Weyerhaeuser reports second quarter results

Rhea-AI Summary

Weyerhaeuser Company (NYSE: WY) reported second quarter 2020 net earnings of $72 million (10 cents per diluted share) on net sales of $1.6 billion, down from $128 million (17 cents per share) a year earlier. Adjusted EBITDA for the quarter was $386 million, an increase from $343 million in Q2 2019. The company faced challenges due to COVID-19 but achieved strong operational performance, particularly in lumber production. Looking ahead, Weyerhaeuser anticipates lower earnings and EBITDA in Q3 2020, despite improved U.S. housing activity.

Positive

• Adjusted EBITDA increased to $386 million from $343 million year-over-year.
• Operational excellence led to record low cost performance in lumber production.
• Strong cash flow generation and improved balance sheet despite pandemic challenges.

Negative

• Net earnings decreased to $72 million from $128 million year-over-year.
• Expected lower earnings and Adjusted EBITDA in Q3 2020 compared to Q2.
• Decline in net sales in Timberlands and Real Estate segments due to reduced activity.

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

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

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

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

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

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

 

WEYERHAEUSER FINANCIAL HIGHLIGHTS		2020		2020		2019
(millions, except per share data)		Q1		Q2		Q2
Net sales		$1,728		$1,631		$1,692
Net earnings		$150		$72		$128
Net earnings per diluted share		$0.20		$0.10		$0.17
Weighted average shares outstanding, diluted		747		747		746
Net earnings before special items(1)(2)		$138		$77		$123
Net earnings per diluted share before special items(1)		$0.18		$0.11		$0.16
Adjusted EBITDA(1)		$413		$386		$343

(1)	Net earnings before special items is a non-GAAP measure that management believes provides helpful context in understanding the company's earnings performance. Additionally, Adjusted EBITDA is a non-GAAP measure that management uses to evaluate the performance of the company. Adjusted EBITDA, as we define it, is operating income adjusted for depreciation, depletion, amortization, basis of real estate sold and special items. Net earnings before special items and Adjusted EBITDA should not be considered in isolation from, and are not intended to represent an alternative to, our GAAP results. Reconciliations of Net earnings before special items and Adjusted EBITDA to GAAP earnings are included within this release.
(2)	Second quarter 2020 after-tax special items include an $11 million net charge related to the early extinguishment of debt and a $6 million benefit related to a product remediation insurance recovery. Special items for other periods presented are included in the reconciliation tables following this release.

 

TIMBERLANDS

FINANCIAL HIGHLIGHTS		2020		2020
(millions)		Q1		Q2		Change
Net sales		$503		$480		($23)
Net contribution to pretax earnings		$105		$75		($30)
Adjusted EBITDA		$173		$140		($33)

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

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

REAL ESTATE, ENERGY & NATURAL RESOURCES

FINANCIAL HIGHLIGHTS		2020		2020
(millions)		Q1		Q2		Change
Net sales		$112		$65		($47)
Net contribution to pretax earnings		$36		$19		($17)
Adjusted EBITDA		$101		$57		($44)

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

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

WOOD PRODUCTS

FINANCIAL HIGHLIGHTS		2020		2020
(millions)		Q1		Q2		Change
Net sales		$1,235		$1,207		($28)
Net contribution to pretax earnings		$134		$159		$25
Pretax benefit for special items		$—		($8)		($8)
Net contribution to pretax earnings before special items		$134		$151		$17
Adjusted EBITDA		$184		$198		$14

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

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

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

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

UNALLOCATED

FINANCIAL HIGHLIGHTS		2020		2020
(millions)		Q1		Q2		Change
Net charge to pretax earnings		($43)		($18)		$25
Pretax benefit for special items		($12)		$—		$12
Net charge to pretax earnings before special items		($55)		($18)		$37
Adjusted EBITDA		($45)		($9)		$36

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

INCOME TAXES

FINANCIAL HIGHLIGHTS		2020		2020
(millions)		Q1		Q2		Change
Income tax (expense) benefit		$3		($60)		($63)
Income tax (expense) benefit attributable to special items		$—		($2)		($2)
Income tax (expense) benefit before special items		$3		($58)		($61)

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

ABOUT WEYERHAEUSER

Weyerhaeuser Company, one of the world's largest private owners of timberlands, began operations in 1900. We own or control approximately 11 million acres of timberlands in the U.S. and manage additional timberlands under long-term licenses in Canada. We manage these timberlands on a sustainable basis in compliance with internationally recognized forestry standards. We are also one of the largest manufacturers of wood products in North America. Our company is a real estate investment trust. In 2019, we generated $6.6 billion in net sales and employed approximately 9,400 people who serve customers worldwide. We are listed on the Dow Jones Sustainability North America Index. Our common stock trades on the New York Stock Exchange under the symbol WY. Learn more at www.weyerhaeuser.com.

EARNINGS CALL INFORMATION

Weyerhaeuser will hold a live conference call at 7 a.m. Pacific (10 a.m. Eastern) on July 31, 2020 to discuss second quarter results.

To access the live webcast and presentation online, go to the Investor Relations section on www.weyerhaeuser.com on July 31, 2020.

To join the conference call from within North America, dial 855-223-0757 (access code: 3297624) at least 15 minutes prior to the call. Those calling from outside North America should dial 574-990-1206 (access code: 3297624). Replays will be available for two weeks at 855-859-2056 (access code: 3297624) from within North America and at 404-537-3406 (access code: 3297624) from outside North America.

FORWARD-LOOKING STATEMENTS

This news release contains statements concerning the company's future results and performance that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934, including, but not limited to, with respect to our outlook and expectations concerning the following: earnings and Adjusted EBITDA for each of our businesses; log sale realizations and sales volumes; log export sales volumes; fee harvest volumes; road, forestry and logging and hauling costs; and sales volumes across all of our wood products lines. Forward-looking statements are generally identified by words such as "believe," "project," "expect," "anticipate," "estimate," "intend," "strategy," "future," "opportunity," "plan," "may," "should," "will," "would," and similar words and expressions. Forward-looking statements are based on our current expectations and assumptions. The realization of our expectations and the accuracy of our assumptions are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include, but are not limited to:

• the effect of general economic conditions, including employment rates, interest rate levels, housing starts, general availability of financing for home mortgages and the relative strength of the U.S. dollar;
• the effect of COVID-19 and other viral or disease outbreaks and their potential effects on our business, results of operations, cash flows, financial condition and future prospects;
• market demand for the company's products, including market demand for our timberland properties with higher and better uses, which is related to, among other factors, the strength of the various U.S. business segments and U.S. and international economic conditions;
• changes in currency exchange rates, particularly the relative value of the U.S. dollar to the Japanese yen, the Chinese yuan, and the Canadian dollar, and the relative value of the euro to the yen;
• restrictions on international trade and tariffs imposed on imports or exports;
• the availability and cost of shipping and transportation;
• economic activity in Asia, especially Japan and China;
• performance of our manufacturing operations, including maintenance and capital requirements;
• potential disruptions in our manufacturing operations;
• the level of competition from domestic and foreign producers;
• our operational excellence initiatives;
• the successful and timely execution and integration of our strategic acquisitions, including our ability to realize expected benefits and synergies, and the successful and timely execution of our strategic divestitures, each of which is subject to a number of risks and conditions beyond our control including, but not limited to, timing and required regulatory approvals;
• raw material availability and prices;
• the effect of weather;
• changes in global or regional climate conditions and governmental response to such changes;
• the risk of loss from fires, floods, windstorms, hurricanes, pest infestation and other natural disasters;
• energy prices;
• transportation and labor availability and costs;
• federal tax policies;
• the effect of forestry, land use, environmental and other governmental regulations;
• legal proceedings;
• performance of pension fund investments and related derivatives;
• the effect of timing of employee retirements and changes in the market price of our common stock on charges for share-based compensation;
• the accuracy of our estimates of costs and expenses related to contingent liabilities;
• changes in accounting principles; and
• other risks and uncertainties identified in our 2019 Annual Report on Form 10-K, as well as those set forth from time to time in our other public statements, reports, registration statements, prospectuses, information statements and other filings with the SEC.

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

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

RECONCILIATION OF ADJUSTED EBITDA TO NET EARNINGS

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

The table below reconciles Adjusted EBITDA for the quarter ended March 31, 2020:

 

(millions)		Timberlands				Real Estate & ENR				Wood Products				Unallocated Items				Total
Adjusted EBITDA by Segment:
Net earnings																		$	150
Interest expense, net of capitalized interest																			85
Income taxes																			(3)
Net contribution (charge) to earnings		$	105			$	36			$	134			$	(43)			$	232
Non-operating pension and other postretirement benefit costs			—				—				—				9				9
Interest income and other			—				—				—				(1)				(1)
Operating income (loss)			105				36				134				(35)				240
Depreciation, depletion and amortization			68				3				50				2				123
Basis of real estate sold			—				62				—				—				62
Special items included in operating income (loss)(1)			—				—				—				(12)				(12)
Adjusted EBITDA		$	173			$	101			$	184			$	(45)			$	413

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

 

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

 

(millions)		Timberlands				Real Estate & ENR				Wood Products				Unallocated Items				Total
Adjusted EBITDA by Segment:
Net earnings																		$	72
Interest expense, net of capitalized interest(1)																			103
Income taxes																			60
Net contribution (charge) to earnings		$	75			$	19			$	159			$	(18)			$	235
Non-operating pension and other postretirement benefit costs			—				—				—				10				10
Interest income and other			—				—				—				(2)				(2)
Operating income (loss)			75				19				159				(10)				243
Depreciation, depletion and amortization			65				4				47				1				117
Basis of real estate sold			—				34				—				—				34
Special items included in operating income (loss)(2)			—				—				(8)				—				(8)
Adjusted EBITDA		$	140			$	57			$	198			$	(9)			$	386

(1)	Interest expense, net of capitalized interest includes a pretax special item consisting of an $11 million net charge related to the early extinguishment of debt.
(2)	Operating income (loss) includes a pretax special item consisting of an $8 million product remediation insurance recovery.

 

The table below reconciles Adjusted EBITDA for the quarter ended June 30, 2019:

 

(millions)		Timberlands				Real Estate & ENR				Wood Products				Unallocated Items				Total
Adjusted EBITDA by Segment:
Net earnings																		$	128
Interest expense, net of capitalized interest																			91
Income taxes																			(37)
Net contribution (charge) to earnings		$	102			$	35			$	81			$	(36)			$	182
Non-operating pension and other postretirement benefit costs(1)			—				—				—				10				10
Interest income and other			—				—				—				(6)				(6)
Operating income (loss)			102				35				81				(32)				186
Depreciation, depletion and amortization			73				3				47				1				124
Basis of real estate sold			—				33				—				—				33
Adjusted EBITDA		$	175			$	71			$	128			$	(31)			$	343

(1)

Non-operating pension and other postretirement benefit costs include a pretax special item consisting of a $6 million benefit from finalizing the noncash settlement charge incurred in first quarter 2019 related to the transfer of pension assets and liabilities through the purchase of a group annuity contract.

 

RECONCILIATION OF NET EARNINGS BEFORE SPECIAL ITEMS TO NET EARNINGS

We reconcile net earnings before special items to net earnings and net earnings per diluted share before special items to net earnings per diluted share, as those are the most directly comparable U.S. GAAP measures. We believe the measures provide meaningful supplemental information for investors about our operating performance, better facilitate period to period comparisons and are widely used by analysts, lenders, rating agencies and other interested parties.

The table below reconciles net earnings before special items to net earnings:

		2020		2020		2019
(millions)		Q1		Q2		Q2
Net earnings		$150		$72		$128
Early extinguishment of debt charge		—		11		—
Legal benefit		(12)		—		—
Pension settlement benefit		—		—		(5)
Product remediation recovery		—		(6)		—
Net earnings before special items		$138		$77		$123

 

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

		2020		2020		2019
		Q1		Q2		Q2
Net earnings per diluted share		$0.20		$0.10		$0.17
Early extinguishment of debt charge		—		0.02		—
Legal benefit		(0.02)		—		—
Pension settlement benefit		—		—		(0.01)
Product remediation recovery		—		(0.01)		—
Net earnings per diluted share before special items		$0.18		$0.11		$0.16

 

                                                                                                                                                                                         

Exhibit 99.2
Weyerhaeuser Company
Q2.2020 Analyst Package
Preliminary results (unaudited)
Consolidated Statement of Operations
		Q1				Q2								Year-to-Date
in millions		March 31, 2020				June 30, 2020				June 30, 2019				June 30, 2020				June 30, 2019
Net sales		$	1,728			$	1,631			$	1,692			$	3,359			$	3,335
Costs of sales			1,382				1,283				1,390				2,665				2,712
Gross margin			346				348				302				694				623
Selling expenses			22				18				21				40				42
General and administrative expenses			74				84				80				158				169
Other operating costs (income), net			10				3				15				13				52
Operating income			240				243				186				483				360
Non-operating pension and other postretirement benefit costs			(9)				(10)				(10)				(19)				(480)
Interest income and other			1				2				6				3				16
Interest expense, net of capitalized interest			(85)				(103)				(91)				(188)				(198)
Earnings (loss) before income taxes			147				132				91				279				(302)
Income taxes			3				(60)				37				(57)				141
Net earnings (loss)		$	150			$	72			$	128			$	222			$	(161)

 

Per Share Information
		Q1				Q2								Year-to-Date
		March 31, 2020				June 30, 2020				June 30, 2019				June 30, 2020				June 30, 2019
Earnings (loss) per share, basic and diluted		$	0.20			$	0.10			$	0.17			$	0.30			$	(0.22)
Dividends paid per common share		$	0.34			$	—			$	0.34			$	0.34			$	0.68
Weighted average shares outstanding (in thousands):
Basic			746,534				746,896				745,486				746,715				746,041
Diluted			747,155				746,984				746,232				747,070				746,041
Common shares outstanding at end of period (in thousands)			746,206				746,251				744,905				746,251				744,905

 

Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization (Adjusted EBITDA)
		Q1				Q2								Year-to-Date
in millions		March 31, 2020				June 30, 2020				June 30, 2019				June 30, 2020				June 30, 2019
Net earnings (loss)		$	150			$	72			$	128			$	222			$	(161)
Non-operating pension and other postretirement benefit costs			9				10				10				19				480
Interest income and other			(1)				(2)				(6)				(3)				(16)
Interest expense, net of capitalized interest			85				103				91				188				198
Income taxes			(3)				60				(37)				57				(141)
Operating income			240				243				186				483				360
Depreciation, depletion and amortization			123				117				124				240				247
Basis of real estate sold			62				34				33				96				81
Special items included in operating income			(12)				(8)				—				(20)				20
Adjusted EBITDA(1)		$	413			$	386			$	343			$	799			$	708

(1)

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

 

Total Company Statistics
Weyerhaeuser Company
Q2.2020 Analyst Package
Preliminary results (unaudited)
Special Items Included in Net Earnings (Income Tax Affected)
		Q1				Q2								Year-to-Date
in millions		March 31, 2020				June 30, 2020				June 30, 2019				June 30, 2020				June 30, 2019
Net earnings (loss)		$	150			$	72			$	128			$	222			$	(161)
Early extinguishment of debt charges(1)			—				11				—				11				9
Legal charge (benefit)			(12)				—				—				(12)				15
Pension settlement charges			—				—				(5)				—				340
Product remediation recovery			—				(6)				—				(6)				—
Net earnings before special items(2)		$	138			$	77			$	123			$	215			$	203

 

		Q1				Q2								Year-to-Date
		March 31, 2020				June 30, 2020				June 30, 2019				June 30, 2020				June 30, 2019
Net earnings (loss) per diluted share		$	0.20			$	0.10			$	0.17			$	0.30			$	(0.22)
Early extinguishment of debt charges(1)			—				0.02				—				0.02				0.01
Legal charge (benefit)			(0.02)				—				—				(0.02)				0.02
Pension settlement charges			—				—				(0.01)				—				0.46
Product remediation recovery			—				(0.01)				—				(0.01)				—
Net earnings per diluted share before special items(2)		$	0.18			$	0.11			$	0.16			$	0.29			$	0.27

(1)	We recorded pretax charges of $12 million ($9 million after-tax) and $11 million ($11 million after-tax) related to the early extinguishment of debt in first quarter 2019 and second quarter 2020, respectively. These charges were included in Interest expense, net of capitalized interest in the Consolidated Statement of Operations.
(2)	Net earnings before special items is a non-GAAP measure that management believes provides helpful context in understanding the company's earnings performance. Net earnings before special items should not be considered in isolation from, and is not intended to represent an alternative to, our GAAP results.

 

Selected Total Company Items
		Q1				Q2								Year-to-Date
in millions		March 31, 2020				June 30, 2020				June 30, 2019				June 30, 2020				June 30, 2019
Pension and postretirement costs:
Pension and postretirement service costs		$	10			$	8			$	8			$	18			$	16
Non-operating pension and other postretirement benefit costs			9				10				10				19				480
Total company pension and postretirement costs		$	19			$	18			$	18			$	37			$	496

 

Weyerhaeuser Company
Q2.2020 Analyst Package
Preliminary results (unaudited)
Consolidated Balance Sheet
in millions		March 31, 2020				June 30, 2020				December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents		$	1,458			$	643			$	139
Receivables, net			390				420				309
Receivables for taxes			24				48				98
Inventories			480				409				416
Assets held for sale			—				—				140
Prepaid expenses and other current assets			141				131				147
Current restricted financial investments held by variable interest entities			—				—				362
Total current assets			2,493				1,651				1,611
Property and equipment, net			1,911				1,958				1,969
Construction in progress			153				110				130
Timber and timberlands at cost, less depletion			11,847				11,780				11,929
Minerals and mineral rights, less depletion			278				275				281
Deferred tax assets			147				65				72
Other assets			399				415				414
Total assets		$	17,228			$	16,254			$	16,406
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt		$	577			$	—			$	—
Borrowings on line of credit			550				—				230
Accounts payable			241				199				246
Accrued liabilities			448				525				530
Total current liabilities			1,816				724				1,006
Long-term debt, net			6,299				6,299				6,147
Deferred tax liabilities			10				18				6
Deferred pension and other postretirement benefits			669				652				693
Other liabilities			352				359				377
Total liabilities			9,146				8,052				8,229
Total equity			8,082				8,202				8,177
Total liabilities and equity		$	17,228			$	16,254			$	16,406

 

 

Weyerhaeuser Company
Q2.2020 Analyst Package
Preliminary results (unaudited)
Consolidated Statement of Cash Flows
		Q1				Q2								Year-to-Date
in millions		March 31, 2020				June 30, 2020				June 30, 2019				June 30, 2020				June 30, 2019
Cash flows from operations:
Net earnings (loss)		$	150			$	72			$	128			$	222			$	(161)
Noncash charges (credits) to earnings (loss):
Depreciation, depletion and amortization			123				117				124				240				247
Basis of real estate sold			62				34				33				96				81
Deferred income taxes, net			(82)				80				(43)				(2)				(166)
Pension and other postretirement benefits			19				18				18				37				496
Share-based compensation expense			7				8				7				15				16
Change in:
Receivables, less allowances			(82)				(30)				(10)				(112)				(87)
Receivables and payables for taxes			79				(18)				6				61				(25)
Inventories			(72)				74				28				2				(32)
Prepaid expenses and other current assets			(2)				7				8				5				3
Accounts payable and accrued liabilities			(91)				30				127				(61)				45
Pension and postretirement benefit contributions and payments			(10)				(6)				(13)				(16)				(27)
Other			(15)				5				(17)				(10)				(8)
Net cash from operations		$	86			$	391			$	396			$	477			$	382
Cash flows from investing activities:
Capital expenditures for property and equipment		$	(47)			$	(55)			$	(71)			$	(102)			$	(112)
Capital expenditures for timberlands reforestation			(21)				(11)				(13)				(32)				(31)
Proceeds from note receivable held by variable interest entities			362				—				—				362				253
Proceeds from sale of nonstrategic timberlands			145				—				—				145				—
Other			2				1				1				3				19
Net cash from investing activities		$	441			$	(65)			$	(83)			$	376			$	129
Cash flows from financing activities:
Cash dividends on common shares		$	(254)			$	—			$	(253)			$	(254)			$	(507)
Net proceeds from issuance of long-term debt			732				—				—				732				739
Payments of long-term debt			—				(588)				—				(588)				(512)
Proceeds from borrowings on line of credit			550				—				140				550				385
Payments on line of credit			(230)				(550)				(245)				(780)				(670)
Proceeds from exercise of stock options			6				—				2				6				4
Repurchases of common shares			—				—				—				—				(60)
Other			(12)				(3)				(4)				(15)				(12)
Net cash from financing activities		$	792			$	(1,141)			$	(360)			$	(349)			$	(633)
Net change in cash and cash equivalents		$	1,319			$	(815)			$	(47)			$	504			$	(122)
Cash and cash equivalents at beginning of period			139				1,458				259				139				334
Cash and cash equivalents at end of period		$	1,458			$	643			$	212			$	643			$	212
Cash paid (received) during the period for:
Interest, net of amounts capitalized		$	108			$	70			$	60			$	178			$	187
Income taxes, net of refunds		$	—			$	1			$	1			$	1			$	51

 

Timberlands Segment
Weyerhaeuser Company
Q2.2020 Analyst Package
Preliminary results (unaudited)
Segment Statement of Operations
in millions		Q1.2020				Q2.2020				Q2.2019				YTD.2020				YTD.2019
Sales to unaffiliated customers		$	381			$	359			$	401			$	740			$	832
Intersegment sales			122				121				131				243				256
Total net sales			503				480				532				983				1,088
Costs of sales			375				383				405				758				818
Gross margin			128				97				127				225				270
Selling expenses			—				1				—				1				1
General and administrative expenses			24				22				25				46				47
Other operating income, net			(1)				(1)				—				(2)				—
Operating income and Net contribution to earnings		$	105			$	75			$	102			$	180			$	222

 

Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization(1)
in millions		Q1.2020				Q2.2020				Q2.2019				YTD.2020				YTD.2019
Operating income		$	105			$	75			$	102			$	180			$	222
Depreciation, depletion and amortization			68				65				73				133				146
Adjusted EBITDA(1)		$	173			$	140			$	175			$	313			$	368

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

 

Selected Segment Items
in millions		Q1.2020				Q2.2020				Q2.2019				YTD.2020				YTD.2019
Total decrease (increase) in working capital(2)		$	(3)			$	(2)			$	46			$	(5)			$	22
Cash spent for capital expenditures		$	(30)			$	(21)			$	(25)			$	(51)			$	(51)

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

 

Segment Statistics(3)
				Q1.2020				Q2.2020				Q2.2019				YTD.2020				YTD.2019
Third Party		Delivered logs:
Net Sales		West		$	177			$	179			$	194			$	356			$	399
(millions)		South			150				145				156				295				315
		North			17				7				17				24				46
		Total delivered logs			344				331				367				675				760
		Stumpage and pay-as-cut timber			5				5				10				10				19
		Recreational and other lease revenue			15				16				15				31				30
		Other revenue			17				7				9				24				23
		Total		$	381			$	359			$	401			$	740			$	832
Delivered Logs		West		$	104.91			$	104.90			$	104.07			$	104.91			$	105.52
Third Party Sales		South		$	34.27			$	33.68			$	35.45			$	33.97			$	35.40
Realizations (per ton)		North		$	60.51			$	59.82			$	62.10			$	60.31			$	60.52
Delivered Logs		West			1,684				1,714				1,864				3,398				3,784
Third Party Sales		South			4,365				4,307				4,400				8,672				8,899
Volumes (tons, thousands)		North			284				113				263				397				757
Fee Harvest Volumes		West			2,310				2,236				2,455				4,546				4,840
(tons, thousands)		South			6,130				5,914				6,367				12,044				12,859
		North			386				194				378				580				1,005

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

 

Real Estate, Energy & Natural Resources Segment
Weyerhaeuser Company
Q2.2020 Analyst Package
Preliminary results (unaudited)
Segment Statement of Operations
in millions		Q1.2020				Q2.2020				Q2.2019				YTD.2020				YTD.2019
Net sales		$	112			$	65			$	81			$	177			$	199
Costs of sales			70				40				39				110				95
Gross margin			42				25				42				67				104
General and administrative expenses			6				6				7				12				14
Operating income and Net contribution to earnings		$	36			$	19			$	35			$	55			$	90

 

Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization(1)
in millions		Q1.2020				Q2.2020				Q2.2019				YTD.2020				YTD.2019
Operating income		$	36			$	19			$	35			$	55			$	90
Depreciation, depletion and amortization			3				4				3				7				6
Basis of real estate sold			62				34				33				96				81
Adjusted EBITDA(1)		$	101			$	57			$	71			$	158			$	177

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

 

Selected Segment Items

in millions

Q1.2020

Q2.2020

Q2.2019

YTD.2020

YTD.2019

Cash spent for capital expenditures

$

—

$

—

$

—

$

—

$

—

 

Segment Statistics
			Q1.2020				Q2.2020				Q2.2019				YTD.2020				YTD.2019
Net Sales	Real Estate		$	95			$	48			$	59			$	143			$	155
(millions)	Energy and Natural Resources			17				17				22				34				44
	Total		$	112			$	65			$	81			$	177			$	199
Acres Sold	Real Estate			44,974				31,337				47,031				76,310				85,865
Price per Acre	Real Estate		$	1,992			$	1,501			$	1,063			$	1,790			$	1,678
Basis as a Percent of Real Estate Net Sales	Real Estate			65	%			71	%			56	%			67	%			52	%

 

 

Wood Products Segment
Weyerhaeuser Company
Q2.2020 Analyst Package
Preliminary results (unaudited)
Segment Statement of Operations
in millions		Q1.2020				Q2.2020				Q2.2019				YTD.2020				YTD.2019
Net sales		$	1,235			$	1,207			$	1,210			$	2,442			$	2,304
Costs of sales			1,040				997				1,070				2,037				2,037
Gross margin			195				210				140				405				267
Selling expenses			21				18				20				39				39
General and administrative expenses			36				33				34				69				69
Other operating costs, net			4				—				5				4				9
Operating income and Net contribution to earnings		$	134			$	159			$	81			$	293			$	150

 

Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization(1)
in millions		Q1.2020				Q2.2020				Q2.2019				YTD.2020				YTD.2019
Operating income		$	134			$	159			$	81			$	293			$	150
Depreciation, depletion and amortization			50				47				47				97				93
Special items			—				(8)				—				(8)				—
Adjusted EBITDA(1)		$	184			$	198			$	128			$	382			$	243

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

 

Segment Special Items Included in Net Contribution to Earnings (Pretax)
in millions		Q1.2020				Q2.2020				Q2.2019				YTD.2020				YTD.2019
Product remediation recovery		$	—			$	8			$	—			$	8			$	—

 

Selected Segment Items
in millions		Q1.2020				Q2.2020				Q2.2019				YTD.2020				YTD.2019
Total decrease (increase) in working capital(2)		$	(186)			$	56			$	75			$	(130)			$	(80)
Cash spent for capital expenditures		$	(38)			$	(45)			$	(53)			$	(83)			$	(83)

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

 

Segment Statistics
in millions, except for third party sales realizations			Q1.2020				Q2.2020				Q2.2019				YTD.2020				YTD.2019
Structural Lumber	Third party net sales		$	508			$	538			$	495			$	1,046			$	939
(volumes presented	Third party sales realizations		$	416			$	438			$	388			$	427			$	390
in board feet)	Third party sales volumes(3)			1,222				1,225				1,274				2,447				2,407
	Production volumes			1,209				1,108				1,193				2,317				2,338
Oriented Strand	Third party net sales		$	190			$	179			$	156			$	369			$	316
Board	Third party sales realizations		$	246			$	240			$	213			$	243			$	218
(volumes presented	Third party sales volumes(3)			770				747				733				1,517				1,450
in square feet 3/8")	Production volumes			777				742				736				1,519				1,465
Engineered Solid	Third party net sales		$	127			$	111			$	134			$	238			$	250
Section	Third party sales realizations		$	2,149			$	2,151			$	2,214			$	2,150			$	2,216
(volumes presented	Third party sales volumes(3)			5.9				5.2				6.1				11.1				11.3
in cubic feet)	Production volumes			6.1				5.3				6.0				11.4				11.9
Engineered	Third party net sales		$	78			$	70			$	86			$	148			$	156
I-joists	Third party sales realizations		$	1,667			$	1,645			$	1,662			$	1,656			$	1,683
(volumes presented	Third party sales volumes(3)			47				42				52				89				93
in lineal feet)	Production volumes			47				38				47				85				91
Softwood Plywood	Third party net sales		$	39			$	34			$	44			$	73			$	88
(volumes presented	Third party sales realizations		$	348			$	356			$	380			$	352			$	382
in square feet 3/8")	Third party sales volumes(3)			113				95				115				208				230
	Production volumes			97				76				104				173				202
Medium Density	Third party net sales		$	44			$	33			$	45			$	77			$	83
Fiberboard	Third party sales realizations		$	841			$	825			$	833			$	834			$	839
(volumes presented	Third party sales volumes(3)			52				40				55				92				99
in square feet 3/4")	Production volumes			56				35				61				91				106

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

 

Unallocated Items
Weyerhaeuser Company
Q2.2020 Analyst Package
Preliminary results (unaudited)
Unallocated items are gains or charges not related to, or allocated to, an individual operating segment. They include all or a portion of items such as share-based compensation, pension and postretirement costs, elimination of intersegment profit in inventory and LIFO, foreign exchange transaction gains and losses, interest income and other as well as legacy obligations.
Net Charge to Earnings
in millions		Q1.2020				Q2.2020				Q2.2019				YTD.2020				YTD.2019
Unallocated corporate function and variable compensation expense		$	(19)			$	(23)			$	(12)			$	(42)			$	(31)
Liability classified share-based compensation			10				(4)				—				6				(4)
Foreign exchange gain (loss)			(8)				3				2				(5)				(1)
Elimination of intersegment profit in inventory and LIFO			(13)				18				(5)				5				(10)
Other, net			(5)				(4)				(17)				(9)				(56)
Operating income (loss)			(35)				(10)				(32)				(45)				(102)
Non-operating pension and other postretirement benefit costs			(9)				(10)				(10)				(19)				(480)
Interest income and other			1				2				6				3				16
Net charge to earnings		$	(43)			$	(18)			$	(36)			$	(61)			$	(566)

 

Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization(1)
in millions		Q1.2020				Q2.2020				Q2.2019				YTD.2020				YTD.2019
Operating income (loss)		$	(35)			$	(10)			$	(32)			$	(45)			$	(102)
Depreciation, depletion and amortization			2				1				1				3				2
Special items			(12)				—				—				(12)				20
Adjusted EBITDA(1)		$	(45)			$	(9)			$	(31)			$	(54)			$	(80)

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

 

Unallocated Special Items Included in Net Charge to Earnings (Pretax)
in millions		Q1.2020				Q2.2020				Q2.2019				YTD.2020				YTD.2019
Legal benefit (charge)			12				—				—				12				(20)
Special items included in operating income (loss)			12				—				—				12				(20)
Pension settlement charges			—				—				6				—				(449)
Special items included in net charge to earnings		$	12			$	—			$	6			$	12			$	(469)

 

Unallocated Selected Items
in millions		Q1.2020				Q2.2020				Q2.2019				YTD.2020				YTD.2019
Cash spent for capital expenditures		$	—			$	—			$	(6)			$	—			$	(9)

 

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

View original content to download multimedia:http://www.prnewswire.com/news-releases/weyerhaeuser-reports-second-quarter-results-301103675.html

SOURCE Weyerhaeuser Company

FAQ

What were Weyerhaeuser's Q2 2020 earnings results?

Weyerhaeuser reported Q2 2020 net earnings of $72 million, or 10 cents per diluted share, on net sales of $1.6 billion.

How did Weyerhaeuser's adjusted EBITDA perform in Q2 2020?

Adjusted EBITDA for Q2 2020 was $386 million, up from $343 million in Q2 2019.

What is Weyerhaeuser's outlook for Q3 2020?

Weyerhaeuser expects lower earnings and Adjusted EBITDA in Q3 2020 compared to Q2, despite improvements in U.S. housing activity.

How has COVID-19 affected Weyerhaeuser's business performance in Q2 2020?

COVID-19 disrupted operations, but Weyerhaeuser achieved strong results through operational excellence and adapting business practices.