Weyerhaeuser reports first quarter results
- Net loss of $289 million or $0.39 per diluted share includes $345 million noncash pension settlement charge
- Earnings before special items increased 14 percent compared with fourth quarter 2018
- Repurchased $60 million of common shares during the first quarter
SEATTLE, April 26, 2019 /PRNewswire/ -- Weyerhaeuser Company (NYSE: WY) today reported a first quarter net loss of $289 million, or 39 cents per diluted share, on net sales of $1.6 billion. This compares with net earnings of $269 million, or 35 cents per diluted share, on net sales of $1.9 billion for the same period last year.
View our earnings release and financial statements in a printer-friendly PDF.
First quarter includes after-tax charges of $369 million for special items, primarily consisting of a previously announced noncash settlement charge related to the transfer of pension assets and liabilities through the purchase of a group annuity contract. Excluding special items, the company reported net earnings of $80 million, or 11 cents per diluted share, for the first quarter of 2019. This compares with net earnings before special items of $275 million for the same period last year and $70 million for the fourth quarter of 2018.
Adjusted EBITDA for the first quarter was $365 million compared with $544 million for the first quarter of last year and $346 million for the fourth quarter of 2018.
"I am proud of our first quarter results, as we delivered strong operating performance, improved financial results in each of our businesses compared with the fourth quarter, repurchased $60 million of common shares, refinanced an upcoming debt maturity, and further reduced our pension liabilities," said Devin W. Stockfish, president and chief executive officer. "Looking forward, we anticipate modest year over year housing growth and expect that building activity will accelerate with improved weather and continued macroeconomic stability. We remain focused on driving industry-leading performance and delivering superior value for our shareholders."
WEYERHAEUSER FINANCIAL HIGHLIGHTS | 2018 | 2019 | 2018 | ||
(millions, except per share data) | Q4 | Q1 | Q1 | ||
Net sales | $1,636 | $1,643 | $1,865 | ||
Net earnings (loss) | $(93) | $(289) | $269 | ||
Net earnings (loss) per diluted share | $(0.12) | $(0.39) | $0.35 | ||
Weighted average shares outstanding, diluted | 750 | 747 | 759 | ||
Net earnings before special items(1) | $70 | $80 | $275 | ||
Net earnings per diluted share before special items | $0.10 | $0.11 | $0.36 | ||
Adjusted EBITDA(2) | $346 | $365 | $544 |
(1) | Fourth quarter 2018 after-tax special items include a $152 million noncash settlement charge related to our U.S. qualified pension plan lump sum offer, a $21 million tax adjustment charge, and a $10 million gain on sale of a nonstrategic asset. First quarter 2019 after-tax special items include a $345 million noncash settlement charge related to the transfer of pension assets and liabilities through the purchase of a group annuity contract, a $15 million legal charge and a $9 million charge related to the early extinguishment of debt. First quarter 2018 after-tax special items include $21 million for environmental remediation charges and a $15 million benefit from product remediation insurance proceeds. | ||||
(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 and special items. 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 | 2019 | |||
(millions) | Q4 | Q1 | Change | ||
Net sales | $576 | $556 | $(20) | ||
Contribution to pretax earnings | $107 | $120 | $13 | ||
Adjusted EBITDA | $188 | $193 | $5 | ||
1Q 2019 Performance - Earnings and Adjusted EBITDA improved in the first quarter compared with the fourth quarter. In the West, average sales realizations for domestic and export logs decreased, and export log sales volumes declined seasonally. This was more than offset by lower costs, primarily attributable to decreased road and forestry spending. In the South, average log sales realizations increased approximately 3 percent and fee harvest volumes declined due to seasonally lower stumpage sales.
2Q 2019 Outlook - Weyerhaeuser anticipates second quarter earnings and Adjusted EBITDA will be lower than the first quarter. In the West, favorable domestic log sales realizations will be more than offset by lower export sales volumes due to the timing of vessel sailings. Average Southern log sales realizations are expected to be comparable to the first quarter. Western and Southern silviculture activity and related costs are expected to increase seasonally. In the North, fee harvest volumes will decrease significantly due to spring break-up.
REAL ESTATE, ENERGY & NATURAL RESOURCES | |||||
FINANCIAL HIGHLIGHTS | 2018 | 2019 | |||
(millions) | Q4 | Q1 | Change | ||
Net sales | $102 | $118 | $16 | ||
Contribution to pretax earnings | $44 | $55 | $11 | ||
Adjusted EBITDA | $90 | $106 | $16 | ||
1Q 2019 Performance - Real Estate sales increased compared with the fourth quarter due to a 22 percent increase in the number of acres sold. Average price per acre was similar to the fourth quarter, and average land basis was modestly lower. Energy & Natural Resources earnings and Adjusted EBITDA were comparable to the fourth quarter.
2Q 2019 Outlook - Weyerhaeuser anticipates second quarter earnings and Adjusted EBITDA from the Real Estate, Energy & Natural Resources segment will be lower than the first quarter, but significantly higher than second quarter 2018 due to the timing of Real Estate transactions. The company now expects full year 2019 Adjusted EBITDA of $270 million.
WOOD PRODUCTS | |||||
FINANCIAL HIGHLIGHTS | 2018 | 2019 | |||
(millions) | Q4 | Q1 | Change | ||
Net sales | $1,087 | $1,094 | $7 | ||
Contribution to pretax earnings | $26 | $69 | $43 | ||
Adjusted EBITDA | $66 | $115 | $49 | ||
1Q 2019 Performance - First quarter earnings and Adjusted EBITDA increased significantly compared with the fourth quarter due to substantially lower log and fiber costs, seasonally higher operating rates and improved manufacturing costs across all product lines. This was partially offset by a 12 percent decrease in average sales realizations for oriented strand board. Average sales realizations for lumber and engineered wood products improved slightly. Sales volumes for lumber and oriented strand board increased seasonally, and sales volumes for engineered wood products decreased.
2Q 2019 Outlook - Weyerhaeuser anticipates higher second quarter earnings and Adjusted EBITDA compared with the first quarter. The company expects seasonally higher sales volumes and improved operating rates across all product lines.
UNALLOCATED | |||||
FINANCIAL HIGHLIGHTS | 2018 | 2019 | |||
(millions) | Q4 | Q1 | Change | ||
Contribution to pretax earnings (loss) | $(194) | $(530) | $(336) | ||
Pretax charge for special items | $187 | $475 | $288 | ||
Contribution to pretax earnings (loss) before special items | $(7) | $(55) | $(48) | ||
Adjusted EBITDA | $2 | $(49) | $(51) | ||
1Q 2019 Performance - First quarter results include charges for elimination of intersegment profit in inventory and LIFO, foreign exchange and share-based compensation, compared with income from these items in the fourth quarter.
First quarter 2019 pretax special items include a $455 million noncash settlement charge related to the transfer of approximately $1.5 billion of U.S. qualified pension assets and liabilities to an insurance company through the purchase of a group annuity contract, and a $20 million legal charge.
ABOUT WEYERHAEUSER
Weyerhaeuser Company, one of the world's largest private owners of timberlands, began operations in 1900. We own or control 12.2 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 April 26, 2019 to discuss first quarter results.
To access the live webcast and presentation online, go to the Investor Relations section on www.weyerhaeuser.com on April 26, 2019.
To join the conference call from within North America, dial 855-223-0757 (access code: 3799749) at least 15 minutes prior to the call. Those calling from outside North America should dial 574-990-1206 (access code: 3799749). Replays will be available for two weeks at 855-859-2056 (access code: 3799749) from within North America and at 404-537-3406 (access code: 3799749) 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: building activity and U.S. housing growth; earnings and Adjusted EBITDA for each of our business segments; log sale realizations; fee harvest volumes and silviculture spending in our timber business; Wood Products sales volumes and realizations and operating rates; and real estate sales volumes and the timing of real estate sales. 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 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;
- 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;
- 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 | |||||||||||||||||||
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 December 31, 2018: | |||||||||||||||||||
DOLLAR AMOUNTS IN MILLIONS | Timberlands | Real Estate | Wood | Unallocated | Total | ||||||||||||||
Adjusted EBITDA by Segment: | |||||||||||||||||||
Net earnings (loss) | $ | (93) | |||||||||||||||||
Interest expense, net of capitalized interest | 97 | ||||||||||||||||||
Income taxes(1) | (21) | ||||||||||||||||||
Net contribution to earnings (loss) | $ | 107 | $ | 44 | $ | 26 | $ | (194) | $ | (17) | |||||||||
Non-operating pension and other postretirement benefit costs(2) | — | — | — | 218 | 218 | ||||||||||||||
Interest income and other(3) | — | (1) | — | (23) | (24) | ||||||||||||||
Operating income (loss) | 107 | 43 | 26 | 1 | 177 | ||||||||||||||
Depreciation, depletion and amortization | 81 | 3 | 40 | 1 | 125 | ||||||||||||||
Basis of real estate sold | — | 44 | — | — | 44 | ||||||||||||||
Adjusted EBITDA | $ | 188 | $ | 90 | $ | 66 | $ | 2 | $ | 346 | |||||||||
(1) | Income taxes include a special item consisting of a $21 million tax adjustment charge. | |||||||||||||||||||
(2) | Non-operating pension and other postretirement benefit costs include a pretax special item consisting of a $200 million noncash settlement charge related to our U.S. qualified pension plan lump sum offer. | |||||||||||||||||||
(3) | Interest income and other includes a pretax special item consisting of a $13 million gain on sale of a nonstrategic asset. | |||||||||||||||||||
The table below reconciles Adjusted EBITDA for the quarter ended March 31, 2019: | |||||||||||||||||||
DOLLAR AMOUNTS IN MILLIONS | Timberlands | Real Estate | Wood | Unallocated | Total | ||||||||||||||
Adjusted EBITDA by Segment: | |||||||||||||||||||
Net earnings (loss) | $ | (289) | |||||||||||||||||
Interest expense, net of capitalized interest(1) | 107 | ||||||||||||||||||
Income taxes | (104) | ||||||||||||||||||
Net contribution to earnings (loss) | $ | 120 | $ | 55 | $ | 69 | $ | (530) | $ | (286) | |||||||||
Non-operating pension and other postretirement benefit costs(2) | — | — | — | 470 | 470 | ||||||||||||||
Interest income and other | — | — | — | (10) | (10) | ||||||||||||||
Operating income (loss) | 120 | 55 | 69 | (70) | 174 | ||||||||||||||
Depreciation, depletion and amortization | 73 | 3 | 46 | 1 | 123 | ||||||||||||||
Basis of real estate sold | — | 48 | — | — | 48 | ||||||||||||||
Special items included in operating income (loss)(3) | — | — | — | 20 | 20 | ||||||||||||||
Adjusted EBITDA | $ | 193 | $ | 106 | $ | 115 | $ | (49) | $ | 365 | |||||||||
(1) | Interest expense, net of capitalized interest includes a pretax special item consisting of a $12 million charge related to the early extinguishment of debt. | |||||||||||||||||||
(2) | Non-operating pension and other postretirement benefit costs include a pretax special item consisting of a $455 million noncash settlement charge related to the transfer of pension assets and liabilities through the purchase of a group annuity contract. | |||||||||||||||||||
(3) | Operating income (loss) includes a pretax special item consisting of a $20 million legal charge. | |||||||||||||||||||
The table below reconciles Adjusted EBITDA for the quarter ended March 31, 2018: | |||||||||||||||||||
DOLLAR AMOUNTS IN MILLIONS | Timberlands | Real Estate | Wood | Unallocated | Total | ||||||||||||||
Adjusted EBITDA by Segment: | |||||||||||||||||||
Net earnings | $ | 269 | |||||||||||||||||
Interest expense, net of capitalized interest | 93 | ||||||||||||||||||
Income taxes | 30 | ||||||||||||||||||
Net contribution to earnings (loss) | $ | 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 included in operating income (loss)(1) | — | — | (20) | 28 | 8 | ||||||||||||||
Adjusted EBITDA | $ | 268 | $ | 41 | $ | 286 | $ | (51) | $ | 544 | |||||||||
(1) | Operating income (loss) includes pretax special items consisting of a $20 million benefit from product remediation insurance proceeds and $28 million for environmental remediation charges. | |||||||||||||||||||
Weyerhaeuser Company | Exhibit 99.2 | ||||||||||
Q1.2019 Analyst Package | |||||||||||
Preliminary results (unaudited) | |||||||||||
Consolidated Statement of Operations | |||||||||||
Q4 | Q1 | ||||||||||
in millions | December 31, | March 31, | March 31, | ||||||||
Net sales | $ | 1,636 | $ | 1,643 | $ | 1,865 | |||||
Costs of sales | 1,345 | 1,322 | 1,348 | ||||||||
Gross margin | 291 | 321 | 517 | ||||||||
Selling expenses | 22 | 21 | 23 | ||||||||
General and administrative expenses | 82 | 89 | 78 | ||||||||
Research and development expenses | 2 | 1 | 2 | ||||||||
Other operating costs, net | 8 | 36 | 10 | ||||||||
Operating income | 177 | 174 | 404 | ||||||||
Non-operating pension and other postretirement benefit costs | (218) | (470) | (24) | ||||||||
Interest income and other | 24 | 10 | 12 | ||||||||
Interest expense, net of capitalized interest | (97) | (107) | (93) | ||||||||
Earnings (loss) before income taxes | (114) | (393) | 299 | ||||||||
Income taxes | 21 | 104 | (30) | ||||||||
Net earnings (loss) | $ | (93) | $ | (289) | $ | 269 | |||||
Per Share Information | |||||||||||
Q4 | Q1 | ||||||||||
December 31, | March 31, | March 31, | |||||||||
Earnings (loss) per share, basic and diluted | $ | (0.12) | $ | (0.39) | $ | 0.35 | |||||
Dividends paid per common share | $ | 0.34 | $ | 0.34 | $ | 0.32 | |||||
Weighted average shares outstanding (in thousands): | |||||||||||
Basic | 748,694 | 746,603 | 756,815 | ||||||||
Diluted | 750,025 | 746,603 | 759,462 | ||||||||
Common shares outstanding at end of period (in thousands) | 746,391 | 744,767 | 756,700 | ||||||||
Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization (Adjusted EBITDA)* | |||||||||||
Q4 | Q1 | ||||||||||
in millions | December 31, | March 31, | March 31, | ||||||||
Net earnings (loss) | $ | (93) | $ | (289) | $ | 269 | |||||
Non-operating pension and other postretirement benefit costs | 218 | 470 | 24 | ||||||||
Interest income and other | (24) | (10) | (12) | ||||||||
Interest expense, net of capitalized interest | 97 | 107 | 93 | ||||||||
Income taxes | (21) | (104) | 30 | ||||||||
Operating income | 177 | 174 | 404 | ||||||||
Depreciation, depletion and amortization | 125 | 123 | 120 | ||||||||
Basis of real estate sold | 44 | 48 | 12 | ||||||||
Special items included in operating income | — | 20 | 8 | ||||||||
Adjusted EBITDA* | $ | 346 | $ | 365 | $ | 544 | |||||
*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 | ||||||||||
Q1.2019 Analyst Package | |||||||||||
Preliminary results (unaudited) | |||||||||||
Special Items Included in Net Earnings (Income Tax Affected) | |||||||||||
Q4 | Q1 | ||||||||||
in millions | December 31, | March 31, | March 31, | ||||||||
Net earnings (loss) | $ | (93) | $ | (289) | $ | 269 | |||||
Gain on sale of nonstrategic assets | (10) | — | — | ||||||||
Legal charge | — | 15 | — | ||||||||
Environmental remediation charge | — | — | 21 | ||||||||
Pension settlement charges | 152 | 345 | — | ||||||||
Product remediation charges (recoveries), net | — | — | (15) | ||||||||
Tax adjustment | 21 | — | — | ||||||||
Early extinguishment of debt charge(1) | — | 9 | — | ||||||||
Net earnings before special items | $ | 70 | $ | 80 | $ | 275 | |||||
Q4 | Q1 | ||||||||||
December 31, | March 31, | March 31, | |||||||||
Net earnings (loss) per diluted share | $ | (0.12) | $ | (0.39) | $ | 0.35 | |||||
Gain on sale of nonstrategic assets | (0.01) | — | — | ||||||||
Legal charge | — | 0.02 | — | ||||||||
Environmental remediation charge | — | — | 0.03 | ||||||||
Pension settlement charges | 0.20 | 0.47 | — | ||||||||
Product remediation charges (recoveries), net | — | — | (0.02) | ||||||||
Tax adjustment | 0.03 | — | — | ||||||||
Early extinguishment of debt charge(1) | — | 0.01 | — | ||||||||
Net earnings per diluted share before special items | $ | 0.10 | $ | 0.11 | $ | 0.36 | |||||
Selected Total Company Items | |||||||||||
Q4 | Q1 | ||||||||||
in millions | December 31, | March 31, | March 31, | ||||||||
Pension and postretirement costs: | |||||||||||
Pension and postretirement service costs | $ | 9 | $ | 8 | $ | 10 | |||||
Non-operating pension and other postretirement benefit costs | 218 | 470 | 24 | ||||||||
Total company pension and postretirement costs | $ | 227 | $ | 478 | $ | 34 | |||||
(1) During first quarter 2019, we recorded a $12 million pretax ($9 million after-tax) charge related to the early extinguishment of debt. | |||||||||||
Weyerhaeuser Company | |||||||||||
Q1.2019 Analyst Package | |||||||||||
Preliminary results (unaudited) | |||||||||||
Consolidated Balance Sheet | |||||||||||
December 31, | March 31, | March 31, | |||||||||
in millions | |||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 334 | $ | 259 | $ | 598 | |||||
Receivables, less discounts and allowances | 337 | 398 | 481 | ||||||||
Receivables for taxes | 137 | 163 | 24 | ||||||||
Inventories | 389 | 451 | 445 | ||||||||
Prepaid expenses and other current assets | 152 | 141 | 118 | ||||||||
Current restricted financial investments held by variable interest entities | 253 | 362 | 253 | ||||||||
Total current assets | 1,602 | 1,774 | 1,919 | ||||||||
Property and equipment, net | 1,857 | 1,917 | 1,573 | ||||||||
Construction in progress | 136 | 102 | 275 | ||||||||
Timber and timberlands at cost, less depletion | 12,671 | 12,586 | 12,888 | ||||||||
Minerals and mineral rights, less depletion | 294 | 291 | 306 | ||||||||
Deferred tax assets | 15 | 18 | 244 | ||||||||
Other assets | 312 | 444 | 318 | ||||||||
Restricted financial investments held by variable interest entities | 362 | — | 362 | ||||||||
Total assets | $ | 17,249 | $ | 17,132 | $ | 17,885 | |||||
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 | 209 | ||||||||
Borrowings on line of credit | 425 | 245 | — | ||||||||
Accounts payable | 222 | 243 | 245 | ||||||||
Accrued liabilities | 490 | 411 | 457 | ||||||||
Total current liabilities | 1,939 | 1,201 | 911 | ||||||||
Long-term debt | 5,419 | 6,156 | 5,928 | ||||||||
Long-term debt (nonrecourse to the company) held by variable interest entities | — | — | 302 | ||||||||
Deferred tax liabilities | 43 | 34 | — | ||||||||
Deferred pension and other postretirement benefits | 527 | 542 | 1,454 | ||||||||
Other liabilities | 275 | 398 | 299 | ||||||||
Total liabilities | 8,203 | 8,331 | 8,894 | ||||||||
Total equity | 9,046 | 8,801 | 8,991 | ||||||||
Total liabilities and equity | $ | 17,249 | $ | 17,132 | $ | 17,885 | |||||
Weyerhaeuser Company | |||||||||||
Q1.2019 Analyst Package | |||||||||||
Preliminary results (unaudited) | |||||||||||
Consolidated Statement of Cash Flows | |||||||||||
Q4 | Q1 | ||||||||||
in millions | December 31, | March 31, | March 31, | ||||||||
Cash flows from operations: | |||||||||||
Net earnings (loss) | $ | (93) | $ | (289) | $ | 269 | |||||
Noncash charges (credits) earnings: | |||||||||||
Depreciation, depletion and amortization | 125 | 123 | 120 | ||||||||
Basis of real estate sold | 44 | 48 | 12 | ||||||||
Deferred income taxes, net | (39) | (123) | 10 | ||||||||
Pension and other postretirement benefits | 227 | 478 | 34 | ||||||||
Share-based compensation expense | 11 | 9 | 9 | ||||||||
Change in: | |||||||||||
Receivables, less allowances | 117 | (77) | (83) | ||||||||
Receivables and payables for taxes | 6 | (31) | 5 | ||||||||
Inventories | (5) | (60) | (66) | ||||||||
Prepaid expenses and other current assets | (11) | (5) | (5) | ||||||||
Accounts payable and accrued liabilities | (21) | (82) | (173) | ||||||||
Pension and postretirement benefit contributions and payments | (26) | (14) | (16) | ||||||||
Other | (43) | 9 | 20 | ||||||||
Net cash from (used in) operations | $ | 292 | $ | (14) | $ | 136 | |||||
Cash flows from investing activities: | |||||||||||
Capital expenditures for property and equipment | $ | (130) | $ | (41) | $ | (61) | |||||
Capital expenditures for timberlands reforestation | (14) | (18) | (20) | ||||||||
Proceeds from note receivable held by variable interest entities | — | 253 | — | ||||||||
Other | (32) | 18 | 5 | ||||||||
Cash from (used in) investing activities | $ | (176) | $ | 212 | $ | (76) | |||||
Cash flows from financing activities: | |||||||||||
Cash dividends on common shares | $ | (254) | $ | (254) | $ | (242) | |||||
Net proceeds from issuance of long-term debt | — | 739 | — | ||||||||
Payments of long-term debt | — | (512) | (62) | ||||||||
Proceeds from borrowing on line of credit | 425 | 245 | — | ||||||||
Payments on line of credit | — | (425) | — | ||||||||
Payments on debt held by variable interest entities | (209) | — | — | ||||||||
Proceeds from exercise of stock options | — | 2 | 25 | ||||||||
Repurchases of common shares | (93) | (60) | — | ||||||||
Other | 1 | (8) | (7) | ||||||||
Cash from (used in) financing activities | $ | (130) | $ | (273) | $ | (286) | |||||
Net change in cash and cash equivalents | $ | (14) | $ | (75) | $ | (226) | |||||
Cash and cash equivalents at beginning of period | 348 | 334 | 824 | ||||||||
Cash and cash equivalents at end of period | $ | 334 | $ | 259 | $ | 598 | |||||
Cash paid during the period for: | |||||||||||
Interest, net of amount capitalized | $ | 73 | $ | 127 | $ | 105 | |||||
Income taxes | $ | 15 | $ | 50 | $ | 17 | |||||
Weyerhaeuser Company | Timberlands Segment | ||||||||||||
Q1.2019 Analyst Package | |||||||||||||
Preliminary results (unaudited) | |||||||||||||
Segment Statement of Operations (1) | |||||||||||||
in millions | Q4.2018 | Q1.2019 | Q1.2018 | ||||||||||
Sales to unaffiliated customers | $ | 448 | $ | 431 | $ | 490 | |||||||
Intersegment sales | 128 | 125 | 142 | ||||||||||
Total net sales | 576 | 556 | 632 | ||||||||||
Costs of sales | 446 | 413 | 422 | ||||||||||
Gross margin | 130 | 143 | 210 | ||||||||||
Selling expenses | — | 1 | 1 | ||||||||||
General and administrative expenses | 24 | 22 | 22 | ||||||||||
Research and development expenses | 1 | 1 | 2 | ||||||||||
Other operating income, net | (2) | (1) | (4) | ||||||||||
Operating income and Net contribution to earnings | $ | 107 | $ | 120 | $ | 189 | |||||||
(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 will 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 period presentation with the current period. | |||||||||||||
Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization* | |||||||||||||
in millions | Q4.2018 | Q1.2019 | Q1.2018 | ||||||||||
Operating income | $ | 107 | $ | 120 | $ | 189 | |||||||
Depreciation, depletion and amortization | 81 | 73 | 79 | ||||||||||
Adjusted EBITDA* | $ | 188 | $ | 193 | $ | 268 | |||||||
*See definition of Adjusted EBITDA (a non-GAAP measure) on page 1. | |||||||||||||
Selected Segment Items | |||||||||||||
in millions | Q4.2018 | Q1.2019 | Q1.2018 | ||||||||||
Total decrease (increase) in working capital(2) | $ | (7) | $ | (24) | $ | (40) | |||||||
Cash spent for capital expenditures | $ | (35) | $ | (26) | $ | (28) | |||||||
(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) | |||||||||||||
Q4.2018 | Q1.2019 | Q1.2018 | |||||||||||
Third Party | Delivered logs: | ||||||||||||
West | $ | 221 | $ | 205 | $ | 266 | |||||||
South | 153 | 159 | 157 | ||||||||||
North | 29 | 29 | 25 | ||||||||||
Total delivered logs | 403 | 393 | 448 | ||||||||||
Stumpage and pay-as-cut timber | 20 | 9 | 15 | ||||||||||
Recreational and other lease revenue | 15 | 15 | 14 | ||||||||||
Other revenue | 10 | 14 | 13 | ||||||||||
Total | $ | 448 | $ | 431 | $ | 490 | |||||||
Delivered Logs Third Party Sales Realizations (per ton) | West | $ | 112.58 | $ | 106.92 | $ | 131.59 | ||||||
South | $ | 34.38 | $ | 35.35 | $ | 34.83 | |||||||
North | $ | 57.27 | $ | 59.68 | $ | 60.79 | |||||||
Delivered Logs Third Party Sales Volumes (tons, thousands) | West | 1,958 | 1,920 | 2,019 | |||||||||
South | 4,417 | 4,499 | 4,510 | ||||||||||
North | 497 | 494 | 404 | ||||||||||
Fee Harvest Volumes (tons, thousands) | West | 2,463 | 2,385 | 2,443 | |||||||||
South | 6,849 | 6,492 | 6,751 | ||||||||||
North | 620 | 627 | 549 | ||||||||||
(3) Western logs are primarily transacted in MBF but are converted to ton equivalents for external reporting purposes. | |||||||||||||
Weyerhaeuser Company | Real Estate, Energy & Natural | ||||||||||||
Q1.2019 Analyst Package | |||||||||||||
Preliminary results (unaudited) | |||||||||||||
Segment Statement of Operations | |||||||||||||
in millions | Q4.2018 | Q1.2019 | Q1.2018 | ||||||||||
Net sales | $ | 102 | $ | 118 | $ | 51 | |||||||
Costs of sales | 52 | 56 | 19 | ||||||||||
Gross margin | 50 | 62 | 32 | ||||||||||
General and administrative expenses | 7 | 7 | 7 | ||||||||||
Operating income | 43 | 55 | 25 | ||||||||||
Interest income and other | 1 | — | — | ||||||||||
Net contribution to earnings | $ | 44 | $ | 55 | $ | 25 | |||||||
Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization* | |||||||||||||
in millions | Q4.2018 | Q1.2019 | Q1.2018 | ||||||||||
Operating income | $ | 43 | $ | 55 | $ | 25 | |||||||
Depreciation, depletion and amortization | 3 | 3 | 4 | ||||||||||
Basis of real estate sold | 44 | 48 | 12 | ||||||||||
Adjusted EBITDA* | $ | 90 | $ | 106 | $ | 41 | |||||||
*See definition of Adjusted EBITDA (a non-GAAP measure) on page 1. | |||||||||||||
Selected Segment Items | |||||||||||||
in millions | Q4.2018 | Q1.2019 | Q1.2018 | ||||||||||
Cash spent for capital expenditures | $ | — | $ | — | $ | — | |||||||
Segment Statistics | |||||||||||||
Q4.2018 | Q1.2019 | Q1.2018 | |||||||||||
Net Sales | Real Estate | $ | 81 | $ | 96 | $ | 34 | ||||||
Energy and Natural Resources | 21 | 22 | 17 | ||||||||||
Total | $ | 102 | $ | 118 | $ | 51 | |||||||
Acres Sold | Real Estate | 31,833 | 38,834 | 21,771 | |||||||||
Price per Acre | Real Estate | $ | 2,479 | $ | 2,424 | $ | 1,539 | ||||||
Basis as a Percent of Real Estate Net Sales | Real Estate | 54 | % | 50 | % | 35 | % | ||||||
Weyerhaeuser Company | Wood Products Segment | |||||||||||
Q1.2019 Analyst Package | ||||||||||||
Preliminary results (unaudited) | ||||||||||||
Segment Statement of Operations (1) | ||||||||||||
in millions | Q4.2018 | Q1.2019 | Q1.2018 | |||||||||
Net sales | $ | 1,087 | $ | 1,094 | $ | 1,324 | ||||||
Costs of sales | 1,003 | 967 | 1,020 | |||||||||
Gross margin | 84 | 127 | 304 | |||||||||
Selling expenses | 20 | 19 | 21 | |||||||||
General and administrative expenses | 33 | 35 | 34 | |||||||||
Research and development expenses | 1 | — | — | |||||||||
Other operating costs (income), net | 4 | 4 | (21) | |||||||||
Operating income and Net contribution to earnings | $ | 26 | $ | 69 | $ | 270 | ||||||
(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 will 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 period presentation with the current period. | ||||||||||||
Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization* | ||||||||||||
in millions | Q4.2018 | Q1.2019 | Q1.2018 | |||||||||
Operating income | $ | 26 | $ | 69 | $ | 270 | ||||||
Depreciation, depletion and amortization | 40 | 46 | 36 | |||||||||
Special items | — | — | (20) | |||||||||
Adjusted EBITDA* | $ | 66 | $ | 115 | $ | 286 | ||||||
*See definition of Adjusted EBITDA (a non-GAAP measure) on page 1. | ||||||||||||
Segment Special Items Included in Net Contribution to Earnings (Pretax) | ||||||||||||
in millions | Q4.2018 | Q1.2019 | Q1.2018 | |||||||||
Product remediation (charges) recoveries, net | $ | — | $ | — | $ | 20 | ||||||
Selected Segment Items | ||||||||||||
in millions | Q4.2018 | Q1.2019 | Q1.2018 | |||||||||
Total decrease (increase) in working capital(2) | $ | 83 | $ | (155) | $ | (226) | ||||||
Cash spent for capital expenditures | $ | (107) | $ | (30) | $ | (52) | ||||||
(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 | Q4.2018 | Q1.2019 | Q1.2018 | |||||||||
Structural Lumber in board feet) | Third party net sales | $ | 427 | $ | 444 | $ | 569 | |||||
Third party sales realizations | $ | 388 | $ | 392 | $ | 498 | ||||||
Third party sales volumes(3) | 1,099 | 1,133 | 1,140 | |||||||||
Production volumes | 1,095 | 1,145 | 1,160 | |||||||||
Engineered Solid in cubic feet) | Third party net sales | $ | 121 | $ | 116 | $ | 129 | |||||
Third party sales realizations | $ | 2,139 | $ | 2,218 | $ | 2,088 | ||||||
Third party sales volumes(3) | 5.7 | 5.2 | 6.2 | |||||||||
Production volumes | 5.3 | 5.9 | 6.3 | |||||||||
Engineered in lineal feet) | Third party net sales | $ | 75 | $ | 70 | $ | 78 | |||||
Third party sales realizations | $ | 1,696 | $ | 1,709 | $ | 1,585 | ||||||
Third party sales volumes(3) | 44 | 41 | 49 | |||||||||
Production volumes | 37 | 44 | 56 | |||||||||
Oriented Strand in square feet 3/8") | Third party net sales | $ | 167 | $ | 160 | $ | 232 | |||||
Third party sales realizations | $ | 252 | $ | 223 | $ | 314 | ||||||
Third party sales volumes(3) | 665 | 717 | 739 | |||||||||
Production volumes | 691 | 729 | 734 | |||||||||
Softwood Plywood (volumes presented in square feet 3/8") | Third party net sales | $ | 42 | $ | 44 | $ | 50 | |||||
Third party sales realizations | $ | 396 | $ | 383 | $ | 438 | ||||||
Third party sales volumes(3) | 104 | 115 | 115 | |||||||||
Production volumes | 96 | 98 | 97 | |||||||||
Medium Density in square feet 3/4") | Third party net sales | $ | 39 | $ | 38 | $ | 43 | |||||
Third party sales realizations | $ | 835 | $ | 846 | $ | 839 | ||||||
Third party sales volumes(3) | 47 | 44 | 51 | |||||||||
Production volumes | 52 | 45 | 50 | |||||||||
(3) Volumes include sales of internally produced products and products purchased for resale primarily through our distribution business. | ||||||||||||
Weyerhaeuser Company | Unallocated Items | |||||||||||
Q1.2019 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 | Q4.2018 | Q1.2019 | Q1.2018 | |||||||||
Unallocated corporate function and variable compensation expense | $ | (28) | $ | (19) | $ | (18) | ||||||
Liability classified share-based compensation | 8 | (4) | — | |||||||||
Foreign exchange gain (loss) | 5 | (3) | (2) | |||||||||
Elimination of intersegment profit in inventory and LIFO | 24 | (5) | (21) | |||||||||
Other | (8) | (39) | (39) | |||||||||
Operating income (loss) | 1 | (70) | (80) | |||||||||
Non-operating pension and other postretirement benefit costs | (218) | (470) | (24) | |||||||||
Interest income and other | 23 | 10 | 12 | |||||||||
Net contribution to earnings (loss) | $ | (194) | $ | (530) | $ | (92) | ||||||
Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization* | ||||||||||||
in millions | Q4.2018 | Q1.2019 | Q1.2018 | |||||||||
Operating income (loss) | $ | 1 | $ | (70) | $ | (80) | ||||||
Depreciation, depletion and amortization | 1 | 1 | 1 | |||||||||
Special items | — | 20 | 28 | |||||||||
Adjusted EBITDA* | $ | 2 | $ | (49) | $ | (51) | ||||||
*See definition of Adjusted EBITDA (a non-GAAP measure) on page 1. | ||||||||||||
Unallocated Special Items Included in Net Contribution to Earnings (Pretax) | ||||||||||||
in millions | Q4.2018 | Q1.2019 | Q1.2018 | |||||||||
Environmental remediation insurance charge | $ | — | $ | — | $ | (28) | ||||||
Legal charge | — | (20) | — | |||||||||
Special items included in operating income (loss) | — | (20) | (28) | |||||||||
Pension settlement charges(1) | (200) | (455) | — | — | ||||||||
Gain on sale of nonstrategic assets | 13 | — | — | |||||||||
Special items included in net contribution to earnings (loss) | $ | (187) | $ | (475) | $ | (28) | ||||||
(1) First quarter 2019 includes a noncash pension settlement charge related to the transfer of pension assets and liabilities through the purchase of a group annuity contract. Fourth quarter 2018 includes a noncash pension settlement charge related to a lump sum offer for our U.S. qualified pension plan. | ||||||||||||
Unallocated Selected Items | ||||||||||||
in millions | Q4.2018 | Q1.2019 | Q1.2018 | |||||||||
Cash spent for capital expenditures | $ | (2) | $ | (3) | $ | (1) | ||||||
SOURCE Weyerhaeuser Company
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