Weyerhaeuser reports second quarter results

Weyerhaeuser reports second quarter results

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

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

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

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

WEYERHAEUSER FINANCIAL HIGHLIGHTS

2018

2018

2017

(millions, except per share data)

Q1

Q2

Q2

Net sales

$1,865

$2,065

$1,808

Net earnings

$269

$317

$24

Net earnings per diluted share

$0.35

$0.42

$0.03

Weighted average shares outstanding, diluted

759

761

756

Net earnings before special items(1)

$275

$332

$212

Net earnings per diluted share before special items

$0.36

$0.44

$0.28

Adjusted EBITDA(2)

$544

$637

$506

(1)

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

(2)

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

TIMBERLANDS

FINANCIAL HIGHLIGHTS

2018

2018

(millions)

Q1

Q2

Change

Net sales

$733

$667

($66)

Contribution to pre-tax earnings

$189

$161

($28)

Adjusted EBITDA

$268

$240

($28)

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

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

REAL ESTATE, ENERGY & NATURAL RESOURCES

FINANCIAL HIGHLIGHTS

2018

2018

(millions)

Q1

Q2

Change

Net sales

$51

$58

$7

Contribution to pre-tax earnings

$25

$22

($3)

Adjusted EBITDA

$41

$47

$6

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

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

WOOD PRODUCTS

FINANCIAL HIGHLIGHTS

2018

2018

(millions)

Q1

Q2

Change

Net sales

$1,309

$1,525

$216

Contribution to pre-tax earnings

$270

$329

$59

Pre-tax charge (benefit) for special items

($20)

$20

$40

Contribution to pre-tax earnings before special items

$250

$349

$99

Adjusted EBITDA

$286

$385

$99

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

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

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

UNALLOCATED

FINANCIAL HIGHLIGHTS

2018

2018

(millions)

Q1

Q2

Change

Contribution to pre-tax earnings

($92)

($38)

$54

Pre-tax charge for special items

$28

$ –

($28)

Contribution to pre-tax earnings before special items

($64)

($38)

$26

Adjusted EBITDA

($51)

($35)

$16

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

ABOUT WEYERHAEUSER

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

EARNINGS CALL INFORMATION

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

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

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

FORWARD LOOKING STATEMENTS

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

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

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

For more information contact:

Analysts – Beth Baum, 206-539-3907

MediaNancy Thompson, 919-760-3484

RECONCILIATION OF ADJUSTED EBITDA TO NET EARNINGS

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

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

DOLLAR AMOUNTS IN MILLIONS

Timberlands

Real Estate

& ENR

Wood

Products

Unallocated

Items

Total

Adjusted EBITDA by Segment:

Net earnings

$

269

Interest expense, net of capitalized interest

93

Income taxes

30

Net contribution to earnings

$

189

$

25

$

270

$

(92)

$

392

Non-operating pension and other postretirement benefit costs

24

24

Interest income and other

(12)

(12)

Operating income (loss)

189

25

270

(80)

404

Depreciation, depletion and amortization

79

4

36

1

120

Basis of real estate sold

12

12

Special items(1)(2)

(20)

28

8

Adjusted EBITDA

$

268

$

41

$

286

$

(51)

$

544

(1)

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

(2)

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

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

DOLLAR AMOUNTS IN MILLIONS

Timberlands

Real Estate

& ENR

Wood

Products

Unallocated

Items

Total

Adjusted EBITDA by Segment:

Net earnings

$

317

Interest expense, net of capitalized interest

92

Income taxes

65

Net contribution to earnings

$

161

$

22

$

329

$

(38)

$

474

Non-operating pension and other postretirement benefit costs

13

13

Interest income and other

(11)

(11)

Operating income (loss)

161

22

329

(36)

476

Depreciation, depletion and amortization

79

3

36

1

119

Basis of real estate sold

22

22

Special items(1)

20

20

Adjusted EBITDA

$

240

$

47

$

385

$

(35)

$

637

(1)

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

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

DOLLAR AMOUNTS IN MILLIONS

Timberlands

Real Estate

& ENR

Wood

Products

Unallocated

Items

Total

Adjusted EBITDA by Segment:

Net earnings

$

24

Interest expense, net of capitalized interest

100

Income taxes

34

Net contribution to earnings

$

(12)

$

23

$

177

$

(30)

$

158

Non-operating pension and other postretirement benefit costs

8

8

Interest income and other

(9)

(9)

Operating income (loss)

(12)

23

177

(31)

157

Depreciation, depletion and amortization

87

4

36

2

129

Basis of real estate sold

10

10

Special items(1)

147

61

2

210

Adjusted EBITDA

$

222

$

37

$

274

$

(27)

$

506

(1)

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

Weyerhaeuser Company

Exhibit 99.2

Q2.2018 Analyst Package

Preliminary results (unaudited)

Consolidated Statement of Operations

in millions

Q1

Q2

Year-to-Date

March 31,

 2018

June 30,

 2018

June 30,

 2017

June 30,

 2018

June 30,

 2017

Net sales

$

1,865

$

2,065

$

1,808

$

3,930

$

3,501

Cost of products sold

1,348

1,447

1,336

2,795

2,608

Gross margin

517

618

472

1,135

893

Selling expenses

23

23

22

46

44

General and administrative expenses

78

80

76

158

163

Research and development expenses

2

2

4

4

8

Charges for integration and restructuring, closures and asset impairments

2

151

2

164

Charges (recoveries) for product remediation, net

(20)

20

50

50

Other operating costs (income), net

28

17

12

45

14

Operating income

404

476

157

880

450

Non-operating pension and other postretirement benefit costs

(24)

(13)

(8)

(37)

(30)

Interest income and other

12

11

9

23

18

Interest expense, net of capitalized interest

(93)

(92)

(100)

(185)

(199)

Earnings before income taxes

299

382

58

681

239

Income taxes

(30)

(65)

(34)

(95)

(58)

Net earnings

$

269

$

317

$

24

$

586

$

181

Per Share Information

Q1

Q2

Year-to-Date

March 31,

 2018

June 30,

 2018

June 30,

 2017

June 30,

 2018

June 30,

 2017

Earnings per share, basic and diluted

$

0.35

$

0.42

$

0.03

$

0.77

$

0.24

Dividends paid per common share

$

0.32

$

0.32

$

0.31

$

0.64

$

0.62

Weighted average shares outstanding (in thousands):

Basic

756,815

757,829

752,630

757,317

751,674

Diluted

759,462

760,533

756,451

759,992

755,625

Common shares outstanding at end of period (in thousands)

756,700

757,646

752,711

757,646

752,711

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

in millions

Q1

Q2

Year-to-Date

March 31,

 2018

June 30,

 2018

June 30,

 2017

June 30,

 2018

June 30,

 2017

Net earnings

$

269

$

317

$

24

$

586

$

181

Non-operating pension and other postretirement benefit costs

24

13

8

37

30

Interest income and other

(12)

(11)

(9)

(23)

(18)

Interest expense, net of capitalized interest

93

92

100

185

199

Income taxes

30

65

34

95

58

Operating income

404

476

157

880

450

Depreciation, depletion and amortization

120

119

129

239

262

Basis of real estate sold

12

22

10

34

24

Unallocated pension service costs

2

Special items

8

20

210

28

222

Adjusted EBITDA*

$

544

$

637

$

506

$

1,181

$

960

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

Weyerhaeuser Company

Total Company Statistics

Q2.2018 Analyst Package

Preliminary results (unaudited)

Special Items Included in Net Earnings (Income Tax Affected)

in millions

Q1

Q2

Year-to-Date

March 31,

 2018

June 30,

 2018

June 30,

 2017

June 30,

 2018

June 30,

 2017

Net earnings

$

269

$

317

$

24

$

586

$

181

Plum Creek merger and integration-related costs

2

12

Restructuring, impairment and other charges

147

147

Environmental remediation charges (recoveries)

21

21

Countervailing and antidumping duties charges (credits)(1)

8

8

Product remediation charges (recoveries), net

(15)

15

31

31

Net earnings before special items

$

275

$

332

$

212

$

607

$

379

Q1

Q2

Year-to-Date

March 31,

 2018

June 30,

 2018

June 30,

 2017

June 30,

 2018

June 30,

 2017

Net earnings per diluted share

$

0.35

$

0.42

$

0.03

$

0.77

$

0.24

Plum Creek merger and integration-related costs

0.02

Restructuring, impairment and other charges

0.20

0.19

Environmental remediation charges (recoveries)

0.03

0.03

Countervailing and antidumping duties charges (credits)(1)

0.01

0.01

Product remediation charges (recoveries), net

(0.02)

0.02

0.04

0.04

Net earnings per diluted share before special items

$

0.36

$

0.44

$

0.28

$

0.80

$

0.50

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

Selected Total Company Items

in millions

Q1

Q2

Year-to-Date

March 31,

 2018

June 30,

 2018

June 30,

 2017

June 30,

 2018

June 30,

 2017

Pension and postretirement costs:

Pension and postretirement service costs

$

10

$

8

$

7

$

18

$

17

Non-operating pension and other postretirement benefit costs

24

13

8

37

30

Total company pension and postretirement costs

$

34

$

21

$

15

$

55

$

47

Weyerhaeuser Company

Q2.2018 Analyst Package

Preliminary results (unaudited)

Consolidated Balance Sheet

in millions

March 31,

 2018

June 30,

 2018

December 31,

 2017

ASSETS

Current assets:

Cash and cash equivalents

$

598

$

901

$

824

Receivables, less discounts and allowances

481

491

396

Receivables for taxes

24

23

14

Inventories

445

414

383

Prepaid expenses and other current assets

118

146

98

Current restricted financial investments held by variable interest entities

253

253

Total current assets

1,919

2,228

1,715

Property and equipment, net

1,573

1,597

1,618

Construction in progress

275

282

225

Timber and timberlands at cost, less depletion

12,888

12,790

12,954

Minerals and mineral rights, less depletion

306

302

308

Goodwill

40

40

40

Deferred tax assets

244

168

268

Other assets

278

279

316

Restricted financial investments held by variable interest entities

362

362

615

Total assets

$

17,885

$

18,048

$

18,059

LIABILITIES AND EQUITY

Current liabilities:

Current maturities of long-term debt

$

$

$

62

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

209

209

209

Accounts payable

245

270

249

Accrued liabilities

457

543

645

Total current liabilities

911

1,022

1,165

Long-term debt

5,928

5,924

5,930

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

302

302

302

Deferred pension and other postretirement benefits

1,454

1,224

1,487

Other liabilities

299

295

276

Total liabilities

8,894

8,767

9,160

Total equity

8,991

9,281

8,899

Total liabilities and equity

$

17,885

$

18,048

$

18,059

Weyerhaeuser Company

Q2.2018 Analyst Package

Preliminary results (unaudited)

Consolidated Statements of Cash Flows

in millions

Q1

Q2

Year-to-Date

March 31,

 2018

June 30,

 2018

June 30,

 2017

June 30,

 2018

June 30,

 2017

Cash flows from operations:

Net earnings

$

269

$

317

$

24

$

586

$

181

Noncash charges (credits) to income:

Depreciation, depletion and amortization

120

119

129

239

262

Basis of real estate sold

12

22

10

34

24

Deferred income taxes, net

10

15

3

25

6

Pension and other postretirement benefits

34

21

15

55

47

   Share-based compensation expense

9

9

9

18

19

   Charges for impairments of assets

1

147

1

147

Change in:

Receivables, less allowances

(83)

(18)

(8)

(101)

(78)

Receivables and payables for taxes

5

10

(17)

15

(53)

Inventories

(66)

30

21

(36)

(7)

Prepaid expenses

(5)

4

(4)

(1)

(13)

Accounts payable and accrued liabilities

(173)

103

192

(70)

55

Pension and postretirement benefit contributions and payments

(16)

(16)

(15)

(32)

(37)

Other

19

(19)

(17)

(29)

Net cash from operations

$

136

$

597

$

489

$

733

$

524

Cash flows from investing activities:

Capital expenditures for property and equipment

$

(61)

$

(83)

$

(74)

$

(144)

$

(126)

Capital expenditures for timberlands reforestation

(20)

(14)

(13)

(34)

(36)

Proceeds from sale of nonstrategic assets

2

4

2

12

Other

3

24

45

27

44

Cash from (used in) investing activities

$

(76)

$

(73)

$

(38)

$

(149)

$

(106)

Cash flows from financing activities:

Cash dividends on common shares

$

(242)

$

(243)

$

(233)

$

(485)

$

(466)

Payments of long-term debt

(62)

(62)

Proceeds from exercise of stock options

25

23

26

48

81

Other

(7)

(1)

2

(8)

(8)

Cash from (used in) financing activities

$

(286)

$

(221)

$

(205)

$

(507)

$

(393)

Net change in cash and cash equivalents

$

(226)

$

303

$

246

$

77

$

25

Cash and cash equivalents at beginning of period

824

598

455

824

676

Cash and cash equivalents at end of period

$

598

$

901

$

701

$

901

$

701

Cash paid during the period for:

Interest, net of amount capitalized

$

105

$

67

$

72

$

172

$

192

Income taxes

$

17

$

41

$

47

$

58

$

106

Weyerhaeuser Company

Timberlands Segment

Q2.2018 Analyst Package

Preliminary results (unaudited)

Segment Statement of Operations

in millions

Q1.2018

Q2.2018

Q2.2017

YTD.2018

YTD.2017

Sales to unaffiliated customers

$

505

$

482

$

469

$

987

$

955

Intersegment sales

228

185

163

413

365

Total net sales

733

667

632

1,400

1,320

Cost of products sold

526

485

476

1,011

995

Gross margin

207

182

156

389

325

Selling expenses

1

1

1

2

General and administrative expenses

23

25

23

48

47

Research and development expenses

2

1

4

3

7

Charges for integration and restructuring, closures and asset impairments

147

147

Other operating costs (income), net

(8)

(5)

(7)

(13)

(14)

Operating income and Net contribution to earnings

$

189

$

161

$

(12)

$

350

$

136

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

in millions

Q1.2018

Q2.2018

Q2.2017

YTD.2018

YTD.2017

Operating income

$

189

$

161

$

(12)

$

350

$

136

Depreciation, depletion and amortization

79

79

87

158

181

Special items

147

147

Adjusted EBITDA*

$

268

$

240

$

222

$

508

$

464

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

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

in millions

Q1.2018

Q2.2018

Q2.2017

YTD.2018

YTD.2017

Restructuring, impairment and other charges

$

$

$

(147)

$

$

(147)

Selected Segment Items

in millions

Q1.2018

Q2.2018

Q2.2017

YTD.2018

YTD.2017

Total decrease (increase) in working capital(1)

$

(40)

$

70

$

(5)

$

30

$

(42)

Cash spent for capital expenditures

$

(28)

$

(29)

$

(25)

$

(57)

$

(55)

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

Segment Statistics(2)(3)

Q1.2018

Q2.2018

Q2.2017

YTD.2018

YTD.2017

Third Party

Net Sales

(millions)

Delivered logs:

  West

$

266

$

262

$

227

$

528

$

452

  South

157

158

148

315

296

  North

25

20

16

45

43

  Other

14

7

11

21

31

Total delivered logs

462

447

402

909

822

Stumpage and pay-as-cut timber

15

11

17

26

29

Products from international operations

21

40

Recreational and other lease revenue

14

15

15

29

29

Other revenue

14

9

14

23

35

Total

$

505

$

482

$

469

$

987

$

955

Delivered Logs

Third Party Sales

Realizations (per ton)

West

$

131.59

$

132.24

$

105.84

$

131.91

$

105.06

South

$

34.83

$

34.55

$

34.48

$

34.69

$

34.48

North

$

60.79

$

64.92

$

63.49

$

62.59

$

60.97

Delivered Logs

Third Party Sales

Volumes

(tons, thousands)

West

2,019

1,984

2,143

4,003

4,300

South

4,510

4,560

4,285

9,070

8,578

North

404

313

253

717

707

Other

317

81

292

398

802

Fee Harvest Volumes

(tons, thousands)

West

2,443

2,360

2,652

4,803

5,309

South

6,751

6,630

6,473

13,381

12,846

North

549

423

383

972

1,005

Other

444

815

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

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

Weyerhaeuser Company

Real Estate, Energy and Natural

Resources Segment

Q2.2018 Analyst Package

Preliminary results (unaudited)

Segment Statement of Operations

in millions

Q1.2018

Q2.2018

Q2.2017

YTD.2018

YTD.2017

Net sales

$

51

$

58

$

46

$

109

$

99

Cost of products sold

19

30

16

49

36

Gross margin

32

28

30

60

63

General and administrative expenses

7

6

7

13

14

Other operating costs (income), net

Operating income and net contribution to earnings

$

25

$

22

$

23

$

47

$

49

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

in millions

Q1.2018

Q2.2018

Q2.2017

YTD.2018

YTD.2017

Operating income

$

25

$

22

$

23

$

47

$

49

Depreciation, depletion and amortization

4

3

4

7

7

Basis of real estate sold

12

22

10

34

24

Adjusted EBITDA*

$

41

$

47

$

37

$

88

$

80

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

Selected Segment Items

in millions

Q1.2018

Q2.2018

Q2.2017

YTD.2018

YTD.2017

Cash spent for capital expenditures

$

$

$

(1)

$

$

(1

Segment Statistics

Q1.2018

Q2.2018

Q2.2017

YTD.2018

YTD.2017

Net Sales

(millions)

Real Estate

$

34

$

38

$

27

$

72

$

64

Energy and Natural Resources

17

20

19

37

35

Total

$

51

$

58

$

46

$

109

$

99

Acres Sold

Real Estate

21,771

16,290

10,003

38,061

23,260

Price per Acre

Real Estate

$

1,539

$

2,258

$

2,714

$

1,847

$

2,537

Weyerhaeuser Company

Wood Products Segment

Q2.2018 Analyst Package

Preliminary results (unaudited)

Segment Statement of Operations

in millions

Q1.2018

Q2.2018

Q2.2017

YTD.2018

YTD.2017

Net sales

$

1,309

$

1,525

$

1,293

$

2,834

$

2,447

Cost of products sold

1,005

1,119

1,002

2,124

1,928

Gross margin

304

406

291

710

519

Selling expenses

21

22

19

43

40

General and administrative expenses

34

31

32

65

64

Research and development expenses

1

1

1

Charges for integration and restructuring, closures and asset impairments

2

2

2

3

Charges (recoveries) for product remediation, net

(20)

20

Other operating costs (income), net

(3)

3

61

62

Operating income and Net contribution to earnings

$

270

$

329

$

177

$

599

$

349

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

in millions

Q1.2018

Q2.2018

Q2.2017

YTD.2018

YTD.2017

Operating income

$

270

$

329

$

177

$

599

$

349

Depreciation, depletion and amortization

36

36

36

72

71

Special items

(20)

20

61

61

Adjusted EBITDA*

$

286

$

385

$

274

$

671

$

481

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

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

in millions

Q1.2018

Q2.2018

Q2.2017

YTD.2018

YTD.2017

Countervailing and antidumping duties (charges) credits(1)

$

$

$

(11)

$

$

(11)

Product remediation (charges) recoveries, net

20

(20)

(50)

(50)

Total

$

20

$

(20)

$

(61)

$

$

(61)

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

Selected Segment Items

in millions

Q1.2018

Q2.2018

Q2.2017

YTD.2018

YTD.2017

Total decrease (increase) in working capital(2)

$

(226)

$

3

$

113

$

(223)

$

(9)

Cash spent for capital expenditures

$

(52)

$

(68)

$

(61)

$

(120)

$

(105)

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

Segment Statistics

in millions, except for third party sales realizations

Q1.2018

Q2.2018

Q2.2017

YTD.2018

YTD.2017

Structural Lumber

(volumes presented

in board feet)

Third party net sales

$

569

$

681

$

538

$

1,250

$

1,016

Third party sales realizations

$

498

$

541

$

441

$

521

$

427

Third party sales volumes(3)

1,140

1,261

1,218

2,401

2,376

Production volumes

1,160

1,180

1,146

2,340

2,298

Engineered Solid

Section

(volumes presented

in cubic feet)

Third party net sales

$

129

$

139

$

130

$

268

$

247

Third party sales realizations

$

2,088

$

2,156

$

1,979

$

2,123

$

1,931

Third party sales volumes(3)

6.2

6.4

6.6

12.6

12.8

Production volumes

6.3

6.4

6.6

12.7

12.9

Engineered

I-joists

(volumes presented

in lineal feet)

Third party net sales

$

78

$

92

$

85

$

170

$

158

Third party sales realizations

$

1,585

$

1,630

$

1,522

$

1,609

$

1,503

Third party sales volumes(3)

49

57

57

106

106

Production volumes

56

52

53

108

103

Oriented Strand

Board

(volumes presented

in square feet 3/8″)

Third party net sales

$

232

$

277

$

225

$

509

$

428

Third party sales realizations

$

314

$

367

$

295

$

341

$

279

Third party sales volumes(3)

739

754

764

1,493

1,533

Production volumes

734

747

754

1,481

1,512

Softwood Plywood

(volumes presented

in square feet 3/8″)

Third party net sales

$

50

$

55

$

47

$

105

$

91

Third party sales realizations

$

438

$

461

$

380

$

450

$

379

Third party sales volumes(3)

115

118

123

233

241

Production volumes

97

105

99

202

196

Medium Density

Fiberboard 

(volumes presented

in square feet 3/4″)

Third party net sales

$

43

$

47

$

51

$

90

$

98

Third party sales realizations

$

839

$

839

$

845

$

839

$

820

Third party sales volumes(3)

51

55

60

106

119

Production volumes

50

57

63

107

119

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

Weyerhaeuser Company

Unallocated Items

Q2.2018 Analyst Package

Preliminary results (unaudited)

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

Contribution to Earnings

in millions

Q1.2018

Q2.2018

Q2.2017

YTD.2018

YTD.2017

Unallocated corporate function and variable compensation expense

$

(18)

$

(19)

$

(17)

$

(37)

$

(36)

Liability classified share-based compensation

(2)

(2)

(6)

Foreign exchange gains (losses)

(2)

2

(3)

Elimination of intersegment profit in inventory and LIFO

(21)

3

(3)

(18)

(9)

Charges for integration and restructuring, closures and asset impairments

(2)

(14)

Other

(39)

(20)

(9)

(59)

(16)

Operating income (loss)

(80)

(36)

(31)

(116)

(84)

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

(24)

(13)

(8)

(37)

(30

Interest income and other

12

11

9

23

18

Net contribution to earnings

$

(92)

$

(38)

$

(30)

$

(130)

$

(96)

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

in millions

Q1.2018

Q2.2018

Q2.2017

YTD.2018

YTD.2017

Operating income (loss)

$

(80)

$

(36)

$

(31)

$

(116)

$

(84)

Depreciation, depletion and amortization

1

1

2

2

3

Unallocated pension service costs

2

Special items

28

2

28

14

Adjusted EBITDA*

$

(51)

$

(35)

$

(27)

$

(86)

$

(65)

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

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

in millions

Q1.2018

Q2.2018

Q2.2017

YTD.2018

YTD.2017

Plum Creek merger and integration-related costs

$

$

$

(2)

$

$

(14)

Environmental remediation insurance (charges) recoveries

(28)

(28)

Total

$

(28)

$

$

(2)

$

(28)

$

(14)

Unallocated Selected Items

in millions

Q1.2018

Q2.2018

Q2.2017

YTD.2018

YTD.2017

Cash spent for capital expenditures

$

(1)

$

$

$

(1)

$

(1)

SOURCE Weyerhaeuser Company

Related Links

http://www.weyerhaeuser.com

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