UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM TO ______
COMMISSION FILE NUMBER:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification Number) |
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(Address of principal executive offices) |
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(Zip Code) |
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes
As of April 22, 2024,
TABLE OF CONTENTS
PART I |
FINANCIAL INFORMATION |
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ITEM 1. |
FINANCIAL STATEMENTS: |
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1 |
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2 |
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3 |
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4 |
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5 |
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6 |
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7 |
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ITEM 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A) |
14 |
ITEM 3. |
24 |
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ITEM 4. |
25 |
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PART II |
OTHER INFORMATION |
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ITEM 1. |
25 |
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ITEM 1A. |
25 |
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ITEM 2. |
25 |
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ITEM 3. |
DEFAULTS UPON SENIOR SECURITIES – NOT APPLICABLE |
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ITEM 4. |
MINE SAFETY DISCLOSURES – NOT APPLICABLE |
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ITEM 5. |
26 |
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ITEM 6. |
27 |
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28 |
PART I – FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
WEYERHAEUSER COMPANY
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
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QUARTER ENDED |
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DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES |
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MARCH 2024 |
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MARCH 2023 |
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Net sales (Note 3) |
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$ |
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$ |
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Costs of sales |
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Gross margin |
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Selling expenses |
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General and administrative expenses |
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Other operating costs, net (Note 13) |
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Operating income |
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Non-operating pension and other post-employment benefit costs (Note 6) |
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Interest income and other |
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Interest expense, net of capitalized interest |
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Earnings before income taxes |
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Income taxes (Note 14) |
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Net earnings |
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$ |
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$ |
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Earnings per share, basic and diluted (Note 4) |
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$ |
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$ |
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Weighted average shares outstanding (in thousands) (Note 4): |
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Basic |
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Diluted |
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See accompanying Notes to Consolidated Financial Statements.
1
WEYERHAEUSER COMPANY
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)
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QUARTER ENDED |
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DOLLAR AMOUNTS IN MILLIONS |
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MARCH 2024 |
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MARCH 2023 |
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Net earnings |
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$ |
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$ |
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Other comprehensive (loss) income: |
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Foreign currency translation adjustments |
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Changes in unamortized actuarial loss, net of tax expense of $ |
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Total other comprehensive (loss) income |
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Total comprehensive income |
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$ |
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$ |
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See accompanying Notes to Consolidated Financial Statements.
2
WEYERHAEUSER COMPANY
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
DOLLAR AMOUNTS IN MILLIONS, EXCEPT PAR VALUE |
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MARCH 31, |
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DECEMBER 31, |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Receivables, net |
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Receivables for taxes |
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Inventories (Note 5) |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, less accumulated depreciation of $ |
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Construction in progress |
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Timber and timberlands at cost, less depletion |
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Minerals and mineral rights, less depletion |
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Deferred tax assets |
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Other assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND EQUITY |
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Current liabilities: |
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Current maturities of long-term debt |
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$ |
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$ |
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Accounts payable |
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Accrued liabilities (Note 7) |
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Total current liabilities |
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Long-term debt, net |
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Deferred tax liabilities |
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Deferred pension and other post-employment benefits (Note 6) |
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Other liabilities |
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Total liabilities |
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Equity: |
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Common shares: $ |
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Other capital |
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Retained earnings |
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Accumulated other comprehensive loss (Note 11) |
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Total equity |
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Total liabilities and equity |
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$ |
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$ |
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See accompanying Notes to Consolidated Financial Statements.
3
WEYERHAEUSER COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
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QUARTER ENDED |
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DOLLAR AMOUNTS IN MILLIONS |
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MARCH 2024 |
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MARCH 2023 |
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Cash flows from operations: |
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Net earnings |
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$ |
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$ |
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Noncash charges (credits) to earnings: |
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Depreciation, depletion and amortization |
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Basis of real estate sold |
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Pension and other post-employment benefits (Note 6) |
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Share-based compensation expense (Note 12) |
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Other |
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Change in: |
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Receivables, net |
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( |
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Receivables and payables for taxes |
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Inventories |
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Prepaid expenses and other current assets |
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Accounts payable and accrued liabilities |
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Pension and post-employment benefit contributions and payments |
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Other |
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( |
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Net cash from operations |
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Cash flows from investing activities: |
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Capital expenditures for property and equipment |
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Capital expenditures for timberlands reforestation |
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Other |
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Net cash from investing activities |
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Cash flows from financing activities: |
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Cash dividends on common shares |
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Repurchases of common shares (Note 4) |
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Other |
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( |
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Net cash from financing activities |
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( |
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Net change in cash, cash equivalents and restricted cash |
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Cash, cash equivalents and restricted cash at beginning of period |
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Cash, cash equivalents and restricted cash at end of period |
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$ |
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$ |
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Cash paid during the period for: |
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Interest, net of amount capitalized of $ |
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$ |
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$ |
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Income taxes, net of refunds |
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$ |
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$ |
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See accompanying Notes to Consolidated Financial Statements.
4
WEYERHAEUSER COMPANY
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(UNAUDITED)
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QUARTER ENDED |
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DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES |
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MARCH 2024 |
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MARCH 2023 |
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Common shares: |
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Balance at beginning of period |
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$ |
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$ |
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Issued for exercise of stock options and vested units |
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Repurchases of common shares (Note 4) |
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( |
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Balance at end of period |
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Other capital: |
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Balance at beginning of period |
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Issued for exercise of stock options |
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Repurchases of common shares (Note 4) |
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( |
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( |
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Share-based compensation |
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Other transactions, net |
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( |
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Balance at end of period |
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Retained earnings: |
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Balance at beginning of period |
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Net earnings |
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Dividends on common shares |
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( |
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Balance at end of period |
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Accumulated other comprehensive loss: |
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Balance at beginning of period |
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( |
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Other comprehensive (loss) income |
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( |
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Balance at end of period (Note 11) |
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( |
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Total equity: |
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Balance at end of period |
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$ |
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$ |
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Dividends paid per common share |
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$ |
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$ |
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See accompanying Notes to Consolidated Financial Statements.
5
INDEX FOR NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: |
7 |
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NOTE 2: |
7 |
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NOTE 3: |
8 |
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NOTE 4: |
8 |
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NOTE 5: |
9 |
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NOTE 6: |
10 |
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NOTE 7: |
10 |
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NOTE 8: |
10 |
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NOTE 9: |
11 |
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NOTE 10: |
11 |
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NOTE 11: |
12 |
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NOTE 12: |
12 |
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NOTE 13: |
13 |
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NOTE 14: |
13 |
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NOTE 15: |
13 |
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6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE QUARTERS ENDED MARCH 31, 2024 AND 2023
NOTE 1: BASIS OF PRESENTATION
Our consolidated financial statements provide an overall view of our results of operations, financial condition and cash flows. They include our accounts and the accounts of entities we control, including majority-owned domestic and foreign subsidiaries. They do not include our intercompany transactions and accounts, which are eliminated. Throughout these Notes to Consolidated Financial Statements, unless specified otherwise, references to “Weyerhaeuser,” “the company,” “we” and “our” refer to the consolidated company.
The accompanying unaudited Consolidated Financial Statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of our financial position, results of operations and cash flows for the interim periods presented. Except as otherwise disclosed in these Notes to Consolidated Financial Statements, such adjustments are of a normal, recurring nature. The Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission pertaining to interim financial statements. Certain information and footnote disclosures normally included in our annual Consolidated Financial Statements have been condensed or omitted. These quarterly Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2023. Results of operations for interim periods should not necessarily be regarded as indicative of the results that may be expected for the full year.
NOTE 2: BUSINESS SEGMENTS
We are principally engaged in growing and harvesting timber; maximizing the value of our acreage through the sale of higher and better use (HBU) properties; monetizing the value of surface and subsurface assets through leases and royalties; and manufacturing, distributing and selling products made from trees. Our business segments are organized based primarily on products and services which include:
A reconciliation of our business segment information to the respective information in the Consolidated Statement of Operations is as follows:
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QUARTER ENDED |
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DOLLAR AMOUNTS IN MILLIONS |
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MARCH 2024 |
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MARCH 2023 |
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Sales to unaffiliated customers: |
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Timberlands |
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$ |
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$ |
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Real Estate & ENR |
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Wood Products |
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Intersegment sales: |
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Timberlands |
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Total sales |
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Intersegment eliminations |
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Total |
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$ |
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$ |
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Net contribution (charge) to earnings: |
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Timberlands |
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$ |
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$ |
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Real Estate & ENR |
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Wood Products |
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Unallocated items(1) |
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Net contribution to earnings |
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Interest expense, net of capitalized interest |
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( |
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Earnings before income taxes |
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Income taxes |
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( |
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Net earnings |
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$ |
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$ |
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7
NOTE 3: REVENUE RECOGNITION
A reconciliation of revenue recognized by our major products:
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QUARTER ENDED |
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DOLLAR AMOUNTS IN MILLIONS |
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MARCH 2024 |
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MARCH 2023 |
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Net sales to unaffiliated customers: |
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Timberlands segment |
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Delivered logs: |
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West |
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Domestic sales |
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$ |
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$ |
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Export grade sales |
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Subtotal West |
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South |
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North |
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Subtotal delivered logs sales |
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Stumpage and pay-as-cut timber |
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Recreational and other lease revenue |
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Other(1) |
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Net sales attributable to Timberlands segment |
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Real Estate & ENR segment |
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Real estate |
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Energy and natural resources |
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Net sales attributable to Real Estate & ENR segment |
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Wood Products segment |
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Structural lumber |
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Oriented strand board |
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Engineered solid section |
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Engineered I-joists |
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Softwood plywood |
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Medium density fiberboard |
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Complementary building products |
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Other(2) |
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Net sales attributable to Wood Products segment |
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Total net sales |
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$ |
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$ |
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Our basic and diluted earnings per share were:
8
Basic earnings per share is net earnings divided by the weighted average number of our outstanding common shares, including stock equivalent units where there is no circumstance under which those shares would not be issued.
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QUARTER ENDED |
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SHARES IN THOUSANDS |
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MARCH 2024 |
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MARCH 2023 |
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Weighted average common shares outstanding – basic |
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Dilutive potential common shares: |
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Stock options |
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Restricted stock units |
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Performance share units |
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Total effect of outstanding dilutive potential common shares |
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Weighted average common shares outstanding – dilutive |
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We use the treasury stock method to calculate the dilutive effect of our outstanding stock options, restricted stock units and performance share units.
Potential Shares Not Included in the Computation of Diluted Earnings per Share
The following shares were not included in the computation of diluted earnings per share because they were either antidilutive or the required performance or market conditions were not met. Some or all of these shares may be dilutive potential common shares in future periods.
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QUARTER ENDED |
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SHARES IN THOUSANDS |
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MARCH 2024 |
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MARCH 2023 |
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Stock options |
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Performance share units |
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Share Repurchase Program
On September 22, 2021, we announced that our board of directors approved a new share repurchase program (the 2021 Repurchase Program) under which we are authorized to repurchase up to $
We repurchased
All common stock repurchases under the 2021 Repurchase Program were made in open-market transactions. We record share repurchases upon trade date as opposed to the settlement date when cash is disbursed. We record a liability for repurchases that have not yet been settled as of period end. There were
NOTE 5: INVENTORIES
Inventories include raw materials, work-in-process and finished goods, as well as materials and supplies.
DOLLAR AMOUNTS IN MILLIONS |
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MARCH 31, |
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DECEMBER 31, |
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LIFO inventories: |
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Logs |
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$ |
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$ |
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Lumber, plywood, oriented strand board and fiberboard |
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Other products |
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Moving average cost or FIFO inventories: |
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Logs |
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Lumber, plywood, oriented strand board, fiberboard and engineered wood products |
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Other products |
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Materials and supplies |
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Total |
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$ |
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$ |
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LIFO – the last-in, first-out method – applies to major inventory products held at our U.S. locations. The moving average cost method or FIFO – the first-in, first-out method – applies to the balance of our U.S. raw material and product inventories, all material and supply inventories and all foreign inventories.
9
NOTE 6: PENSION AND OTHER POST-EMPLOYMENT BENEFIT PLANS
The components of net periodic benefit cost are:
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PENSION |
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QUARTER ENDED |
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DOLLAR AMOUNTS IN MILLIONS |
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MARCH 2024 |
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MARCH 2023 |
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Service cost |
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$ |
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$ |
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Interest cost |
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Expected return on plan assets |
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( |
) |
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( |
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Amortization of actuarial loss |
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Total net periodic benefit cost – pension |
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$ |
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$ |
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OTHER POST-EMPLOYMENT BENEFITS |
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QUARTER ENDED |
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DOLLAR AMOUNTS IN MILLIONS |
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MARCH 2024 |
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MARCH 2023 |
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Interest cost |
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$ |
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$ |
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Amortization of actuarial loss |
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Total net periodic benefit cost – other post-employment benefits |
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$ |
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$ |
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For the periods presented, service cost is included in “Costs of sales,” “Selling expenses,” and “General and administrative expenses” with the remaining components included in “Non-operating pension and other post-employment benefit costs” in the Consolidated Statement of Operations.
Fair Value of Pension Plan Assets and Obligations
In our year-end reporting process, we estimate the fair value of pension plan assets based upon the information available at that time. For certain assets, primarily private equity funds, the information available consists of net asset values as of an interim date, cash flows between the interim date and the end of the year and market events. We evaluate the year-end estimated fair value of pension plan assets in second quarter of each year to incorporate final net asset values reflected in financial statements received after we have filed our Annual Report on Form 10-K.
NOTE 7: ACCRUED LIABILITIES
Accrued liabilities were comprised of the following:
DOLLAR AMOUNTS IN MILLIONS |
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MARCH 31, |
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DECEMBER 31, |
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Compensation and employee benefit costs |
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$ |
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$ |
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Current portion of lease liabilities |
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Customer rebates, volume discounts and deferred income |
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Interest |
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Taxes payable |
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Other |
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Total |
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$ |
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$ |
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NOTE 8: LINE OF CREDIT
In March 2023, we entered into a new $
10
NOTE 9: FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value and carrying value of our long-term debt consisted of the following:
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MARCH 31, |
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DECEMBER 31, |
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DOLLAR AMOUNTS IN MILLIONS |
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CARRYING |
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FAIR VALUE |
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CARRYING |
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FAIR VALUE |
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Long-term debt (including current maturities) and line of credit: |
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Fixed rate |
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$ |
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$ |
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$ |
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$ |
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Variable rate |
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Total debt |
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$ |
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$ |
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$ |
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$ |
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To estimate the fair value of fixed rate long-term debt, we used the market approach, which is based on quoted market prices we received for the same types and issues of our debt. We believe that our variable-rate long term debt and line of credit instruments have net carrying values that approximate their fair value with only insignificant differences. The inputs to the valuations of our long-term debt are based on market data obtained from independent sources or information derived principally from observable market data. The difference between the fair value and the carrying value represents the theoretical net premium or discount we would pay or receive to retire all debt at the measurement date.
Fair Value of Other Financial Instruments
We believe that our other financial instruments, including cash and cash equivalents, short-term investments, receivables and payables, have net carrying values that approximate their fair values with only insignificant differences. This is primarily due to the short-term nature of these instruments and the allowance for doubtful accounts.
NOTE 10: LEGAL PROCEEDINGS, COMMITMENTS AND CONTINGENCIES
Legal Proceedings
We are party to various legal proceedings arising in the ordinary course of business. We are not currently a party to any legal proceeding that management believes could have a material adverse effect on our Consolidated Statement of Operations, Consolidated Balance Sheet or Consolidated Statement of Cash Flows.
Environmental Matters
Site Remediation
Under the federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) – commonly known as the “Superfund” – and similar state laws, we:
As of March 31, 2024, our total accrual for future estimated remediation costs on active Superfund sites and other sites for which we are potentially responsible was approximately $
11
NOTE 11: ACCUMULATED OTHER COMPREHENSIVE LOSS
Changes in amounts included in our accumulated other comprehensive loss by component are:
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QUARTER ENDED |
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DOLLAR AMOUNTS IN MILLIONS |
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MARCH 2024 |
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MARCH 2023 |
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Pension(1) |
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Balance at beginning of period |
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$ |
( |
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$ |
( |
) |
Other comprehensive income before reclassifications |
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Amounts reclassified from accumulated other comprehensive loss to earnings(2) |
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Total other comprehensive income |
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Balance at end of period |
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$ |
( |
) |
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$ |
( |
) |
Other post-employment benefits(1) |
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Balance at beginning of period |
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$ |
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$ |
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Other comprehensive loss before reclassifications |
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( |
) |
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Amounts reclassified from accumulated other comprehensive loss to earnings(2) |
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Total other comprehensive loss |
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( |
) |
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Balance at end of period |
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$ |
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$ |
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Translation adjustments and other |
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Balance at beginning of period |
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$ |
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$ |
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Translation adjustments |
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( |
) |
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Total other comprehensive loss |
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( |
) |
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Balance at end of period |
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Accumulated other comprehensive loss, end of period |
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$ |
( |
) |
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$ |
( |
) |
Share-based compensation activity during first quarter 2024 included the following:
SHARES IN THOUSANDS |
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GRANTED |
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VESTED |
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Restricted stock units (RSUs) |
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Performance share units (PSUs) |
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A total of
Restricted Stock Units
The weighted average fair value of the RSUs granted in 2024, calculated as an average of the high and low prices on grant date, was $
Performance Share Units
The weighted average grant date fair value of PSUs granted in 2024 was $
Weighted Average Assumptions Used in Estimating the Value of Performance Share Units Granted in 2024
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PERFORMANCE SHARE UNITS |
Performance period |
|
|
Valuation date closing stock price |
|
$ |
Risk-free rate |
|
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Expected volatility |
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12
NOTE 13: OTHER OPERATING COSTS, NET
Other operating costs, net were comprised of the following:
|
|
QUARTER ENDED |
|
|||||
DOLLAR AMOUNTS IN MILLIONS |
|
MARCH 2024 |
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MARCH 2023 |
|
||
Environmental remediation charges |
|
$ |
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$ |
|
||
Litigation expense, net |
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Research and development expenses |
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Other, net |
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|
||
Total other operating costs, net |
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$ |
|
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$ |
|
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NOTE 14: INCOME TAXES
As a real estate investment trust (REIT), we generally are not subject to federal corporate income taxes on REIT taxable income that is distributed to shareholders. We are required to pay corporate income taxes on earnings of our wholly-owned Taxable REIT Subsidiaries (TRSs), which include our Wood Products segment and a portion of our Timberlands and Real Estate & ENR segments.
The quarterly provision for income taxes is based on our current estimate of the annual effective tax rate and is adjusted for discrete taxable events that have occurred during the year. Our 2024 estimated annual effective tax rate, excluding discrete items, differs from the U.S. federal statutory tax rate of
NOTE 15: RESTRICTED CASH
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported on our Consolidated Balance Sheet that sum to the total of the amounts shown in the Consolidated Statement of Cash Flows:
DOLLAR AMOUNTS IN MILLIONS |
|
MARCH 31, |
|
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MARCH 31, |
|
||
Cash and cash equivalents |
|
$ |
|
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$ |
|
||
(1) |
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|
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Total cash, cash equivalents and restricted cash |
|
$ |
|
|
$ |
|
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13
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
NOTE ABOUT FORWARD-LOOKING STATEMENTS
This report contains statements concerning our future results and performance that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include, without limitation, statements relating to: our expected future financial and operating performance; our plans, strategies, intentions and expectations; our capital structure and the sufficiency of our liquidity position to meet future cash requirements; compliance with covenants in our debt agreements; our expectations concerning our contingent liabilities and the sufficiency of related reserves and accruals including, but not limited to, cost estimates of future litigation and environmental remediation; our provision for income taxes; expected capital expenditures; expected returns on pension plan assets; market and general economic conditions, including related influencing factors such as the trajectory of U.S. housing activity, repair and remodel activity, inflation trends and interest rates; our expectations about our future opportunities in emerging carbon credit and carbon capture and storage markets; and assumptions used in valuing incentive compensation and related expense.
Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often involve use of words such as “anticipate,” “believe,” “committed,” "continue,” “estimate,” “expect,” “foreseeable,” “maintain,” “may,” “potential,” and “will,” or similar words or terminology. They may use the positive, negative or another variation of those and similar words. These forward-looking statements are based on our current expectations and assumptions and are not guarantees of future events or 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. There is no guarantee that any of the events anticipated by our forward-looking statements will occur. If any of the events occur, there is no guarantee what effect it will have on our operations, cash flows, or financial condition. We undertake no obligation to update our forward-looking statements after the date of this report. The factors listed below, as well as other factors not described herein because they are not currently known to us or we currently judge them to be immaterial, may cause our actual results to differ significantly from our forward-looking statements: