted EBITDA

 

$

173

   

$

101

   

$

184

   

$

(45)

   

$

413

 
   

(1)

  Operating income (loss) includes a pretax special item consisting of a $12 million noncash legal benefit.

 

The table below reconciles Adjusted EBITDA for the quarter ended June 30, 2020:

 

(millions)

 

Timberlands

   

Real Estate

& ENR

   

Wood

Products

   

Unallocated

Items

   

Total

 

Adjusted EBITDA by Segment:

                                       

Net earnings

                                 

$

72

 

Interest expense, net of capitalized interest(1)

                                   

103

 

Income taxes

                                   

60

 

Net contribution (charge) to earnings

 

$

75

   

$

19

   

$

159

   

$

(18)

   

$

235

 

Non-operating pension and other postretirement benefit costs

   

     

     

     

10

     

10

 

Interest income and other

   

     

     

     

(2)

     

(2)

 

Operating income (loss)

   

75

     

19

     

159

     

(10)

     

243

 

Depreciation, depletion and amortization

   

65

     

4

     

47

     

1

     

117

 

Basis of real estate sold

   

     

34

     

     

     

34

 

Special items included in operating income (loss)(2)

   

     

     

(8)

     

     

(8)

 

Adjusted EBITDA

 

$

140

   

$

57

   

$

198

   

$

(9)

   

$

386

 
   

(1)

Interest expense, net of capitalized interest includes a pretax special item consisting of an $11 million net charge related to the early extinguishment of debt.

(2)

Operating income (loss) includes a pretax special item consisting of an $8 million product remediation insurance recovery.

 

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 (charge) to earnings

 

$

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 include 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.

 

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:

   

2020

 

2020

 

2019

(millions)

 

Q1

 

Q2

 

Q2

Net earnings

 

$150

 

$72

 

$128

Early extinguishment of debt charge

 

 

11

 

Legal benefit

 

(12)

 

 

Pension settlement benefit

 

 

 

(5)

Product remediation recovery

 

 

(6)

 

Net earnings before special items

 

$138

 

$77

 

$123

 

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

   

2020

 

2020

 

2019

   

Q1

 

Q2

 

Q2

Net earnings per diluted share

 

$0.20

 

$0.10

 

$0.17

Early extinguishment of debt charge

 

 

0.02

 

Legal benefit

 

(0.02)

 

 

Pension settlement benefit

 

 

 

(0.01)

Product remediation recovery

 

 

(0.01)

 

Net earnings per diluted share before special items

 

$0.18

 

$0.11

 

$0.16

 

                                                                                                                                                                                         

Exhibit 99.2

Weyerhaeuser Company                                                                                                                                                                                                                       

Q2.2020 Analyst Package      

Preliminary results (unaudited)

Consolidated Statement of Operations

 
   

Q1

   

Q2

   

Year-to-Date

 

in millions

 

March 31,

2020

   

June 30,

2020

   

June 30,

2019

   

June 30,

2020

   

June 30,

2019

 

Net sales

 

$

1,728

   

$

1,631

   

$

1,692

   

$

3,359

   

$

3,335

 

Costs of sales

   

1,382

     

1,283

     

1,390

     

2,665

     

2,712

 

Gross margin

   

346

     

348

     

302

     

694

     

623

 

Selling expenses

   

22

     

18

     

21

     

40

     

42

 

General and administrative expenses

   

74

     

84

     

80

     

158

     

169

 

Other operating costs (income), net

   

10

     

3

     

15

     

13

     

52

 

Operating income

   

240

     

243

     

186

     

483

     

360

 

Non-operating pension and other postretirement benefit costs

   

(9)

     

(10)

     

(10)

     

(19)

     

(480)

 

Interest income and other

   

1

     

2

     

6

     

3

     

16

 

Interest expense, net of capitalized interest

   

(85)

     

(103)

     

(91)

     

(188)

     

(198)

 

Earnings (loss) before income taxes

   

147

     

132

     

91

     

279

     

(302)

 

Income taxes

   

3

     

(60)

     

37

     

(57)

     

141

 

Net earnings (loss)

 

$

150

   

$

72

   

$

128

   

$

222

   

$

(161)

 

 

Per Share Information

 
   

Q1

   

Q2

   

Year-to-Date

 
   

March 31,

2020

   

June 30,

2020

   

June 30,

2019

   

June 30,

2020

   

June 30,

2019

 

Earnings (loss) per share, basic and diluted

 

$

0.20

   

$

0.10

   

$

0.17

   

$

0.30

   

$

(0.22)

 

Dividends paid per common share

 

$

0.34

   

$

   

$

0.34

   

$

0.34

   

$

0.68

 

Weighted average shares outstanding (in thousands):

                                       

Basic

   

746,534

     

746,896

     

745,486

     

746,715

     

746,041

 

Diluted

   

747,155

     

746,984

     

746,232

     

747,070

     

746,041

 

Common shares outstanding at end of period (in thousands)

   

746,206

     

746,251

     

744,905

     

746,251

     

744,905

 

 

 

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

 
   

Q1

   

Q2

   

Year-to-Date

 

in millions

 

March 31,

2020

   

June 30,

2020

   

June 30,

2019

   

June 30,

2020

   

June 30,

2019

 

Net earnings (loss)

 

$

150

   

$

72

   

$

128

   

$

222

   

$

(161)

 

Non-operating pension and other postretirement benefit costs

   

9

     

10

     

10

     

19

     

480

 

Interest income and other

   

(1)

     

(2)

     

(6)

     

(3)

     

(16)

 

Interest expense, net of capitalized interest

   

85

     

103

     

91

     

188

     

198

 

Income taxes

   

(3)

     

60

     

(37)

     

57

     

(141)

 

Operating income

   

240

     

243

     

186

     

483

     

360

 

Depreciation, depletion and amortization

   

123

     

117

     

124

     

240

     

247

 

Basis of real estate sold

   

62

     

34

     

33

     

96

     

81

 

Special items included in operating income

   

(12)

     

(8)

     

     

(20)

     

20

 

Adjusted EBITDA(1)

 

$

413

   

$

386

   

$

343

   

$

799

   

$

708

 
   

(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.

 

Total Company Statistics

Weyerhaeuser Company

Q2.2020 Analyst Package

Preliminary results (unaudited)

Special Items Included in Net Earnings (Income Tax Affected)

 
   

Q1

   

Q2

   

Year-to-Date

 

in millions

 

March 31,

2020

   

June 30,

2020

   

June 30,

2019

   

June 30,

2020

   

June 30,

2019

 

Net earnings (loss)

 

$

150

   

$

72

   

$

128

   

$

222

   

$

(161)

 

Early extinguishment of debt charges(1)

   

     

11

     

     

11

     

9

 

Legal charge (benefit)

   

(12)

     

     

     

(12)

     

15

 

Pension settlement charges

   

     

     

(5)

     

     

340

 

Product remediation recovery

   

     

(6)

     

     

(6)

     

 

Net earnings before special items(2)

 

$

138

   

$

77

   

$

123

   

$

215

   

$

203

 

 

   

Q1

   

Q2

   

Year-to-Date

 
   

March 31,

2020

   

June 30,

2020

   

June 30,

2019

   

June 30,

2020

   

June 30,

2019

 

Net earnings (loss) per diluted share

 

$

0.20

   

$

0.10

   

$

0.17

   

$

0.30

   

$

(0.22)

 

Early extinguishment of debt charges(1)

   

     

0.02

     

     

0.02

     

0.01

 

Legal charge (benefit)

   

(0.02)

     

     

     

(0.02)

     

0.02

 

Pension settlement charges

   

     

     

(0.01)

     

     

0.46

 

Product remediation recovery

   

     

(0.01)

     

     

(0.01)

     

 

Net earnings per diluted share before special items(2)

 

$

0.18

   

$

0.11

   

$

0.16

   

$

0.29

   

$

0.27

 
   

(1)  

We recorded pretax charges of $12 million ($9 million after-tax) and $11 million ($11 million after-tax) related to the early extinguishment of debt in first quarter 2019 and second quarter 2020, respectively. These charges were 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

   

Year-to-Date

 

in millions

 

March 31,

2020

   

June 30,

2020

   

June 30,

2019

   

June 30,

2020

   

June 30,

2019

 

Pension and postretirement costs:

                                       

Pension and postretirement service costs

 

$

10

   

$

8

   

$

8

   

$

18

   

$

16

 

Non-operating pension and other postretirement benefit costs

   

9

     

10

     

10

     

19

     

480

 

Total company pension and postretirement costs

 

$

19

   

$

18

   

$

18

   

$

37

   

$

496

 

 

 

 

Weyerhaeuser Company

Q2.2020 Analyst Package

Preliminary results (unaudited)

Consolidated Balance Sheet

 

in millions

 

March 31,

2020

   

June 30,

2020

   

December 31,

2019

 

ASSETS

                       

Current assets:

                       

Cash and cash equivalents

 

$

1,458

   

$

643

   

$

139

 

Receivables, net

   

390

     

420

     

309

 

Receivables for taxes

   

24

     

48

     

98

 

Inventories

   

480

     

409

     

416

 

Assets held for sale

   

     

     

140

 

Prepaid expenses and other current assets

   

141

     

131

     

147

 

Current restricted financial investments held by variable interest entities

   

     

     

362

 

Total current assets

   

2,493

     

1,651

     

1,611

 

Property and equipment, net

   

1,911

     

1,958

     

1,969

 

Construction in progress

   

153

     

110

     

130

 

Timber and timberlands at cost, less depletion

   

11,847

     

11,780

     

11,929

 

Minerals and mineral rights, less depletion

   

278

     

275

     

281

 

Deferred tax assets

   

147

     

65

     

72

 

Other assets

   

399

     

415

     

414

 

Total assets

 

$

17,228

   

$

16,254

   

$

16,406

 
                         

LIABILITIES AND EQUITY

                       

Current liabilities:

                       

Current maturities of long-term debt

 

$

577

   

$

   

$

 

Borrowings on line of credit

   

550

     

     

230

 

Accounts payable

   

241

     

199

     

246

 

Accrued liabilities

   

448

     

525

     

530

 

Total current liabilities

   

1,816

     

724

     

1,006

 

Long-term debt, net

   

6,299

     

6,299

     

6,147

 

Deferred tax liabilities

   

10

     

18

     

6

 

Deferred pension and other postretirement benefits

   

669

     

652

     

693

 

Other liabilities

   

352

     

359

     

377

 

Total liabilities

   

9,146

     

8,052

     

8,229

 

Total equity

   

8,082

     

8,202

     

8,177

 

Total liabilities and equity

 

$

17,228

   

$

16,254

   

$

16,406

 

 

 

Weyerhaeuser Company

Q2.2020 Analyst Package

Preliminary results (unaudited)

 

Consolidated Statement of Cash Flows

 
   

Q1

   

Q2

   

Year-to-Date

 

in millions

 

March 31,

2020

   

June 30,

2020

   

June 30,

2019

   

June 30,

2020

   

June 30,

2019

 

Cash flows from operations:

                                       

Net earnings (loss)

 

$

150

   

$

72

   

$

128

   

$

222

   

$

(161)

 

Noncash charges (credits) to earnings (loss):

                                       

Depreciation, depletion and amortization

   

123

     

117

     

124

     

240

     

247

 

Basis of real estate sold

   

62

     

34

     

33

     

96

     

81

 

Deferred income taxes, net

   

(82)

     

80

     

(43)

     

(2)

     

(166)

 

Pension and other postretirement benefits

   

19

     

18

     

18

     

37

     

496

 

Share-based compensation expense

   

7

     

8

     

7

     

15

     

16

 

Change in:

                                       

Receivables, less allowances

   

(82)

     

(30)

     

(10)

     

(112)

     

(87)

 

Receivables and payables for taxes

   

79

     

(18)

     

6

     

61

     

(25)

 

Inventories

   

(72)

     

74

     

28

     

2

     

(32)

 

Prepaid expenses and other current assets

   

(2)

     

7

     

8

     

5

     

3

 

Accounts payable and accrued liabilities

   

(91)

     

30

     

127

     

(61)

     

45

 

Pension and postretirement benefit contributions and payments

   

(10)

     

(6)

     

(13)

     

(16)

     

(27)

 

Other

   

(15)

     

5

     

(17)

     

(10)

     

(8)

 

Net cash from operations

 

$

86

   

$

391

   

$

396

   

$

477

   

$

382

 

Cash flows from investing activities:

                                       

Capital expenditures for property and equipment

 

$

(47)

   

$

(55)

   

$

(71)

   

$

(102)

   

$

(112)

 

Capital expenditures for timberlands reforestation

   

(21)

     

(11)

     

(13)

     

(32)

     

(31)

 

Proceeds from note receivable held by variable interest entities

   

362

     

     

     

362

     

253

 

Proceeds from sale of nonstrategic timberlands

   

145

     

     

     

145

     

 

Other

   

2

     

1

     

1

     

3

     

19

 

Net cash from investing activities

 

$

441

   

$

(65)

   

$

(83)

   

$

376

   

$

129

 

Cash flows from financing activities:

                                       

Cash dividends on common shares

 

$

(254)

   

$

   

$

(253)

   

$

(254)

   

$

(507)

 

Net proceeds from issuance of long-term debt

   

732

     

     

     

732

     

739

 

Payments of long-term debt

   

     

(588)

     

     

(588)

     

(512)

 

Proceeds from borrowings on line of credit

   

550

     

     

140

     

550

     

385

 

Payments on line of credit

   

(230)

     

(550)

     

(245)

     

(780)

     

(670)

 

Proceeds from exercise of stock options

   

6

     

     

2

     

6

     

4

 

Repurchases of common shares

   

     

     

     

     

(60)

 

Other

   

(12)

     

(3)

     

(4)

     

(15)

     

(12)

 

Net cash from financing activities

 

$

792

   

$

(1,141)

   

$

(360)

   

$

(349)

   

$

(633)

 
                                         

Net change in cash and cash equivalents

 

$

1,319

   

$

(815)

   

$

(47)

   

$

504

   

$

(122)

 

Cash and cash equivalents at beginning of period

   

139

     

1,458

     

259

     

139

     

334

 

Cash and cash equivalents at end of period

 

$

1,458

   

$

643

   

$

212

   

$

643

   

$

212

 
                                         

Cash paid (received) during the period for:

                                       

Interest, net of amounts capitalized

 

$

108

   

$

70

   

$

60

   

$

178

   

$

187

 

Income taxes, net of refunds

 

$

   

$

1

   

$

1

   

$

1

   

$

51

 

 

 

Timberlands Segment

Weyerhaeuser Company

Q2.2020 Analyst Package

Preliminary results (unaudited)

Segment Statement of Operations

 

in millions

 

Q1.2020

   

Q2.2020

   

Q2.2019

   

YTD.2020

   

YTD.2019

 

Sales to unaffiliated customers

 

$

381

   

$

359

   

$

401

   

$

740

   

$

832

 

Intersegment sales

   

122

     

121

     

131

     

243

     

256

 

Total net sales

   

503

     

480

     

532

     

983

     

1,088

 

Costs of sales

   

375

     

383

     

405

     

758

     

818

 

Gross margin

   

128

     

97

     

127

     

225

     

270

 

Selling expenses

   

     

1

     

     

1

     

1

 

General and administrative expenses

   

24

     

22

     

25

     

46

     

47

 

Other operating income, net

   

(1)

     

(1)

     

     

(2)

     

 

Operating income and Net contribution to earnings

 

$

105

   

$

75

   

$

102

   

$

180

   

$

222

 

 

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

 

in millions

 

Q1.2020

   

Q2.2020

   

Q2.2019

   

YTD.2020

   

YTD.2019

 

Operating income

 

$

105

   

$

75

   

$

102

   

$

180

   

$

222

 

Depreciation, depletion and amortization

   

68

     

65

     

73

     

133

     

146

 

Adjusted EBITDA(1)

 

$

173

   

$

140

   

$

175

   

$

313

   

$

368

 
   

(1)

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

 

Selected Segment Items

in millions

 

Q1.2020

   

Q2.2020

   

Q2.2019

   

YTD.2020

   

YTD.2019

 

Total decrease (increase) in working capital(2)

 

$

(3)

   

$

(2)

   

$

46

   

$

(5)

   

$

22

 

Cash spent for capital expenditures

 

$

(30)

   

$

(21)

   

$

(25)

   

$

(51)

   

$

(51)

 
   

(2)

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(3)

 
       

Q1.2020

   

Q2.2020

   

Q2.2019

   

YTD.2020

   

YTD.2019

 

Third Party

 

Delivered logs:

                                       

Net Sales

 

West

 

$

177

   

$

179

   

$

194

   

$

356

   

$

399

 

(millions)

 

South

   

150

     

145

     

156

     

295

     

315

 
   

North

   

17

     

7

     

17

     

24

     

46

 
   

Total delivered logs

   

344

     

331

     

367

     

675

     

760

 
   

Stumpage and pay-as-cut timber

   

5

     

5

     

10

     

10

     

19

 
   

Recreational and other lease revenue

   

15

     

16

     

15

     

31

     

30

 
   

Other revenue

   

17

     

7

     

9

     

24

     

23

 
   

Total

 

$

381

   

$

359

   

$

401

   

$

740

   

$

832

 

Delivered Logs

 

West

 

$

104.91

   

$

104.90

   

$

104.07

   

$

104.91

   

$

105.52

 

Third Party Sales

 

South

 

$

34.27

   

$

33.68

   

$

35.45

   

$

33.97

   

$

35.40

 

Realizations (per ton)

 

North

 

$

60.51

   

$

59.82

   

$

62.10

   

$

60.31

   

$

60.52

 

Delivered Logs

 

West

   

1,684

     

1,714

     

1,864

     

3,398

     

3,784

 

Third Party Sales

 

South

   

4,365

     

4,307

     

4,400

     

8,672

     

8,899

 

Volumes (tons, thousands)

 

North

   

284

     

113

     

263

     

397

     

757

 

Fee Harvest Volumes

 

West

   

2,310

     

2,236

     

2,455

     

4,546

     

4,840

 

(tons, thousands)

 

South

   

6,130

     

5,914

     

6,367

     

12,044

     

12,859

 
   

North

   

386

     

194

     

378

     

580

     

1,005

 
   

(3) 

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

 

Real Estate, Energy & Natural Resources Segment

Weyerhaeuser Company

Q2.2020 Analyst Package

Preliminary results (unaudited)

Segment Statement of Operations

 

in millions

 

Q1.2020

   

Q2.2020

   

Q2.2019

   

YTD.2020

   

YTD.2019

 

Net sales

 

$

112

   

$

65

   

$

81

   

$

177

   

$

199

 

Costs of sales

   

70

     

40

     

39

     

110

     

95

 

Gross margin

   

42

     

25

     

42

     

67

     

104

 

General and administrative expenses

   

6

     

6

     

7

     

12

     

14

 

Operating income and Net contribution to earnings

 

$

36

   

$

19

   

$

35

   

$

55

   

$

90

 

 

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

 

in millions

 

Q1.2020

   

Q2.2020

   

Q2.2019

   

YTD.2020

   

YTD.2019

 

Operating income

 

$

36

   

$

19

   

$

35

   

$

55

   

$

90

 

Depreciation, depletion and amortization

   

3

     

4

     

3

     

7

     

6

 

Basis of real estate sold

   

62

     

34

     

33

     

96

     

81

 

Adjusted EBITDA(1)

 

$

101

   

$

57

   

$

71

   

$

158

   

$

177

 
   

(1)

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

 

Selected Segment Items

 

in millions

 

Q1.2020

   

Q2.2020

   

Q2.2019

   

YTD.2020

   

YTD.2019

 

Cash spent for capital expenditures

 

$

   

$

   

$

   

$

   

$

 
                                         

 

Segment Statistics

 
     

Q1.2020

   

Q2.2020

   

Q2.2019

   

YTD.2020

   

YTD.2019

 

Net Sales

Real Estate

 

$

95

   

$

48

   

$

59

   

$

143

   

$

155

 

(millions)

Energy and Natural Resources

   

17

     

17

     

22

     

34

     

44

 
 

Total

 

$

112

   

$

65

   

$

81

   

$

177

   

$

199

 

Acres Sold

Real Estate

   

44,974

     

31,337

     

47,031

     

76,310

     

85,865

 

Price per Acre

Real Estate

 

$

1,992

   

$

1,501

   

$

1,063

   

$

1,790

   

$

1,678

 

Basis as a Percent of

Real Estate Net Sales

Real Estate

   

65

%

   

71

%

   

56

%

   

67

%

   

52

%

 

 

Wood Products Segment

Weyerhaeuser Company

Q2.2020 Analyst Package

Preliminary results (unaudited)

Segment Statement of Operations

 

in millions

 

Q1.2020

   

Q2.2020

   

Q2.2019

   

YTD.2020

   

YTD.2019

 

Net sales

 

$

1,235

   

$

1,207

   

$

1,210

   

$

2,442

   

$

2,304

 

Costs of sales

   

1,040

     

997

     

1,070

     

2,037

     

2,037

 

Gross margin

   

195

     

210

     

140

     

405

     

267

 

Selling expenses

   

21

     

18

     

20

     

39

     

39

 

General and administrative expenses

   

36

     

33

     

34

     

69

     

69

 

Other operating costs, net

   

4

     

     

5

     

4

     

9

 

Operating income and Net contribution to earnings

 

$

134

   

$

159

   

$

81

   

$

293

   

$

150

 

 

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

 

in millions

 

Q1.2020

   

Q2.2020

   

Q2.2019

   

YTD.2020

   

YTD.2019

 

Operating income

 

$

134

   

$

159

   

$

81

   

$

293

   

$

150

 

Depreciation, depletion and amortization

   

50

     

47

     

47

     

97

     

93

 

Special items

   

     

(8)

     

     

(8)

     

 

Adjusted EBITDA(1)

 

$

184

   

$

198

   

$

128

   

$

382

   

$

243

 
   

(1)

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

 

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

 

in millions

 

Q1.2020

   

Q2.2020

   

Q2.2019

   

YTD.2020

   

YTD.2019

 

Product remediation recovery

 

$

   

$

8

   

$

   

$

8

   

$

 
                                         

 

Selected Segment Items

 

in millions

 

Q1.2020

   

Q2.2020

   

Q2.2019

   

YTD.2020

   

YTD.2019

 

Total decrease (increase) in working capital(2)

 

$

(186)

   

$

56

   

$

75

   

$

(130)

   

$

(80)

 

Cash spent for capital expenditures

 

$

(38)

   

$

(45)

   

$

(53)

   

$

(83)

   

$

(83)

 
   

(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

 

Q1.2020

   

Q2.2020

   

Q2.2019

   

YTD.2020

   

YTD.2019

 

Structural Lumber

Third party net sales

 

$

508

   

$

538

   

$

495

   

$

1,046

   

$

939

 

(volumes presented

Third party sales realizations

 

$

416

   

$

438

   

$

388

   

$

427

   

$

390

 

in board feet)

Third party sales volumes(3)

   

1,222

     

1,225

     

1,274

     

2,447

     

2,407

 
 

Production volumes

   

1,209

     

1,108

     

1,193

     

2,317

     

2,338

 

Oriented Strand

Third party net sales

 

$

190

   

$

179

   

$

156

   

$

369

   

$

316

 

Board

Third party sales realizations

 

$

246

   

$

240

   

$

213

   

$

243

   

$

218

 

(volumes presented

Third party sales volumes(3)

   

770

     

747

     

733

     

1,517

     

1,450

 

in square feet 3/8")

Production volumes

   

777

     

742

     

736

     

1,519

     

1,465

 

Engineered Solid

Third party net sales

 

$

127

   

$

111

   

$

134

   

$

238

   

$

250

 

Section

Third party sales realizations

 

$

2,149

   

$

2,151

   

$

2,214

   

$

2,150

   

$

2,216

 

(volumes presented

Third party sales volumes(3)

   

5.9

     

5.2

     

6.1

     

11.1

     

11.3

 

in cubic feet)

Production volumes

   

6.1

     

5.3

     

6.0

     

11.4

     

11.9

 

Engineered

Third party net sales

 

$

78

   

$

70

   

$

86

   

$

148

   

$

156

 

I-joists

Third party sales realizations

 

$

1,667

   

$

1,645

   

$

1,662

   

$

1,656

   

$

1,683

 

(volumes presented

Third party sales volumes(3)

   

47

     

42

     

52

     

89

     

93

 

in lineal feet)

Production volumes

   

47

     

38

     

47

     

85

     

91

 

Softwood Plywood

Third party net sales

 

$

39

   

$

34

   

$

44

   

$

73

   

$

88

 

(volumes presented

Third party sales realizations

 

$

348

   

$

356

   

$

380

   

$

352

   

$

382

 

in square feet 3/8")

Third party sales volumes(3)

   

113

     

95

     

115

     

208

     

230

 
 

Production volumes

   

97

     

76

     

104

     

173

     

202

 

Medium Density

Third party net sales

 

$

44

   

$

33

   

$

45

   

$

77

   

$

83

 

Fiberboard

Third party sales realizations

 

$

841

   

$

825

   

$

833

   

$

834

   

$

839

 

(volumes presented

Third party sales volumes(3)

   

52

     

40

     

55

     

92

     

99

 

in square feet 3/4")

Production volumes

   

56

     

35

     

61

     

91

     

106

 
   

(3)

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

 

Unallocated Items

Weyerhaeuser Company

Q2.2020 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.

 

Net Charge to Earnings

 

in millions

 

Q1.2020

   

Q2.2020

   

Q2.2019

   

YTD.2020

   

YTD.2019

 

Unallocated corporate function and variable compensation expense

 

$

(19)

   

$

(23)

   

$

(12)

   

$

(42)

   

$

(31)

 

Liability classified share-based compensation

   

10

     

(4)

     

     

6

     

(4)

 

Foreign exchange gain (loss)

   

(8)

     

3

     

2

     

(5)

     

(1)

 

Elimination of intersegment profit in inventory and LIFO

   

(13)

     

18

     

(5)

     

5

     

(10)

 

Other, net

   

(5)

     

(4)

     

(17)

     

(9)

     

(56)

 

Operating income (loss)

   

(35)

     

(10)

     

(32)

     

(45)

     

(102)

 

Non-operating pension and other postretirement benefit costs

   

(9)

     

(10)

     

(10)

     

(19)

     

(480)

 

Interest income and other

   

1

     

2

     

6

     

3

     

16

 

Net charge to earnings

 

$

(43)

   

$

(18)

   

$

(36)

   

$

(61)

   

$

(566)

 

 

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

 

in millions

 

Q1.2020

   

Q2.2020

   

Q2.2019

   

YTD.2020

   

YTD.2019

 

Operating income (loss)

 

$

(35)

   

$

(10)

   

$

(32)

   

$

(45)

   

$

(102)

 

Depreciation, depletion and amortization

   

2

     

1

     

1

     

3

     

2

 

Special items

   

(12)

     

     

     

(12)

     

20

 

Adjusted EBITDA(1)

 

$

(45)

   

$

(9)

   

$

(31)

   

$

(54)

   

$

(80)

 
   

(1)

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

 

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

 

in millions

 

Q1.2020

   

Q2.2020

   

Q2.2019

   

YTD.2020

   

YTD.2019

 

Legal benefit (charge)

   

12

     

     

     

12

     

(20)

 

Special items included in operating income (loss)

   

12

     

     

     

12

     

(20)

 

Pension settlement charges

   

     

     

6

     

     

(449)

 

Special items included in net charge to earnings

 

$

12

   

$

   

$

6

   

$

12

   

$

(469)

 

 

Unallocated Selected Items

 

in millions

 

Q1.2020

   

Q2.2020

   

Q2.2019

   

YTD.2020

   

YTD.2019

 

Cash spent for capital expenditures

 

$

   

$

   

$

(6)

   

$

   

$

(9)

 
                                         

 

For more information contact:
Analysts - Beth Baum, 206-539-3907
Media - Nancy Thompson, 919-861-0342

 

SOURCE Weyerhaeuser Company


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