UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 26, 2019
WEYERHAEUSER COMPANY
(Exact name of registrant as specified in charter)
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Washington |
1-4825 |
91-0470860 |
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(State or other jurisdiction of incorporation or organization) |
(Commission File Number) |
(IRS Employer Identification Number) |
220 Occidental Avenue South
Seattle, Washington 98104-7800
(Address of principal executive offices)
(zip code)
Registrant’s telephone number, including area code:
(206) 539-3000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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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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Common Stock, par value $1.25 per share |
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WY |
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New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934:
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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. |
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Section 2 - Financial Information
Item 2.02. Results of Operations and Financial Condition
On July 26, 2019, Weyerhaeuser Company issued a press release announcing its financial results for the quarter ended June 30, 2019. Copies of the press release and the exhibit thereto are furnished as Exhibit 99.1 and Exhibit 99.2 to this report.
In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1 and Exhibit 99.2, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Section 9 - Financial Statements and Exhibits
Item 9.01. Financial Statements and Exhibits
(d) Exhibits. The following items are furnished as exhibits to this report.
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Exhibit No. |
Description |
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Exhibit to press release of Weyerhaeuser Company issued July 26, 2019. |
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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WEYERHAEUSER COMPANY |
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By: |
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/s/ David M. Wold |
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Name: |
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David M. Wold |
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Its: |
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Vice President and Chief Accounting Officer |
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(Principal Accounting Officer) |
Date: July 26, 2019
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Exhibit No. |
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Description |
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Exhibit to press release of Weyerhaeuser Company issued July 26, 2019. |
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EXHIBIT 99.1
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Analysts - Beth Baum (206) 539-3907 |
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Media - Nancy Thompson (919) 861-0342 |
Weyerhaeuser reports second quarter results
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Net earnings of $128 million, or $0.17 per diluted share |
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Net earnings before special items increased 54 percent compared with first quarter |
SEATTLE (July 26, 2019) - Weyerhaeuser Company (NYSE: WY) today reported second quarter net earnings of $128 million, or 17 cents per diluted share, on net sales of $1.7 billion. This compares with net earnings of $317 million, or 42 cents per diluted share, on net sales of $2.1 billion for the same period last year.
Excluding an after-tax adjustment of $5 million for special items, the company reported second quarter net earnings of $123 million, or 16 cents per diluted share. This compares with net earnings before special items of $332 million for the same period last year and $80 million for the first quarter of 2019.
Adjusted EBITDA for the second quarter of 2019 was $343 million compared with $637 million for the same period last year and $365 million for the first quarter of 2019.
“Our businesses delivered strong operating performance in the second quarter despite various market and weather-related challenges,” said Devin W. Stockfish, president and chief executive officer. “This includes the lowest controllable lumber manufacturing cost we have ever reported. Looking forward, although record-setting rainfall has held back U.S. housing activity in the first half of 2019, we see solid underlying market conditions and continue to expect the housing market will follow a modest growth trajectory. We remain committed to delivering industry-leading performance, fully capitalizing on all market conditions, and driving superior value for shareholders.”
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WEYERHAEUSER FINANCIAL HIGHLIGHTS |
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2019 |
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2019 |
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2018 |
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(millions, except per share data) |
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Q1 |
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Q2 |
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Q2 |
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Net sales |
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$1,643 |
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$1,692 |
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$2,065 |
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Net earnings (loss) |
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($289) |
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$128 |
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$317 |
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Net earnings (loss) per diluted share |
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($0.39) |
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$0.17 |
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$0.42 |
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Weighted average shares outstanding, diluted |
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747 |
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746 |
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761 |
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Net earnings before special items(1)(2) |
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$80 |
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$123 |
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$332 |
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Net earnings per diluted share before special items(1) |
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$0.11 |
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$0.16 |
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$0.44 |
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Adjusted EBITDA(1) |
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$365 |
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$343 |
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$637 |
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(1) |
Net earnings before special items is a non-GAAP measure that management believes provides helpful context in understanding the company’s earnings performance. Additionally, Adjusted EBITDA is a non-GAAP measure that management uses to evaluate the performance of the company. Adjusted EBITDA, as we define it, is operating income adjusted for depreciation, depletion, amortization, basis of real estate sold and special items. Net earnings before special items and Adjusted EBITDA should not be considered in isolation from, and are not intended to represent, an alternative to our GAAP results. Reconciliations of net earnings before special items and Adjusted EBITDA to GAAP earnings are included within this release. |
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(2) |
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. Second quarter 2019 after-tax special items include a $5 million benefit from finalizing the noncash settlement charge incurred in first quarter 2019. Second quarter 2018 after-tax special items include $15 million of product remediation charges. |
1
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FINANCIAL HIGHLIGHTS |
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2019 |
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2019 |
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(millions) |
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Q1 |
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Q2 |
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Change |
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Net sales |
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$556 |
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$532 |
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($24) |
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Contribution to pretax earnings |
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$120 |
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$102 |
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($18) |
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Adjusted EBITDA |
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$193 |
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$175 |
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($18) |
2Q 2019 Performance - In the West, forestry and road spending increased seasonally compared with the first quarter, and average log sales realizations decreased. Export log realizations were slightly lower, and the proportion of sales to export markets decreased due to the timing of vessel sailings. In the South, average log sales realizations were comparable, with a modest reduction in fee harvest volumes due to continued wet weather. In the North, fee harvest volumes were seasonally lower due to spring breakup.
3Q 2019 Outlook - Weyerhaeuser expects third quarter earnings and Adjusted EBITDA will be lower than the second quarter. In the West, the company anticipates seasonally lower harvest volumes, slightly higher road costs, and average log sales realizations modestly lower than the second quarter average. In the South, the company expects seasonally higher forestry expenses, largely offset by increased fee harvest volumes. Average Southern log sales realizations should be comparable to the second quarter.
REAL ESTATE, ENERGY & NATURAL RESOURCES
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FINANCIAL HIGHLIGHTS |
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2019 |
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2019 |
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(millions) |
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Q1 |
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Q2 |
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Change |
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Net sales |
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$118 |
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$81 |
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($37) |
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Contribution to pretax earnings |
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$55 |
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$35 |
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($20) |
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Adjusted EBITDA |
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$106 |
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$71 |
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($35) |
2Q 2019 Performance - Real estate sales were lower than the first quarter. The number of acres sold increased and average price per acre declined, primarily due to a large acre transaction in Montana which accounted for approximately half of the acres sold in the second quarter. Average land basis increased due to the mix of properties sold. Energy & Natural Resources earnings and Adjusted EBITDA were slightly higher than the first quarter.
3Q 2019 Outlook - Weyerhaeuser anticipates third quarter earnings and Adjusted EBITDA will be lower than the second quarter. The company continues to expect full year 2019 Adjusted EBITDA for the segment will be approximately $270 million.
WOOD PRODUCTS
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FINANCIAL HIGHLIGHTS |
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2019 |
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2019 |
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(millions) |
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Q1 |
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Q2 |
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Change |
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Net sales |
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$1,094 |
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$1,210 |
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$116 |
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Contribution to pretax earnings |
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$69 |
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$81 |
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$12 |
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Adjusted EBITDA |
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$115 |
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$128 |
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$13 |
2Q 2019 Performance - Earnings and Adjusted EBITDA increased compared with the first quarter due to seasonally higher sales volumes and improved per unit manufacturing costs in engineered wood products. This was partially offset by a modest decline in average sales realizations for oriented strand board and slightly lower average sales realizations for lumber.
3Q 2019 Outlook - Weyerhaeuser anticipates third quarter earnings and Adjusted EBITDA will be comparable to the second quarter before any improvement in average sales realizations. The company expects comparable sales volumes and slightly lower fiber costs, offset by slightly higher unit manufacturing costs for engineered wood products.
2
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FINANCIAL HIGHLIGHTS |
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2019 |
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2019 |
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(millions) |
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Q1 |
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Q2 |
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Change |
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Contribution to pretax earnings (loss) |
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($530) |
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($36) |
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$494 |
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Pretax charge (benefit) for special items |
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$475 |
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($6) |
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($481) |
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Contribution to pretax earnings (loss) before special items |
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($55) |
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($42) |
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$13 |
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Adjusted EBITDA |
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($49) |
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($31) |
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$18 |
2Q 2019 Performance - Unallocated variable compensation expenses declined in the second quarter. Results also included a small noncash foreign exchange gain in the second quarter compared with a charge in the first quarter.
Special items in the second quarter include a $6 million pretax benefit from finalizing the noncash settlement charge incurred in the first quarter related to the transfer of pension assets and liabilities through the purchase of a group annuity contract.
INCOME TAXES
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FINANCIAL HIGHLIGHTS |
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2019 |
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2019 |
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Q1 |
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Q2 |
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Change |
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Income tax (expense) benefit |
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$104 |
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$37 |
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($67) |
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Income tax (expense) benefit attributable to special items |
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$118 |
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($1) |
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($119) |
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Income tax (expense) benefit before special items |
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($14) |
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$38 |
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$52 |
2Q 2019 Performance - The provision for income taxes was a benefit for the second quarter, as the company adjusted its estimated annual effective tax rate to reflect lower pricing for lumber and oriented strand board.
ABOUT WEYERHAEUSER
Weyerhaeuser Company, one of the world's largest private owners of timberlands, began operations in 1900. We own or control 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 July 26, 2019 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 26, 2019.
To join the conference call from within North America, dial 855-223-0757 (access code: 6886814) at least 15 minutes prior to the call. Those calling from outside North America should dial 574-990-1206 (access code: 6886814). Replays will be available for two weeks at 855-859-2056 (access code: 6886814) from within North America and at 404-537-3406 (access code: 6886814) from outside North America.
3
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 as well as road costs and forestry expenses in our timber business; sales volumes and realizations as well as fiber and manufacturing costs for Wood Products. These statements generally are identified by words such as “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” and expressions such as “will be,” “will continue,” “will likely result,” and similar words and expressions. These statements are based on our current expectations and assumptions and are not guarantees of future performance. The realization of our expectations and the accuracy of our assumptions are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include, but are not limited to:
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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; |
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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; |
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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; |
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restrictions on international trade and tariffs imposed on imports or exports; |
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the availability and cost of shipping and transportation; |
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economic activity in Asia, especially Japan and China; |
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performance of our manufacturing operations, including maintenance and capital requirements; |
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potential disruptions in our manufacturing operations; |
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the level of competition from domestic and foreign producers; |
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raw material availability and prices; |
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the effect of weather; |
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changes in global or regional climate conditions and governmental response to such changes; |
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the risk of loss from fires, floods, windstorms, hurricanes, pest infestation and other natural disasters; |
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energy prices; |
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our operational excellence initiatives; |
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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; |
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transportation and labor availability and costs; |
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federal tax policies; |
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the effect of forestry, land use, environmental and other governmental regulations; |
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legal proceedings; |
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performance of pension fund investments and related derivatives; |
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the effect of timing of retirements and changes in the market price of our common stock on charges for share-based compensation; |
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the accuracy of our estimates of costs and expenses related to contingent liabilities; |
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changes in accounting principles; and |
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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.
4
RECONCILIATION OF ADJUSTED EBITDA TO NET EARNINGS (LOSS)
We reconcile Adjusted EBITDA to net earnings (loss) for the consolidated company and to operating income (loss) for the business segments, as those are the most directly comparable U.S. GAAP measures for each.
The table below reconciles Adjusted EBITDA for the quarter ended March 31, 2019:
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DOLLAR AMOUNTS IN MILLIONS |
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Timberlands |
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Real Estate & ENR |
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Wood Products |
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Unallocated Items |
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Total |
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Adjusted EBITDA by Segment: |
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Net earnings (loss) |
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$ |
(289 |
) |
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Interest expense, net of capitalized interest(1) |
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107 |
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Income taxes |
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(104 |
) |
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Net contribution to earnings (loss) |
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$ |
120 |
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$ |
55 |
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$ |
69 |
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$ |
(530 |
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$ |
(286 |
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Non-operating pension and other postretirement benefit costs(2) |
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— |
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— |
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— |
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470 |
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470 |
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Interest income and other |
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— |
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— |
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— |
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(10 |
) |
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(10 |
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Operating income (loss) |
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120 |
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55 |
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69 |
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(70 |
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174 |
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Depreciation, depletion and amortization |
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73 |
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3 |
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46 |
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1 |
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123 |
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Basis of real estate sold |
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— |
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48 |
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— |
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— |
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48 |
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Special items included in operating income (loss)(3) |
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— |
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— |
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— |
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20 |
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20 |
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Adjusted EBITDA |
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$ |
193 |
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$ |
106 |
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$ |
115 |
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$ |
(49 |
) |
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$ |
365 |
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(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. |
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(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. |
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(3) |
Operating income (loss) includes a pretax special item consisting of a $20 million legal charge. |
The table below reconciles Adjusted EBITDA for the quarter ended June 30, 2019:
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DOLLAR AMOUNTS IN MILLIONS |
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Timberlands |
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Real Estate & ENR |
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Wood Products |
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Unallocated Items |
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Total |
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Adjusted EBITDA by Segment: |
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Net earnings |
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$ |
128 |
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Interest expense, net of capitalized interest |
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91 |
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Income taxes |
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(37 |
) |
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Net contribution to earnings (loss) |
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$ |
102 |
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$ |
35 |
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$ |
81 |
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$ |
(36 |
) |
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$ |
182 |
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Non-operating pension and other postretirement benefit costs(1) |
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— |
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— |
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— |
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10 |
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10 |
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Interest income and other |
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— |
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— |
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— |
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(6 |
) |
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(6 |
) |
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Operating income (loss) |
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102 |
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35 |
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81 |
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(32 |
) |
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186 |
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Depreciation, depletion and amortization |
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73 |
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3 |
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47 |
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1 |
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124 |
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Basis of real estate sold |
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— |
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33 |
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— |
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— |
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33 |
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Special items included in operating income (loss) |
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— |
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— |
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— |
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— |
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— |
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Adjusted EBITDA |
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$ |
175 |
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|
$ |
71 |
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|
$ |
128 |
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|
$ |
(31 |
) |
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$ |
343 |
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(1) |
Non-operating pension and other postretirement benefit costs includes a pretax special item consisting of a $6 million benefit from finalizing the noncash settlement charge incurred in first quarter 2019 related to the transfer of pension assets and liabilities through the purchase of a group annuity contract. |
5
The table below reconciles Adjusted EBITDA for the quarter ended June 30, 2018:
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DOLLAR AMOUNTS IN MILLIONS |
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Timberlands |
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Real Estate & ENR |
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Wood Products |
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Unallocated Items |
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Total |
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Adjusted EBITDA by Segment: |
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|
|
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Net earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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$ |
317 |
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|
Interest expense, net of capitalized interest |
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
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|
|
92 |
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Income taxes |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
65 |
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|
Net contribution to earnings (loss) |
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$ |
161 |
|
|
$ |
22 |
|
|
$ |
329 |
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|
$ |
(38 |
) |
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$ |
474 |
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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 included in operating income (loss)(1) |
|
|
— |
|
|
|
— |
|
|
|
20 |
|
|
|
— |
|
|
|
20 |
|
|
Adjusted EBITDA |
|
$ |
240 |
|
|
$ |
47 |
|
|
$ |
385 |
|
|
$ |
(35 |
) |
|
$ |
637 |
|
|
(1) |
Operating income (loss) includes a pretax special item consisting of $20 million of product remediation charges. |
RECONCILIATION OF NET EARNINGS (LOSS) BEFORE SPECIAL ITEMS TO NET EARNINGS (LOSS)
We reconcile net earnings (loss) before special items to net earnings (loss) for the consolidated company, as those are the most directly comparable U.S. GAAP measures for each.
The table below reconciles net earnings (loss) before special items to net earnings (loss):
|
|
|
2019 |
|
2019 |
|
2018 |
|
(millions, except per share data) |
|
Q1 |
|
Q2 |
|
Q2 |
|
Net earnings (loss) |
|
$(289) |
|
$128 |
|
$317 |
|
Early extinguishment of debt charge |
|
9 |
|
— |
|
— |
|
Legal charge |
|
15 |
|
— |
|
— |
|
Pension settlement charges |
|
345 |
|
(5) |
|
— |
|
Product remediation charges (recoveries), net |
|
— |
|
— |
|
15 |
|
Net earnings before special items |
|
$80 |
|
$123 |
|
$332 |
The table below reconciles net earnings (loss) per diluted share before special items to net earnings (loss) per diluted share:
|
|
|
2019 |
|
2019 |
|
2018 |
|
|
|
Q1 |
|
Q2 |
|
Q2 |
|
Net earnings (loss) per diluted share |
|
$(0.39) |
|
$0.17 |
|
$0.42 |
|
Early extinguishment of debt charge |
|
0.01 |
|
— |
|
— |
|
Legal charge |
|
0.02 |
|
— |
|
— |
|
Pension settlement charges |
|
0.47 |
|
(0.01) |
|
— |
|
Product remediation charges (recoveries), net |
|
— |
|
— |
|
0.02 |
|
Net earnings per diluted share before special items |
|
$0.11 |
|
$0.16 |
|
$0.44 |
6
|
Weyerhaeuser Company |
Exhibit 99.2 |
Q2.2019 Analyst Package
Preliminary results (unaudited)
Consolidated Statement of Operations
|
|
|
Q1 |
|
|
Q2 |
|
|
Year-to-Date |
|
|||||||||||
|
in millions |
|
March 31, 2019 |
|
|
June 30, 2019 |
|
|
June 30, 2018 |
|
|
June 30, 2019 |
|
|
June 30, 2018 |
|
|||||
|
Net sales |
|
$ |
1,643 |
|
|
$ |
1,692 |
|
|
$ |
2,065 |
|
|
$ |
3,335 |
|
|
$ |
3,930 |
|
|
Costs of sales |
|
|
1,322 |
|
|
|
1,390 |
|
|
|
1,447 |
|
|
|
2,712 |
|
|
|
2,795 |
|
|
Gross margin |
|
|
321 |
|
|
|
302 |
|
|
|
618 |
|
|
|
623 |
|
|
|
1,135 |
|
|
Selling expenses |
|
|
21 |
|
|
|
21 |
|
|
|
23 |
|
|
|
42 |
|
|
|
46 |
|
|
General and administrative expenses |
|
|
89 |
|
|
|
80 |
|
|
|
80 |
|
|
|
169 |
|
|
|
158 |
|
|
Research and development expenses |
|
|
1 |
|
|
|
2 |
|
|
|
2 |
|
|
|
3 |
|
|
|
4 |
|
|
Other operating costs, net |
|
|
36 |
|
|
|
13 |
|
|
|
37 |
|
|
|
49 |
|
|
|
47 |
|
|
Operating income |
|
|
174 |
|
|
|
186 |
|
|
|
476 |
|
|
|
360 |
|
|
|
880 |
|
|
Non-operating pension and other postretirement benefit costs |
|
|
(470 |
) |
|
|
(10 |
) |
|
|
(13 |
) |
|
|
(480 |
) |
|
|
(37 |
) |
|
Interest income and other |
|
|
10 |
|
|
|
6 |
|
|
|
11 |
|
|
|
16 |
|
|
|
23 |
|
|
Interest expense, net of capitalized interest |
|
|
(107 |
) |
|
|
(91 |
) |
|
|
(92 |
) |
|
|
(198 |
) |
|
|
(185 |
) |
|
Earnings (loss) before income taxes |
|
|
(393 |
) |
|
|
91 |
|
|
|
382 |
|
|
|
(302 |
) |
|
|
681 |
|
|
Income taxes |
|
|
104 |
|
|
|
37 |
|
|
|
(65 |
) |
|
|
141 |
|
|
|
(95 |
) |
|
Net earnings (loss) |
|
$ |
(289 |
) |
|
$ |
128 |
|
|
$ |
317 |
|
|
$ |
(161 |
) |
|
$ |
586 |
|
Per Share Information
|
|
|
Q1 |
|
|
Q2 |
|
|
Year-to-Date |
|
|||||||||||
|
|
|
March 31, 2019 |
|
|
June 30, 2019 |
|
|
June 30, 2018 |
|
|
June 30, 2019 |
|
|
June 30, 2018 |
|
|||||
|
Earnings (loss) per share, basic and diluted |
|
$ |
(0.39 |
) |
|
$ |
0.17 |
|
|
$ |
0.42 |
|
|
$ |
(0.22 |
) |
|
$ |
0.77 |
|
|
Dividends paid per common share |
|
$ |
0.34 |
|
|
$ |
0.34 |
|
|
$ |
0.32 |
|
|
$ |
0.68 |
|
|
$ |
0.64 |
|
|
Weighted average shares outstanding (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
746,603 |
|
|
|
745,486 |
|
|
|
757,829 |
|
|
|
746,041 |
|
|
|
757,317 |
|
|
Diluted |
|
|
746,603 |
|
|
|
746,232 |
|
|
|
760,533 |
|
|
|
746,041 |
|
|
|
759,992 |
|
|
Common shares outstanding at end of period (in thousands) |
|
|
744,767 |
|
|
|
744,905 |
|
|
|
757,646 |
|
|
|
744,905 |
|
|
|
757,646 |
|
Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization (Adjusted EBITDA)
|
|
|
Q1 |
|
|
Q2 |
|
|
Year-to-Date |
|
|||||||||||
|
|
March 31, 2019 |
|
|
June 30, 2019 |
|
|
June 30, 2018 |
|
|
June 30, 2019 |
|
|
June 30, 2018 |
|
||||||
|
Net earnings (loss) |
|
$ |
(289 |
) |
|
$ |
128 |
|
|
$ |
317 |
|
|
$ |
(161 |
) |
|
$ |
586 |
|
|
Non-operating pension and other postretirement benefit costs |
|
|
470 |
|
|
|
10 |
|
|
|
13 |
|
|
|
480 |
|
|
|
37 |
|
|
Interest income and other |
|
|
(10 |
) |
|
|
(6 |
) |
|
|
(11 |
) |
|
|
(16 |
) |
|
|
(23 |
) |
|
Interest expense, net of capitalized interest |
|
|
107 |
|
|
|
91 |
|
|
|
92 |
|
|
|
198 |
|
|
|
185 |
|
|
Income taxes |
|
|
(104 |
) |
|
|
(37 |
) |
|
|
65 |
|
|
|
(141 |
) |
|
|
95 |
|
|
Operating income |
|
|
174 |
|
|
|
186 |
|
|
|
476 |
|
|
|
360 |
|
|
|
880 |
|
|
Depreciation, depletion and amortization |
|
|
123 |
|
|
|
124 |
|
|
|
119 |
|
|
|
247 |
|
|
|
239 |
|
|
Basis of real estate sold |
|
|
48 |
|
|
|
33 |
|
|
|
22 |
|
|
|
81 |
|
|
|
34 |
|
|
Special items included in operating income |
|
|
20 |
|
|
|
— |
|
|
|
20 |
|
|
|
20 |
|
|
|
28 |
|
|
Adjusted EBITDA(1) |
|
$ |
365 |
|
|
$ |
343 |
|
|
$ |
637 |
|
|
$ |
708 |
|
|
$ |
1,181 |
|
(1) Adjusted EBITDA is a non-GAAP measure that management uses to evaluate the performance of the company. Adjusted EBITDA, as we define it, is operating income adjusted for depreciation, depletion, amortization, basis of real estate sold, and special items. Our definition of Adjusted EBITDA may be different from similarly titled measures reported by other companies. Adjusted EBITDA should not be considered in isolation from and is not intended to represent an alternative to our GAAP results.
Page 1 of 8
Q2.2019 Analyst Package
Preliminary results (unaudited)
Special Items Included in Net Earnings (Income Tax Affected)
|
|
|
Q1 |
|
|
Q2 |
|
|
Year-to-Date |
|
|||||||||||
|
in millions |
|
March 31, 2019 |
|
|
June 30, 2019 |
|
|
June 30, 2018 |
|
|
June 30, 2019 |
|
|
June 30, 2018 |
|
|||||
|
Net earnings (loss) |
|
$ |
(289 |
) |
|
$ |
128 |
|
|
$ |
317 |
|
|
$ |
(161 |
) |
|
$ |
586 |
|
|
Early extinguishment of debt charge(1) |
|
|
9 |
|
|
|
— |
|
|
|
— |
|
|
|
9 |
|
|
|
— |
|
|
Environmental remediation charge |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
21 |
|
|
Legal charge |
|
|
15 |
|
|
|
— |
|
|
|
— |
|
|
|
15 |
|
|
|
— |
|
|
Pension settlement charges |
|
|
345 |
|
|
|
(5 |
) |
|
|
— |
|
|
|
340 |
|
|
|
— |
|
|
Product remediation charges (recoveries), net |
|
|
— |
|
|
|
— |
|
|
|
15 |
|
|
|
— |
|
|
|
— |
|
|
Net earnings before special items(2) |
|
$ |
80 |
|
|
$ |
123 |
|
|
$ |
332 |
|
|
$ |
203 |
|
|
$ |
607 |
|
|
|
|
Q1 |
|
|
Q2 |
|
|
Year-to-Date |
|
|||||||||||
|
|
|
March 31, 2019 |
|
|
June 30, 2019 |
|
|
June 30, 2018 |
|
|
June 30, 2019 |
|
|
June 30, 2018 |
|
|||||
|
Net earnings (loss) per diluted share |
|
$ |
(0.39 |
) |
|
$ |
0.17 |
|
|
$ |
0.42 |
|
|
$ |
(0.22 |
) |
|
$ |
0.77 |
|
|
Early extinguishment of debt charge(1) |
|
|
0.01 |
|
|
|
— |
|
|
|
— |
|
|
|
0.01 |
|
|
|
— |
|
|
Environmental remediation charge |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.03 |
|
|
Legal charge |
|
|
0.02 |
|
|
|
— |
|
|
|
— |
|
|
|
0.02 |
|
|
|
— |
|
|
Pension settlement charges |
|
|
0.47 |
|
|
|
(0.01 |
) |
|
|
— |
|
|
|
0.46 |
|
|
|
— |
|
|
Product remediation charges (recoveries), net |
|
|
— |
|
|
|
— |
|
|
|
0.02 |
|
|
|
— |
|
|
|
— |
|
|
Net earnings per diluted share before special items(2) |
|
$ |
0.11 |
|
|
$ |
0.16 |
|
|
$ |
0.44 |
|
|
$ |
0.27 |
|
|
$ |
0.80 |
|
(1) During first quarter 2019, we recorded a $12 million pretax ($9 million after-tax) charge related to the early extinguishment of debt. This charge is included in Interest expense, net of capitalized interest in the Consolidated Statement of Operations.
(2) Net Earnings before special items is a non-GAAP measure that management believes provides helpful context in understanding the company’s earnings performance. Net Earnings before special items should not be considered in isolation from and is not intended to represent an alternative to our GAAP results.
Selected Total Company Items
|
|
|
Q1 |
|
|
Q2 |
|
|
Year-to-Date |
|
|||||||||||
|
in millions |
|
March 31, 2019 |
|
|
June 30, 2019 |
|
|
June 30, 2018 |
|
|
June 30, 2019 |
|
|
June 30, 2018 |
|
|||||
|
Pension and postretirement costs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension and postretirement service costs |
|
$ |
8 |
|
|
$ |
8 |
|
|
$ |
8 |
|
|
$ |
16 |
|
|
$ |
18 |
|
|
Non-operating pension and other postretirement benefit costs |
|
|
470 |
|
|
|
10 |
|
|
|
13 |
|
|
|
480 |
|
|
|
37 |
|
|
Total company pension and postretirement costs |
|
$ |
478 |
|
|
$ |
18 |
|
|
$ |
21 |
|
|
$ |
496 |
|
|
$ |
55 |
|
Page 2 of 8
Q2.2019 Analyst Package
Preliminary results (unaudited)
Consolidated Balance Sheet
|
in millions |
|
March 31, 2019 |
|
|
June 30, 2019 |
|
|
December 31, 2018 |
|
|||
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
259 |
|
|
$ |
212 |
|
|
$ |
334 |
|
|
Receivables, less discounts and allowances |
|
|
398 |
|
|
|
408 |
|
|
|
337 |
|
|
Receivables for taxes |
|
|
163 |
|
|
|
157 |
|
|
|
137 |
|
|
Inventories |
|
|
451 |
|
|
|
425 |
|
|
|
389 |
|
|
Prepaid expenses and other current assets |
|
|
141 |
|
|
|
132 |
|
|
|
152 |
|
|
Current restricted financial investments held by variable interest entities |
|
|
362 |
|
|
|
362 |
|
|
|
253 |
|
|
Total current assets |
|
|
1,774 |
|
|
|
1,696 |
|
|
|
1,602 |
|
|
Property and equipment, net |
|
|
1,917 |
|
|
|
1,901 |
|
|
|
1,857 |
|
|
Construction in progress |
|
|
102 |
|
|
|
134 |
|
|
|
136 |
|
|
Timber and timberlands at cost, less depletion |
|
|
12,586 |
|
|
|
12,516 |
|
|
|
12,671 |
|
|
Minerals and mineral rights, less depletion |
|
|
291 |
|
|
|
288 |
|
|
|
294 |
|
|
Deferred tax assets |
|
|
18 |
|
|
|
33 |
|
|
|
15 |
|
|
Other assets |
|
|
444 |
|
|
|
461 |
|
|
|
312 |
|
|
Restricted financial investments held by variable interest entities |
|
|
— |
|
|
|
— |
|
|
|
362 |
|
|
Total assets |
|
$ |
17,132 |
|
|
$ |
17,029 |
|
|
$ |
17,249 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current maturities of long-term debt |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
500 |
|
|
Current debt (nonrecourse to the company) held by variable interest entities |
|
|
302 |
|
|
|
302 |
|
|
|
302 |
|
|
Borrowings on line of credit |
|
|
245 |
|
|
|
140 |
|
|
|
425 |
|
|
Accounts payable |
|
|
243 |
|
|
|
271 |
|
|
|
222 |
|
|
Accrued liabilities |
|
|
411 |
|
|
|
510 |
|
|
|
490 |
|
|
Total current liabilities |
|
|
1,201 |
|
|
|
1,223 |
|
|
|
1,939 |
|
|
Long-term debt |
|
|
6,156 |
|
|
|
6,153 |
|
|
|
5,419 |
|
|
Deferred tax liabilities |
|
|
34 |
|
|
|
17 |
|
|
|
43 |
|
|
Deferred pension and other postretirement benefits |
|
|
542 |
|
|
|
515 |
|
|
|
527 |
|
|
Other liabilities |
|
|
398 |
|
|
|
397 |
|
|
|
275 |
|
|
Total liabilities |
|
|
8,331 |
|
|
|
8,305 |
|
|
|
8,203 |
|
|
Total equity |
|
|
8,801 |
|
|
|
8,724 |
|
|
|
9,046 |
|
|
Total liabilities and equity |
|
$ |
17,132 |
|
|
$ |
17,029 |
|
|
$ |
17,249 |
|
Page 3 of 8
Q2.2019 Analyst Package
Preliminary results (unaudited)
Consolidated Statement of Cash Flows
|
|
|
Q1 |
|
|
Q2 |
|
|
Year-to-Date |
|
|||||||||||
|
in millions |
|
March 31, 2019 |
|
|
June 30, 2019 |
|
|
June 30, 2018 |
|
|
June 30, 2019 |
|
|
June 30, 2018 |
|
|||||
|
Cash flows from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
|
$ |
(289 |
) |
|
$ |
128 |
|
|
$ |
317 |
|
|
$ |
(161 |
) |
|
$ |
586 |
|
|
Noncash charges to earnings (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
|
123 |
|
|
|
124 |
|
|
|
119 |
|
|
|
247 |
|
|
|
239 |
|
|
Basis of real estate sold |
|
|
48 |
|
|
|
33 |
|
|
|
22 |
|
|
|
81 |
|
|
|
34 |
|
|
Deferred income taxes, net |
|
|
(123 |
) |
|
|
(43 |
) |
|
|
15 |
|
|
|
(166 |
) |
|
|
25 |
|
|
Pension and other postretirement benefits |
|
|
478 |
|
|
|
18 |
|
|
|
21 |
|
|
|
496 |
|
|
|
55 |
|
|
Share-based compensation expense |
|
|
9 |
|
|
|
7 |
|
|
|
9 |
|
|
|
16 |
|
|
|
18 |
|
|
Change in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables, less allowances |
|
|
(77 |
) |
|
|
(10 |
) |
|
|
(18 |
) |
|
|
(87 |
) |
|
|
(101 |
) |
|
Receivables and payables for taxes |
|
|
(31 |
) |
|
|
6 |
|
|
|
10 |
|
|
|
(25 |
) |
|
|
15 |
|
|
Inventories |
|
|
(60 |
) |
|
|
28 |
|
|
|
30 |
|
|
|
(32 |
) |
|
|
(36 |
) |
|
Prepaid expenses and other current assets |
|
|
(5 |
) |
|
|
8 |
|
|
|
4 |
|
|
|
3 |
|
|
|
(1 |
) |
|
Accounts payable and accrued liabilities |
|
|
(82 |
) |
|
|
127 |
|
|
|
103 |
|
|
|
45 |
|
|
|
(70 |
) |
|
Pension and postretirement benefit contributions and payments |
|
|
(14 |
) |
|
|
(13 |
) |
|
|
(16 |
) |
|
|
(27 |
) |
|
|
(32 |
) |
|
Other |
|
|
9 |
|
|
|
(17 |
) |
|
|
(19 |
) |
|
|
(8 |
) |
|
|
1 |
|
|
Net cash from (used in) operations |
|
$ |
(14 |
) |
|
$ |
396 |
|
|
$ |
597 |
|
|
$ |
382 |
|
|
$ |
733 |
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures for property and equipment |
|
$ |
(41 |
) |
|
$ |
(71 |
) |
|
$ |
(83 |
) |
|
$ |
(112 |
) |
|
$ |
(144 |
) |
|
Capital expenditures for timberlands reforestation |
|
|
(18 |
) |
|
|
(13 |
) |
|
|
(14 |
) |
|
|
(31 |
) |
|
|
(34 |
) |
|
Proceeds from note receivable held by variable interest entities |
|
|
253 |
|
|
|
— |
|
|
|
— |
|
|
|
253 |
|
|
|
— |
|
|
Other |
|
|
18 |
|
|
|
1 |
|
|
|
24 |
|
|
|
19 |
|
|
|
29 |
|
|
Net cash from (used in) investing activities |
|
$ |
212 |
|
|
$ |
(83 |
) |
|
$ |
(73 |
) |
|
$ |
129 |
|
|
$ |
(149 |
) |
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends on common shares |
|
$ |
(254 |
) |
|
$ |
(253 |
) |
|
$ |
(243 |
) |
|
$ |
(507 |
) |
|
$ |
(485 |
) |
|
Net proceeds from issuance of long-term debt |
|
|
739 |
|
|
|
— |
|
|
|
— |
|
|
|
739 |
|
|
|
— |
|
|
Payments of long-term debt |
|
|
(512 |
) |
|
|
— |
|
|
|
— |
|
|
|
(512 |
) |
|
|
(62 |
) |
|
Proceeds from borrowing on line of credit |
|
|
245 |
|
|
|
140 |
|
|
|
— |
|
|
|
385 |
|
|
|
— |
|
|
Payments on line of credit |
|
|
(425 |
) |
|
|
(245 |
) |
|
|
— |
|
|
|
(670 |
) |
|
|
— |
|
|
Proceeds from exercise of stock options |
|
|
2 |
|
|
|
2 |
|
|
|
23 |
|
|
|
4 |
|
|
|
48 |
|
|
Repurchases of common shares |
|
|
(60 |
) |
|
|
— |
|
|
|
— |
|
|
|
(60 |
) |
|
|
— |
|
|
Other |
|
|
(8 |
) |
|
|
(4 |
) |
|
|
(1 |
) |
|
|
(12 |
) |
|
|
(8 |
) |
|
Net cash used in financing activities |
|
$ |
(273 |
) |
|
$ |
(360 |
) |
|
$ |
(221 |
) |
|
$ |
(633 |
) |
|
$ |
(507 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents |
|
$ |
(75 |
) |
|
$ |
(47 |
) |
|
$ |
303 |
|
|
$ |
(122 |
) |
|
$ |
77 |
|
|
Cash and cash equivalents at beginning of period |
|
|
334 |
|
|
|
259 |
|
|
|
598 |
|
|
|
334 |
|
|
|
824 |
|
|
Cash and cash equivalents at end of period |
|
$ |
259 |
|
|
$ |
212 |
|
|
$ |
901 |
|
|
$ |
212 |
|
|
$ |
901 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the period for: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest, net of amount capitalized |
|
$ |
127 |
|
|
$ |
59 |
|
|
$ |
67 |
|
|
$ |
186 |
|
|
$ |
172 |
|
|
Income taxes |
|
$ |
50 |
|
|
$ |
1 |
|
|
$ |
41 |
|
|
$ |
51 |
|
|
$ |
58 |
|
Page 4 of 8
Q2.2019 Analyst Package
Preliminary results (unaudited)
Segment Statement of Operations (1)
|
in millions |
|
Q1.2019 |
|
|
Q2.2019 |
|
|
Q2.2018 |
|
|
YTD.2019 |
|
|
YTD.2018 |
|
|||||
|
Sales to unaffiliated customers |
|
$ |
431 |
|
|
$ |
401 |
|
|
$ |
476 |
|
|
$ |
832 |
|
|
$ |
966 |
|
|
Intersegment sales |
|
|
125 |
|
|
|
131 |
|
|
|
139 |
|
|
|
256 |
|
|
|
281 |
|
|
Total net sales |
|
|
556 |
|
|
|
532 |
|
|
|
615 |
|
|
|
1,088 |
|
|
|
1,247 |
|
|
Costs of sales |
|
|
413 |
|
|
|
405 |
|
|
|
431 |
|
|
|
818 |
|
|
|
853 |
|
|
Gross margin |
|
|
143 |
|
|
|
127 |
|
|
|
184 |
|
|
|
270 |
|
|
|
394 |
|
|
Selling expenses |
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
1 |
|
|
General and administrative expenses |
|
|
22 |
|
|
|
25 |
|
|
|
24 |
|
|
|
47 |
|
|
|
46 |
|
|
Research and development expenses |
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
2 |
|
|
|
3 |
|
|
Other operating income, net |
|
|
(1 |
) |
|
|
(1 |
) |
|
|
(2 |
) |
|
|
(2 |
) |
|
|
(6 |
) |
|
Operating income and Net contribution to earnings |
|
$ |
120 |
|
|
$ |
102 |
|
|
$ |
161 |
|
|
$ |
222 |
|
|
$ |
350 |
|
(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 year presentations with the current year.
Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization(2)
|
in millions |
|
Q1.2019 |
|
|
Q2.2019 |
|
|
Q2.2018 |
|
|
YTD.2019 |
|
|
YTD.2018 |
|
|||||
|
Operating income |
|
$ |
120 |
|
|
$ |
102 |
|
|
$ |
161 |
|
|
$ |
222 |
|
|
$ |
350 |
|
|
Depreciation, depletion and amortization |
|
|
73 |
|
|
|
73 |
|
|
|
79 |
|
|
|
146 |
|
|
|
158 |
|
|
Adjusted EBITDA(2) |
|
$ |
193 |
|
|
$ |
175 |
|
|
$ |
240 |
|
|
$ |
368 |
|
|
$ |
508 |
|
(2) See definition of Adjusted EBITDA (a non-GAAP measure) on page 1.
Selected Segment Items
|
in millions |
|
Q1.2019 |
|
|
Q2.2019 |
|
|
Q2.2018 |
|
|
YTD.2019 |
|
|
YTD.2018 |
|
|||||
|
Total decrease (increase) in working capital(3) |
|
$ |
(24 |
) |
|
$ |
46 |
|
|
$ |
70 |
|
|
$ |
22 |
|
|
$ |
30 |
|
|
Cash spent for capital expenditures |
|
$ |
(26 |
) |
|
$ |
(25 |
) |
|
$ |
(29 |
) |
|
$ |
(51 |
) |
|
$ |
(57 |
) |
(3) Represents the change in prepaid assets, accounts receivable, accounts payable, accrued liabilities and log inventory for the Timberlands and Real Estate & ENR segments combined.
Segment Statistics(4)
|
|
|
|
|
Q1.2019 |
|
|
Q2.2019 |
|
|
Q2.2018 |
|
|
YTD.2019 |
|
|
YTD.2018 |
|
|||||
|
Third Party |
|
Delivered logs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales |
|
West |
|
$ |
205 |
|
|
$ |
194 |
|
|
$ |
262 |
|
|
$ |
399 |
|
|
$ |
528 |
|
|
(millions) |
|
South |
|
|
159 |
|
|
|
156 |
|
|
|
158 |
|
|
|
315 |
|
|
|
315 |
|
|
|
|
North |
|
|
29 |
|
|
|
17 |
|
|
|
20 |
|
|
|
46 |
|
|
|
45 |
|
|
|
|
Total delivered logs |
|
|
393 |
|
|
|
367 |
|
|
|
440 |
|
|
|
760 |
|
|
|
888 |
|
|
|
|
Stumpage and pay-as-cut timber |
|
|
9 |
|
|
|
10 |
|
|
|
11 |
|
|
|
19 |
|
|
|
26 |
|
|
|
|
Recreational and other lease revenue |
|
|
15 |
|
|
|
15 |
|
|
|
14 |
|
|
|
30 |
|
|
|
28 |
|
|
|
|
Other revenue |
|
|
14 |
|
|
|
9 |
|
|
|
11 |
|
|
|
23 |
|
|
|
24 |
|
|
|
|
Total |
|
$ |
431 |
|
|
$ |
401 |
|
|
$ |
476 |
|
|
$ |
832 |
|
|
$ |
966 |
|
|
Delivered Logs |
|
West |
|
$ |
106.92 |
|
|
$ |
104.07 |
|
|
$ |
132.24 |
|
|
$ |
105.52 |
|
|
$ |
131.91 |
|
|
Third Party Sales |
|
South |
|
$ |
35.35 |
|
|
$ |
35.45 |
|
|
$ |
34.55 |
|
|
$ |
35.40 |
|
|
$ |
34.69 |
|
|
Realizations (per ton) |
|
North |
|
$ |
59.68 |
|
|
$ |
62.10 |
|
|
$ |
64.92 |
|
|
$ |
60.52 |
|
|
$ |
62.59 |
|
|
Delivered Logs |
|
West |
|
|
1,920 |
|
|
|
1,864 |
|
|
|
1,984 |
|
|
|
3,784 |
|
|
|
4,003 |
|
|
Third Party Sales |
|
South |
|
|
4,499 |
|
|
|
4,400 |
|
|
|
4,560 |
|
|
|
8,899 |
|
|
|
9,070 |
|
|
Volumes (tons, thousands) |
|
North |
|
|
494 |
|
|
|
263 |
|
|
|
313 |
|
|
|
757 |
|
|
|
717 |
|
|
Fee Harvest Volumes |
|
West |
|
|
2,385 |
|
|
|
2,455 |
|
|
|
2,360 |
|
|
|
4,840 |
|
|
|
4,803 |
|
|
(tons, thousands) |
|
South |
|
|
6,492 |
|
|
|
6,367 |
|
|
|
6,630 |
|
|
|
12,859 |
|
|
|
13,381 |
|
|
|
|
North |
|
|
627 |
|
|
|
378 |
|
|
|
423 |
|
|
|
1,005 |
|
|
|
972 |
|
(4) Western logs are primarily transacted in MBF but are converted to ton equivalents for external reporting purposes.
Page 5 of 8
Q2.2019 Analyst Package
Preliminary results (unaudited)
Segment Statement of Operations
|
in millions |
|
Q1.2019 |
|
|
Q2.2019 |
|
|
Q2.2018 |
|
|
YTD.2019 |
|
|
YTD.2018 |
|
|||||
|
Net sales |
|
$ |
118 |
|
|
$ |
81 |
|
|
$ |
58 |
|
|
$ |
199 |
|
|
$ |
109 |
|
|
Costs of sales |
|
|
56 |
|
|
|
39 |
|
|
|
30 |
|
|
|
95 |
|
|
|
49 |
|
|
Gross margin |
|
|
62 |
|
|
|
42 |
|
|
|
28 |
|
|
|
104 |
|
|
|
60 |
|
|
General and administrative expenses |
|
|
7 |
|
|
|
7 |
|
|
|
6 |
|
|
|
14 |
|
|
|
13 |
|
|
Operating income and Net contribution to earnings |
|
$ |
55 |
|
|
$ |
35 |
|
|
$ |
22 |
|
|
$ |
90 |
|
|
$ |
47 |
|
Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization(1)
|
in millions |
|
Q1.2019 |
|
|
Q2.2019 |
|
|
Q2.2018 |
|
|
YTD.2019 |
|
|
YTD.2018 |
|
|||||
|
Operating income |
|
$ |
55 |
|
|
$ |
35 |
|
|
$ |
22 |
|
|
$ |
90 |
|
|
$ |
47 |
|
|
Depreciation, depletion and amortization |
|
|
3 |
|
|
|
3 |
|
|
|
3 |
|
|
|
6 |
|
|
|
7 |
|
|
Basis of real estate sold |
|
|
48 |
|
|
|
33 |
|
|
|
22 |
|
|
|
81 |
|
|
|
34 |
|
|
Adjusted EBITDA(1) |
|
$ |
106 |
|
|
$ |
71 |
|
|
$ |
47 |
|
|
$ |
177 |
|
|
$ |
88 |
|
(1) See definition of Adjusted EBITDA (a non-GAAP measure) on page 1.
Selected Segment Items
|
in millions |
|
Q1.2019 |
|
|
Q2.2019 |
|
|
Q2.2018 |
|
|
YTD.2019 |
|
|
YTD.2018 |
|
|||||
|
Cash spent for capital expenditures |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Segment Statistics
|
|
|
|
Q1.2019 |
|
|
Q2.2019 |
|
|
Q2.2018 |
|
|
YTD.2019 |
|
|
YTD.2018 |
|
|||||
|
|
Real Estate |
|
$ |
96 |
|
|
$ |
59 |
|
|
$ |
38 |
|
|
$ |
155 |
|
|
$ |
72 |
|
|
Net Sales |
Energy and Natural Resources |
|
|
22 |
|
|
|
22 |
|
|
|
20 |
|
|
|
44 |
|
|
|
37 |
|
|
(millions) |
Total |
|
$ |
118 |
|
|
$ |
81 |
|
|
$ |
58 |
|
|
$ |
199 |
|
|
$ |
109 |
|
|
Acres Sold |
Real Estate |
|
|
38,834 |
|
|
|
47,031 |
|
|
|
16,290 |
|
|
|
85,865 |
|
|
|
38,061 |
|
|
Price per Acre |
Real Estate |
|
$ |
2,424 |
|
|
$ |
1,063 |
|
|
$ |
2,258 |
|
|
$ |
1,678 |
|
|
$ |
1,847 |
|
|
Basis as a Percent of Real Estate Net Sales |
Real Estate |
|
|
50 |
% |
|
|
56 |
% |
|
|
58 |
% |
|
|
52 |
% |
|
|
47 |
% |
Page 6 of 8
Q2.2019 Analyst Package
Preliminary results (unaudited)
Segment Statement of Operations (1)
|
in millions |
|
Q1.2019 |
|
|
Q2.2019 |
|
|
Q2.2018 |
|
|
YTD.2019 |
|
|
YTD.2018 |
|
|||||
|
Net sales |
|
$ |
1,094 |
|
|
$ |
1,210 |
|
|
$ |
1,531 |
|
|
$ |
2,304 |
|
|
$ |
2,855 |
|
|
Costs of sales |
|
|
967 |
|
|
|
1,070 |
|
|
|
1,125 |
|
|
|
2,037 |
|
|
|
2,145 |
|
|
Gross margin |
|
|
127 |
|
|
|
140 |
|
|
|
406 |
|
|
|
267 |
|
|
|
710 |
|
|
Selling expenses |
|
|
19 |
|
|
|
20 |
|
|
|
22 |
|
|
|
39 |
|
|
|
43 |
|
|
General and administrative expenses |
|
|
35 |
|
|
|
34 |
|
|
|
31 |
|
|
|
69 |
|
|
|
65 |
|
|
Research and development expenses |
|
|
— |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
Other operating costs (income), net |
|
|
4 |
|
|
|
4 |
|
|
|
23 |
|
|
|
8 |
|
|
|
2 |
|
|
Operating income and Net contribution to earnings |
|
$ |
69 |
|
|
$ |
81 |
|
|
$ |
329 |
|
|
$ |
150 |
|
|
$ |
599 |
|
(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 year presentations with the current year.
Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization(2)
|
in millions |
|
Q1.2019 |
|
|
Q2.2019 |
|
|
Q2.2018 |
|
|
YTD.2019 |
|
|
YTD.2018 |
|
|||||
|
Operating income |
|
$ |
69 |
|
|
$ |
81 |
|
|
$ |
329 |
|
|
$ |
150 |
|
|
$ |
599 |
|
|
Depreciation, depletion and amortization |
|
|
46 |
|
|
|
47 |
|
|
|
36 |
|
|
|
93 |
|
|
|
72 |
|
|
Special items |
|
|
— |
|
|
|
— |
|
|
|
20 |
|
|
|
— |
|
|
|
— |
|
|
Adjusted EBITDA(2) |
|
$ |
115 |
|
|
$ |
128 |
|
|
$ |
385 |
|
|
$ |
243 |
|
|
$ |
671 |
|
(2) See definition of Adjusted EBITDA (a non-GAAP measure) on page 1.
Segment Special Items Included in Net Contribution to Earnings (Pretax)
|
in millions |
|
Q1.2019 |
|
|
Q2.2019 |
|
|
Q2.2018 |
|
|
YTD.2019 |
|
|
YTD.2018 |
|
|||||
|
Product remediation (charges) recoveries, net |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(20 |
) |
|
$ |
— |
|
|
$ |
— |
|
Selected Segment Items
|
in millions |
|
Q1.2019 |
|
|
Q2.2019 |
|
|
Q2.2018 |
|
|
YTD.2019 |
|
|
YTD.2018 |
|
|||||
|
Total decrease (increase) in working capital(3) |
|
$ |
(155 |
) |
|
$ |
75 |
|
|
$ |
3 |
|
|
$ |
(80 |
) |
|
$ |
(223 |
) |
|
Cash spent for capital expenditures |
|
$ |
(30 |
) |
|
$ |
(53 |
) |
|
$ |
(68 |
) |
|
$ |
(83 |
) |
|
$ |
(120 |
) |
(3) Represents the change in prepaid assets, accounts receivable, accounts payable, accrued liabilities and inventory for the Wood Products segment.
Segment Statistics
|
in millions, except for third party sales realizations |
|
Q1.2019 |
|
|
Q2.2019 |
|
|
Q2.2018 |
|
|
YTD.2019 |
|
|
YTD.2018 |
|
||||||
|
Structural Lumber |
Third party net sales |
|
$ |
444 |
|
|
$ |
495 |
|
|
$ |
681 |
|
|
$ |
939 |
|
|
$ |
1,250 |
|
|
(volumes presented |
Third party sales realizations |
|
$ |
392 |
|
|
$ |
388 |
|
|
$ |
541 |
|
|
$ |
390 |
|
|
$ |
521 |
|
|
in board feet) |
Third party sales volumes(4) |
|
|
1,133 |
|
|
|
1,274 |
|
|
|
1,261 |
|
|
|
2,407 |
|
|
|
2,401 |
|
|
|
Production volumes |
|
|
1,145 |
|
|
|
1,193 |
|
|
|
1,180 |
|
|
|
2,338 |
|
|
|
2,340 |
|
|
Engineered Solid |
Third party net sales |
|
$ |
116 |
|
|
$ |
134 |
|
|
$ |
139 |
|
|
$ |
250 |
|
|
$ |
268 |
|
|
Section |
Third party sales realizations |
|
$ |
2,218 |
|
|
$ |
2,214 |
|
|
$ |
2,156 |
|
|
$ |
2,216 |
|
|
$ |
2,123 |
|
|
(volumes presented |
Third party sales volumes(4) |
|
|
5.2 |
|
|
|
6.1 |
|
|
|
6.4 |
|
|
|
11.3 |
|
|
|
12.6 |
|
|
in cubic feet) |
Production volumes |
|
|
5.9 |
|
|
|
6.0 |
|
|
|
6.4 |
|
|
|
11.9 |
|
|
|
12.7 |
|
|
Engineered |
Third party net sales |
|
$ |
70 |
|
|
$ |
86 |
|
|
$ |
92 |
|
|
$ |
156 |
|
|
$ |
170 |
|
|
I-joists |
Third party sales realizations |
|
$ |
1,709 |
|
|
$ |
1,662 |
|
|
$ |
1,630 |
|
|
$ |
1,683 |
|
|
$ |
1,609 |
|
|
(volumes presented |
Third party sales volumes(4) |
|
|
41 |
|
|
|
52 |
|
|
|
57 |
|
|
|
93 |
|
|
|
106 |
|
|
in lineal feet) |
Production volumes |
|
|
44 |
|
|
|
47 |
|
|
|
52 |
|
|
|
91 |
|
|
|
108 |
|
|
Oriented Strand |
Third party net sales |
|
$ |
160 |
|
|
$ |
156 |
|
|
$ |
277 |
|
|
$ |
316 |
|
|
$ |
509 |
|
|
Board |
Third party sales realizations |
|
$ |
223 |
|
|
$ |
213 |
|
|
$ |
367 |
|
|
$ |
218 |
|
|
$ |
341 |
|
|
(volumes presented |
Third party sales volumes(4) |
|
|
717 |
|
|
|
733 |
|
|
|
754 |
|
|
|
1,450 |
|
|
|
1,493 |
|
|
in square feet 3/8") |
Production volumes |
|
|
729 |
|
|
|
736 |
|
|
|
747 |
|
|
|
1,465 |
|
|
|
1,481 |
|
|
Softwood Plywood |
Third party net sales |
|
$ |
44 |
|
|
$ |
44 |
|
|
$ |
55 |
|
|
$ |
88 |
|
|
$ |
105 |
|
|
(volumes presented |
Third party sales realizations |
|
$ |
383 |
|
|
$ |
380 |
|
|
$ |
461 |
|
|
$ |
382 |
|
|
$ |
450 |
|
|
in square feet 3/8") |
Third party sales volumes(4) |
|
|
115 |
|
|
|
115 |
|
|
|
118 |
|
|
|
230 |
|
|
|
233 |
|
|
|
Production volumes |
|
|
98 |
|
|
|
104 |
|
|
|
105 |
|
|
|
202 |
|
|
|
202 |
|
|
Medium Density |
Third party net sales |
|
$ |
38 |
|
|
$ |
45 |
|
|
$ |
47 |
|
|
$ |
83 |
|
|
$ |
90 |
|
|
Fiberboard |
Third party sales realizations |
|
$ |
846 |
|
|
$ |
833 |
|
|
$ |
839 |
|
|
$ |
839 |
|
|
$ |
839 |
|
|
(volumes presented |
Third party sales volumes(4) |
|
|
44 |
|
|
|
55 |
|
|
|
55 |
|
|
|
99 |
|
|
|
106 |
|
|
in square feet 3/4") |
Production volumes |
|
|
45 |
|
|
|
61 |
|
|
|
57 |
|
|
|
106 |
|
|
|
107 |
|
(4) Volumes include sales of internally produced products and products purchased for resale primarily through our distribution business.
Page 7 of 8
Q2.2019 Analyst Package
Preliminary results (unaudited)
Unallocated items are gains or charges not related to, or allocated to, an individual operating segment. They include all or a portion of items such as share-based compensation, pension and postretirement costs, elimination of intersegment profit in inventory and LIFO, foreign exchange transaction gains and losses, interest income and other as well as legacy obligations.
Contribution to Earnings
|
in millions |
|
Q1.2019 |
|
|
Q2.2019 |
|
|
Q2.2018 |
|
|
YTD.2019 |
|
|
YTD.2018 |
|
|||||
|
Unallocated corporate function and variable compensation expense |
|
$ |
(19 |
) |
|
$ |
(12 |
) |
|
$ |
(19 |
) |
|
$ |
(31 |
) |
|
$ |
(37 |
) |
|
Liability classified share-based compensation |
|
|
(4 |
) |
|
|
— |
|
|
|
(2 |
) |
|
|
(4 |
) |
|
|
(2 |
) |
|
Foreign exchange gain (loss) |
|
|
(3 |
) |
|
|
2 |
|
|
|
2 |
|
|
|
(1 |
) |
|
|
— |
|
|
Elimination of intersegment profit in inventory and LIFO |
|
|
(5 |
) |
|
|
(5 |
) |
|
|
3 |
|
|
|
(10 |
) |
|
|
(18 |
) |
|
Other |
|
|
(39 |
) |
|
|
(17 |
) |
|
|
(20 |
) |
|
|
(56 |
) |
|
|
(59 |
) |
|
Operating income (loss) |
|
|
(70 |
) |
|
|
(32 |
) |
|
|
(36 |
) |
|
|
(102 |
) |
|
|
(116 |
) |
|
Non-operating pension and other postretirement benefit costs |
|
|
(470 |
) |
|
|
(10 |
) |
|
|
(13 |
) |
|
|
(480 |
) |
|
|
(37 |
) |
|
Interest income and other |
|
|
10 |
|
|
|
6 |
|
|
|
11 |
|
|
|
16 |
|
|
|
23 |
|
|
Net contribution to earnings (loss) |
|
$ |
(530 |
) |
|
$ |
(36 |
) |
|
$ |
(38 |
) |
|
$ |
(566 |
) |
|
$ |
(130 |
) |
Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization(1)
|
in millions |
|
Q1.2019 |
|
|
Q2.2019 |
|
|
Q2.2018 |
|
|
YTD.2019 |
|
|
YTD.2018 |
|
|||||
|
Operating income (loss) |
|
$ |
(70 |
) |
|
$ |
(32 |
) |
|
$ |
(36 |
) |
|
$ |
(102 |
) |
|
$ |
(116 |
) |
|
Depreciation, depletion and amortization |
|
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
2 |
|
|
|
2 |
|
|
Special items |
|
|
20 |
|
|
|
— |
|
|
|
— |
|
|
|
20 |
|
|
|
28 |
|
|
Adjusted EBITDA(1) |
|
$ |
(49 |
) |
|
$ |
(31 |
) |
|
$ |
(35 |
) |
|
$ |
(80 |
) |
|
$ |
(86 |
) |
(1) See definition of Adjusted EBITDA (a non-GAAP measure) on page 1.
Unallocated Special Items Included in Net Contribution to Earnings (Pretax)
|
in millions |
|
Q1.2019 |
|
|
Q2.2019 |
|
|
Q2.2018 |
|
|
YTD.2019 |
|
|
YTD.2018 |
|
|||||
|
Environmental remediation insurance charge |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(28 |
) |
|
Legal charge |
|
|
(20 |
) |
|
|
— |
|
|
|
— |
|
|
|
(20 |
) |
|
— |
|
|
|
Special items included in operating income (loss) |
|
|
(20 |
) |
|
|
— |
|
|
|
— |
|
|
|
(20 |
) |
|
|
(28 |
) |
|
Pension settlement charges(2) |
|
|
(455 |
) |
|
|
6 |
|
|
|
— |
|
|
|
(449 |
) |
|
— |
|
|
|
Gain on sale of nonstrategic assets |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
|
||
|
Special items included in net contribution to earnings (loss) |
|
$ |
(475 |
) |
|
$ |
6 |
|
|
$ |
— |
|
|
$ |
(469 |
) |
|
$ |
(28 |
) |
(2) During first quarter 2019, we recorded a $455 million pretax noncash settlement charge related to the transfer of pension assets and liabilities through the purchase of a group annuity contract. This charge was updated based on final pension asset and liability amounts during second quarter 2019, resulting in a $6 million pretax benefit for the quarter and a net $449 million pretax charge for year-to-date 2019.
Unallocated Selected Items
|
in millions |
|
Q1.2019 |
|
|
Q2.2019 |
|
|
Q2.2018 |
|
|
YTD.2019 |
|
|
YTD.2018 |
|
|||||
|
Cash spent for capital expenditures |
|
$ |
(3 |
) |
|
$ |
(6 |
) |
|
$ |
— |
|
|
$ |
(9 |
) |
|
$ |
(1 |
) |
Page 8 of 8