Weyerhaeuser reports second quarter results
SEATTLE, July 27, 2018 /PRNewswire/ -- Weyerhaeuser Company (NYSE: WY) today reported second quarter net earnings of $317 million, or 42 cents per diluted share, on net sales of $2.1 billion. This compares with earnings of $24 million, or 3 cents per diluted share, on net sales of $1.8 billion for the same period last year.
View our earnings release and financial statements in a printer-friendly PDF.
Excluding net after-tax special charges of $15 million, the company reported net earnings of $332 million, or 44 cents per diluted share for the second quarter. This compares with net earnings before special items of $212 million for the same period last year and $275 million for the first quarter of 2018. Adjusted EBITDA for the second quarter was $637 million compared with $506 million for the second quarter of last year and $544 million for the first quarter of 2018.
"I am very pleased with our second quarter financial results, as each of our businesses delivered solid operational performance and capitalized on market conditions to drive strong year-over-year improvement, including the highest Wood Products EBITDA on record," said Doyle R. Simons, president and chief executive officer. "In addition, we delivered Weyerhaeuser's highest EBITDA since 2006, when the company's operations were nearly three times larger than they are today. Looking forward, housing market fundamentals remain strong, and we remain relentlessly focused on driving operational excellence and fully capitalizing on market conditions to drive value for shareholders."
WEYERHAEUSER FINANCIAL HIGHLIGHTS 2018 2018 2017
(millions, except per share data) Q1 Q2 Q2
--- --- ---
Net sales $1,865 $2,065 $1,808
Net earnings $269 $317 $24
Net earnings per diluted share $0.35 $0.42 $0.03
Weighted average shares outstanding, diluted 759 761 756
Net earnings before special items(1) $275 $332 $212
Net earnings per diluted share before special
items $0.36 $0.44 $0.28
Adjusted EBITDA(2) $544 $637 $506
(1) First quarter 2018 after-tax
special items include charges of
$21 million for environmental
remediation and a $15 million
benefit from product remediation
insurance proceeds. Second quarter
2018 special items include $15
million of net after-tax charges
for product remediation. Second
quarter 2017 after-tax special
items include a $147 million non-
cash impairment charge for the
Uruguay business, and charges of
$31 million for product
remediation, $8 million for
countervailing and antidumping
duties on Canadian softwood lumber
the company sold into the United
States and $2 million for Plum
Creek merger-related costs.
Beginning first quarter 2018,
these duties are no longer
reported as a special item.
(2) Adjusted EBITDA is a non-GAAP
measure that management uses to
evaluate the performance of the
company. Adjusted EBITDA, as we
define it, is operating income,
adjusted for depreciation,
depletion, amortization, basis of
real estate sold, unallocated
pension service costs and special
items. Adjusted EBITDA excludes
results from joint ventures.
Adjusted EBITDA should not be
considered in isolation from and
is not intended to represent an
alternative to our GAAP results. A
reconciliation of Adjusted EBITDA
to GAAP earnings is included
within this release.
TIMBERLANDS
FINANCIAL HIGHLIGHTS 2018 2018
(millions) Q1 Q2 Change
--- --- ------
Net sales $733 $667 ($66)
Contribution to pre-tax earnings $189 $161 ($28)
Adjusted EBITDA $268 $240 ($28)
2Q 2018 Performance - In the South, log sales volumes were comparable with the first quarter and average realizations declined slightly due to a greater proportion of pulpwood sales. Unit logging costs increased seasonally due to additional thinning activity. In the West, slightly higher average log sales realizations were more than offset by seasonally higher forestry, road and unit logging costs. Fuel costs increased in both regions.
3Q 2018 Outlook - Weyerhaeuser expects third quarter earnings and Adjusted EBITDA will be lower than the second quarter, but slightly higher than the third quarter of 2017. The company anticipates seasonally higher road and forestry costs and higher fuel and unit logging costs. In the West, average sales realizations are expected to be slightly lower than the second quarter and fee harvest volumes will be comparable. In the South, the company anticipates higher fee harvest volumes and comparable average log sales realizations.
REAL ESTATE, ENERGY & NATURAL RESOURCES
FINANCIAL HIGHLIGHTS 2018 2018
(millions) Q1 Q2 Change
--- --- ------
Net sales $51 $58 $7
Contribution to pre-tax earnings $25 $22 ($3)
Adjusted EBITDA $41 $47 $6
2Q 2018 Performance - Real Estate sales increased slightly compared with the first quarter and Energy and Natural Resources royalties were modestly higher. Adjusted EBITDA increased, but earnings were slightly lower due to a higher average land basis on the mix of properties sold.
3Q 2018 Outlook - Weyerhaeuser anticipates third quarter earnings and Adjusted EBITDA will be higher than the second quarter. We continue to expect full year 2018 Adjusted EBITDA for the segment will be approximately $250 million.
WOOD PRODUCTS
FINANCIAL HIGHLIGHTS 2018 2018
(millions) Q1 Q2 Change
--- --- ------
Net sales $1,309 $1,525 $216
Contribution to pre-tax earnings $270 $329 $59
Pre-tax charge (benefit) for
special items ($20) $20 $40
Contribution to pre-tax earnings
before special items $250 $349 $99
Adjusted EBITDA $286 $385 $99
2Q 2018 Performance - Average sales realizations for lumber and oriented strand board improved significantly compared with the first quarter, and engineered wood products realizations increased modestly. Sales volumes rose seasonally for all product lines. These factors were partially offset by higher log, raw material and transportation costs.
Second quarter special items consist of a $20 million net pre-tax charge for finalization of product remediation costs.
3Q 2018 Outlook - Weyerhaeuser expects earnings before special items and Adjusted EBITDA will decrease compared with the second quarter. The company anticipates moderately lower average sales realizations for lumber and oriented strand board. As previously disclosed, sales volumes for oriented strand board will be lower due to an extended outage at our Grayling, Michigan mill for a scheduled press replacement.
UNALLOCATED
FINANCIAL HIGHLIGHTS 2018 2018
(millions) Q1 Q2 Change
--- --- ------
Contribution to pre-tax earnings ($92) ($38) $54
Pre-tax charge for special items $28 $ - ($28)
Contribution to pre-tax earnings
before special items ($64) ($38) $26
Adjusted EBITDA ($51) ($35) $16
2Q 2018 Performance - Second quarter results include a small non-cash benefit from elimination of intersegment profit in inventory and LIFO due to reduced log and lumber inventories. This compares with a charge in the first quarter. Non-cash non-operating pension and post-retirement expense also decreased due to finalization of measurements of year-end pension plan assets and liabilities.
ABOUT WEYERHAEUSER
Weyerhaeuser Company, one of the world's largest private owners of timberlands, began operations in 1900. We own or control 12.4 million acres of timberlands in the U.S. and manage additional timberlands under long-term licenses in Canada. We manage these timberlands on a sustainable basis in compliance with internationally recognized forestry standards. We are also one of the largest manufacturers of wood products. Our company is a real estate investment trust. In February 2016, we merged with Plum Creek Timber Company, Inc. In 2017, we generated $7.2 billion in net sales and employed approximately 9,300 people who serve customers worldwide. We are listed on the North American and World Dow Jones Sustainability Indices. Our common stock trades on the New York Stock Exchange under the symbol WY. Learn more at www.weyerhaeuser.com.
EARNINGS CALL INFORMATION
Weyerhaeuser will hold a live conference call at 7 a.m. Pacific (10 a.m. Eastern) on July 27, 2018, to discuss second quarter results.
To access the live webcast and presentation online, go to the Investor Relations section on www.weyerhaeuser.com on July 27, 2018.
To join the conference call from within North America, dial 855-223-0757 (access code: 5882807) at least 15 minutes prior to the call. Those calling from outside North America should dial 574-990-1206 (access code: 5882807). Replays will be available for two weeks at 855-859-2056 (access code: 5882807) from within North America and at 404-537-3406 (access code: 5882807) from outside North America.
FORWARD LOOKING STATEMENTS
This news release contains statements concerning the company's future results and performance that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934, including without limitation with respect to the following for the third quarter of 2018: earnings and Adjusted EBITDA for each of our Timber and Real Estate, Energy & Natural Resources business segments; earnings before special items and Adjusted EBITDA for our Wood Products business segment; log sales realizations, fee harvest volumes, road and forestry costs and fuel and unit logging costs in our timber business; and sales realizations for lumber and oriented strand board and sales volumes for oriented strand board for our Wood Products business. These statements generally are identified by words such as "believe," "project," "expect," "anticipate," "estimate," "intend," "strategy," "future," "opportunity," "plan," "may," "should," "will," "would," and expressions such as "will be," "will continue," "will likely result," and similar words and expressions. These statements are based on our current expectations and assumptions and are not guarantees of future performance. The realization of our expectations and the accuracy of our assumptions are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include, but are not limited to:
-- the effect of general economic conditions, including employment rates,
interest rate levels, housing starts, availability of financing for home
mortgages and strength of the U.S. dollar;
-- market demand for our products, including market demand for our
timberland properties with higher and better uses, which is related to,
among other factors, the strength of the various U.S. business segments
and U.S. and international economic conditions;
-- changes in currency exchange rates, particularly the relative value of
the U.S. dollar to the yen and the Canadian dollar, and the relative
value of the euro to the yen;
-- restrictions on international trade, tariffs imposed on imports and the
availability and cost of shipping and transportation;
-- economic activity in Asia, especially Japan and China;
-- performance of our manufacturing operations, including maintenance
requirements;
-- potential disruptions in our manufacturing operations;
-- the level of competition from domestic and foreign producers;
-- raw material availability and prices;
-- the effect of weather;
-- the risk of loss from fires, floods, windstorms, hurricanes, pest
infestation and other natural disasters;
-- energy prices;
-- the successful execution of our internal plans and strategic
initiatives, including restructuring and cost reduction initiatives;
-- the successful and timely execution and integration of our strategic
acquisitions, including our ability to realize expected benefits and
synergies, and the successful and timely execution of our strategic
divestitures, each of which is subject to a number of risks and
conditions beyond our control including, but not limited to, timing and
required regulatory approvals;
-- transportation and labor availability and costs;
-- federal tax policies;
-- the effect of forestry, land use, environmental and other governmental
regulations;
-- legal proceedings;
-- performance of pension fund investments and related derivatives;
-- the effect of timing of retirements and changes in the market price of
our common stock on charges for share-based compensation;
-- changes in accounting principles; and
-- other matters described under "Risk Factors" in our 2017 Annual Report
on Form 10-K, as well as those set forth from time to time in our other
public statements and other reports and filings with the Securities and
Exchange Commission.
Forward-looking statements speak only as of the date they are made, and we undertake no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events, or otherwise.
For more information contact:
Analysts - Beth Baum, 206-539-3907
Media - Nancy Thompson, 919-760-3484
RECONCILIATION OF ADJUSTED EBITDA TO NET EARNINGS
We reconcile Adjusted EBITDA to net earnings for the consolidated company and to operating income for the business segments, as those are the most directly comparable U.S. GAAP measures for each.
The table below reconciles Adjusted EBITDA for the quarter ended March 31, 2018:
DOLLAR AMOUNTS IN MILLIONS Timberlands Real Estate Wood Unallocated Total
& ENR Products Items
--- ----- -------- -----
Adjusted EBITDA by Segment:
Net earnings $269
Interest expense, net of
capitalized interest 93
Income taxes 30
---
Net contribution to earnings $189 $25 $270 $(92) $392
Non-operating pension and
other postretirement benefit
costs - - - 24 24
Interest income and other - - - (12) (12)
--- --- --- --- ---
Operating income (loss) 189 25 270 (80) 404
Depreciation, depletion and
amortization 79 4 36 1 120
Basis of real estate sold - 12 - - 12
Special items(1)(2) - - (20) 28 8
--- --- --- --- ---
Adjusted EBITDA $268 $41 $286 $(51) $544
==== === ==== ==== ====
(1) Pre-tax special items attributable
to Wood Products include a $20
million benefit from product
remediation insurance proceeds.
(2) Pre-tax special items included in
Unallocated Items consist of
charges of $28 million for
environmental remediation.
The table below reconciles Adjusted EBITDA for the quarter ended June 30, 2018:
DOLLAR AMOUNTS IN MILLIONS Timberlands Real Estate Wood Unallocated Total
& ENR Products Items
--- ----- -------- -----
Adjusted EBITDA by Segment:
Net earnings $317
Interest expense, net of
capitalized interest 92
Income taxes 65
---
Net contribution to earnings $161 $22 $329 $(38) $474
Non-operating pension and
other postretirement benefit
costs - - - 13 13
Interest income and other - - - (11) (11)
--- --- --- --- ---
Operating income (loss) 161 22 329 (36) 476
Depreciation, depletion and
amortization 79 3 36 1 119
Basis of real estate sold - 22 - - 22
Special items(1) - - 20 - 20
--- --- --- --- ---
Adjusted EBITDA $240 $47 $385 $(35) $637
==== === ==== ==== ====
(1) Pre-tax special items
included in Wood Products
consist of net charges of $20
million for finalization of
product remediation costs.
The table below reconciles Adjusted EBITDA for the quarter ended June 30, 2017:
DOLLAR AMOUNTS IN MILLIONS Timberlands Real Estate Wood Unallocated Total
& ENR Products Items
--- ----- -------- -----
Adjusted EBITDA by Segment:
Net earnings $24
Interest expense, net of
capitalized interest 100
Income taxes 34
---
Net contribution to earnings $(12) $23 $177 $(30) $158
Non-operating pension and
other postretirement benefit
costs - - - 8 8
Interest income and other - - - (9) (9)
--- --- --- --- ---
Operating income (loss) (12) 23 177 (31) 157
Depreciation, depletion and
amortization 87 4 36 2 129
Basis of real estate sold - 10 - - 10
Special items(1) 147 - 61 2 210
--- --- --- --- ---
Adjusted EBITDA $222 $37 $274 $(27) $506
==== === ==== ==== ====
(1) Pre-tax special items include $147
million of impairment charges
related to our Uruguayan
operations; $50 million for
product remediation; $11 million
of countervailing and antidumping
duties; and $2 million of Plum
Creek merger-related costs.
Weyerhaeuser Company Exhibit 99.2
Q2.2018 Analyst Package
Preliminary results (unaudited)
Consolidated Statement of Operations
in millions Q1 Q2 Year-to-Date
---
March 31, June 30, June 30, June 30, June 30,
2018 2018 2017 2018 2017
---- ---- ----
Net sales $1,865 $2,065 $1,808 $3,930 $3,501
Cost of products
sold 1,348 1,447 1,336 2,795 2,608
Gross margin 517 618 472 1,135 893
Selling expenses 23 23 22 46 44
General and
administrative
expenses 78 80 76 158 163
Research and
development
expenses 2 2 4 4 8
Charges for
integration and
restructuring,
closures and asset
impairments 2 - 151 2 164
Charges (recoveries)
for product
remediation, net (20) 20 50 - 50
Other operating
costs (income), net 28 17 12 45 14
--- --- --- --- ---
Operating income 404 476 157 880 450
Non-operating
pension and other
postretirement
benefit costs (24) (13) (8) (37) (30)
Interest income and
other 12 11 9 23 18
Interest expense,
net of capitalized
interest (93) (92) (100) (185) (199)
--- --- ---- ---- ----
Earnings before
income taxes 299 382 58 681 239
Income taxes (30) (65) (34) (95) (58)
Net earnings $269 $317 $24 $586 $181
==== ==== === ==== ====
Per Share Information
Q1 Q2 Year-to-Date
---
March 31, June 30, June 30, June 30, June 30,
2018 2018 2017 2018 2017
---- ---- ---- ---- ----
Earnings per share,
basic and diluted $0.35 $0.42 $0.03 $0.77 $0.24
Dividends paid per
common share $0.32 $0.32 $0.31 $0.64 $0.62
Weighted average shares outstanding
(in thousands):
Basic 756,815 757,829 752,630 757,317 751,674
Diluted 759,462 760,533 756,451 759,992 755,625
Common shares
outstanding at end
of period (in
thousands) 756,700 757,646 752,711 757,646 752,711
Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization (Adjusted EBITDA)*
in millions Q1 Q2 Year-to-Date
---
March 31, June 30, June 30, June 30, June 30,
2018 2018 2017 2018 2017
---- ---- ---- ---- ----
Net earnings $269 $317 $24 $586 $181
Non-operating
pension and other
postretirement
benefit costs 24 13 8 37 30
Interest income and
other (12) (11) (9) (23) (18)
Interest expense,
net of capitalized
interest 93 92 100 185 199
Income taxes 30 65 34 95 58
Operating income 404 476 157 880 450
Depreciation,
depletion and
amortization 120 119 129 239 262
Basis of real estate
sold 12 22 10 34 24
Unallocated pension
service costs - - - - 2
Special items 8 20 210 28 222
Adjusted EBITDA* $544 $637 $506 $1,181 $960
==== ==== ==== ====== ====
*Adjusted EBITDA is a non-GAAP measure that management uses to evaluate the performance of the company. Adjusted EBITDA, as we define it, is operating income adjusted for depreciation, depletion, amortization, basis of real estate sold, unallocated
pension service costs, and special items. Adjusted EBITDA excludes results from joint ventures. Our definition of Adjusted EBITDA may be different from similarly titled measures reported by other companies. Adjusted EBITDA should not be considered in
isolation from and is not intended to represent an alternative to our GAAP results.
Weyerhaeuser Company Total Company Statistics
Q2.2018 Analyst Package
Preliminary results (unaudited)
Special Items Included in Net Earnings (Income Tax Affected)
in millions Q1 Q2 Year-to-Date
---
March 31, June 30, June 30, June 30, June 30,
2018 2018 2017 2018 2017
---- ---- ---- ---- ----
Net earnings $269 $317 $24 $586 $181
Plum Creek merger and
integration-related costs - - 2 - 12
Restructuring, impairment and
other charges - - 147 - 147
Environmental remediation
charges (recoveries) 21 - - 21 -
Countervailing and
antidumping duties charges
(credits)(1) - - 8 - 8
Product remediation charges
(recoveries), net (15) 15 31 - 31
Net earnings before special
items $275 $332 $212 $607 $379
==== ==== ==== ==== ====
Q1 Q2 Year-to-Date
---
March 31, June 30, June 30, June 30, June 30,
2018 2018 2017 2018 2017
---- ---- ---- ---- ----
Net earnings per diluted
share $0.35 $0.42 $0.03 $0.77 $0.24
Plum Creek merger and
integration-related costs - - - - 0.02
Restructuring, impairment and
other charges - - 0.20 - 0.19
Environmental remediation
charges (recoveries) 0.03 - - 0.03 -
Countervailing and
antidumping duties charges
(credits)(1) - - 0.01 - 0.01
Product remediation charges
(recoveries), net (0.02) 0.02 0.04 - 0.04
Net earnings per diluted
share before special items $0.36 $0.44 $0.28 $0.80 $0.50
===== ===== ===== ===== =====
(1)As of first quarter 2018, countervailing and antidumping duties are no longer reported as a special item.
Selected Total Company Items
in millions Q1 Q2 Year-to-Date
---
March 31, June 30, June 30, June 30, June 30,
2018 2018 2017 2018 2017
---- ---- ---- ---- ----
Pension and postretirement costs:
Pension and postretirement
service costs $10 $8 $7 $18 $17
Non-operating pension and
other postretirement benefit
costs 24 13 8 37 30
Total company pension and
postretirement costs $34 $21 $15 $55 $47
=== === === === ===
Weyerhaeuser Company
Q2.2018 Analyst Package
Preliminary results (unaudited)
Consolidated Balance Sheet
in millions March 31, June 30, December 31,
2018 2018 2017
---- ---- ----
ASSETS
------
Current assets:
Cash and cash equivalents $598 $901 $824
Receivables, less discounts and
allowances 481 491 396
Receivables for taxes 24 23 14
Inventories 445 414 383
Prepaid expenses and other current
assets 118 146 98
Current restricted financial
investments held by variable
interest entities 253 253 -
--- --- ---
Total current assets 1,919 2,228 1,715
Property and equipment, net 1,573 1,597 1,618
Construction in progress 275 282 225
Timber and timberlands at cost, less
depletion 12,888 12,790 12,954
Minerals and mineral rights, less
depletion 306 302 308
Goodwill 40 40 40
Deferred tax assets 244 168 268
Other assets 278 279 316
Restricted financial investments held
by variable interest entities 362 362 615
Total assets $17,885 $18,048 $18,059
======= ======= =======
LIABILITIES AND EQUITY
----------------------
Current liabilities:
Current maturities of long-term debt $ - $ - $62
Current debt (nonrecourse to the
company) held by variable interest
entities 209 209 209
Accounts payable 245 270 249
Accrued liabilities 457 543 645
Total current liabilities 911 1,022 1,165
Long-term debt 5,928 5,924 5,930
Long-term debt (nonrecourse to the
company) held by variable interest
entities 302 302 302
Deferred pension and other
postretirement benefits 1,454 1,224 1,487
Other liabilities 299 295 276
Total liabilities 8,894 8,767 9,160
Total equity 8,991 9,281 8,899
----- ----- -----
Total liabilities and equity $17,885 $18,048 $18,059
======= ======= =======
Weyerhaeuser Company
Q2.2018 Analyst Package
Preliminary results (unaudited)
Consolidated Statements of Cash Flows
in millions Q1 Q2 Year-to-Date
---
March 31, June 30, June 30, June 30, June 30,
2018 2018 2017 2018 2017
---- ---- ---- ---- ----
Cash flows from operations:
Net earnings $269 $317 $24 $586 $181
Noncash charges (credits) to income:
Depreciation, depletion and
amortization 120 119 129 239 262
Basis of real estate sold 12 22 10 34 24
Deferred income taxes, net 10 15 3 25 6
Pension and other postretirement
benefits 34 21 15 55 47
Share-based compensation expense 9 9 9 18 19
Charges for impairments of assets 1 - 147 1 147
Change in:
Receivables, less allowances (83) (18) (8) (101) (78)
Receivables and payables for taxes 5 10 (17) 15 (53)
Inventories (66) 30 21 (36) (7)
Prepaid expenses (5) 4 (4) (1) (13)
Accounts payable and accrued
liabilities (173) 103 192 (70) 55
Pension and postretirement benefit
contributions and payments (16) (16) (15) (32) (37)
Other 19 (19) (17) - (29)
Net cash from operations $136 $597 $489 $733 $524
==== ==== ==== ==== ====
Cash flows from investing activities:
Capital expenditures for property and
equipment $(61) $(83) $(74) $(144) $(126)
Capital expenditures for timberlands
reforestation (20) (14) (13) (34) (36)
Proceeds from sale of nonstrategic
assets 2 - 4 2 12
Other 3 24 45 27 44
Cash from (used in) investing
activities $(76) $(73) $(38) $(149) $(106)
==== ==== ==== ===== =====
Cash flows from financing activities:
Cash dividends on common shares $(242) $(243) $(233) $(485) $(466)
Payments of long-term debt (62) - - (62) -
Proceeds from exercise of stock options 25 23 26 48 81
Other (7) (1) 2 (8) (8)
Cash from (used in) financing
activities $(286) $(221) $(205) $(507) $(393)
===== ===== ===== ===== =====
Net change in cash and cash equivalents $(226) $303 $246 $77 $25
Cash and cash equivalents at beginning
of period 824 598 455 824 676
Cash and cash equivalents at end of
period $598 $901 $701 $901 $701
==== ==== ==== ==== ====
Cash paid during the period for:
Interest, net of amount capitalized $105 $67 $72 $172 $192
Income taxes $17 $41 $47 $58 $106
Weyerhaeuser Company Timberlands Segment
Q2.2018 Analyst Package
Preliminary results (unaudited)
Segment Statement of Operations
in millions Q1.2018 Q2.2018 Q2.2017 YTD.2018 YTD.2017
------- ------- ------- -------- --------
Sales to unaffiliated customers $505 $482 $469 $987 $955
Intersegment sales 228 185 163 413 365
--- --- --- --- ---
Total net sales 733 667 632 1,400 1,320
Cost of products sold 526 485 476 1,011 995
--- --- --- ----- ---
Gross margin 207 182 156 389 325
Selling expenses 1 - 1 1 2
General and administrative expenses 23 25 23 48 47
Research and development expenses 2 1 4 3 7
Charges for integration and restructuring,
closures and asset impairments - - 147 - 147
Other operating costs (income), net (8) (5) (7) (13) (14)
--- --- --- --- ---
Operating income and Net contribution to earnings $189 $161 $(12) $350 $136
==== ==== ==== ==== ====
Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization*
in millions Q1.2018 Q2.2018 Q2.2017 YTD.2018 YTD.2017
------- ------- ------- -------- --------
Operating income $189 $161 $(12) $350 $136
Depreciation, depletion and amortization 79 79 87 158 181
Special items - - 147 - 147
--- --- --- --- ---
Adjusted EBITDA* $268 $240 $222 $508 $464
==== ==== ==== ==== ====
*See definition of Adjusted EBITDA (a non-GAAP measure) on page 1.
Segment Special Items Included in Net Contribution to Earnings (Pre-Tax)
in millions Q1.2018 Q2.2018 Q2.2017 YTD.2018 YTD.2017
------- ------- ------- -------- --------
Restructuring, impairment and other charges $ - $ - $(147) $ - $(147)
Selected Segment Items
in millions Q1.2018 Q2.2018 Q2.2017 YTD.2018 YTD.2017
------- ------- ------- -------- --------
Total decrease (increase) in working capital(1) $(40) $70 $(5) $30 $(42)
Cash spent for capital expenditures $(28) $(29) $(25) $(57) $(55)
(1) Represents the change in prepaid assets, accounts receivable, accounts payable, accrued liabilities and log inventory for the Timberlands and Real Estate & ENR segments combined.
Segment Statistics(2)(3)
Q1.2018 Q2.2018 Q2.2017 YTD.2018 YTD.2017
------- ------- ------- -------- --------
Third Party Delivered logs:
Net Sales
(millions)
---------
West $266 $262 $227 $528 $452
South 157 158 148 315 296
North 25 20 16 45 43
Other 14 7 11 21 31
--- --- --- --- ---
Total delivered
logs 462 447 402 909 822
Stumpage and pay-
as-cut timber 15 11 17 26 29
Products from
international
operations - - 21 - 40
Recreational and
other lease
revenue 14 15 15 29 29
Other revenue 14 9 14 23 35
Total $505 $482 $469 $987 $955
==== ==== ==== ==== ====
Delivered Logs West $131.59 $132.24 $105.84 $131.91 $105.06
Third Party Sales
Realizations (per ton)
---------------------
South $34.83 $34.55 $34.48 $34.69 $34.48
North $60.79 $64.92 $63.49 $62.59 $60.97
Delivered Logs West 2,019 1,984 2,143 4,003 4,300
Third Party Sales
Volumes
(tons, thousands)
----------------
South 4,510 4,560 4,285 9,070 8,578
North 404 313 253 717 707
Other 317 81 292 398 802
Fee Harvest
Volumes West 2,443 2,360 2,652 4,803 5,309
(tons, thousands)
South 6,751 6,630 6,473 13,381 12,846
North 549 423 383 972 1,005
Other - - 444 - 815
(2) The Western region includes Washington and Oregon. The Southern region includes Virginia, North Carolina, South Carolina, Florida, Georgia, Alabama, Mississippi, Louisiana, Arkansas, Texas and Oklahoma. The Northern region includes West Virginia, Maine, New Hampshire, Vermont, Michigan,
Wisconsin and Montana. Other includes our Canadian operations and managed Twin Creeks operations (our management agreement for the Twin Creeks Venture began in April 2016 and terminated in December 2017).
(3) Western logs are primarily transacted in MBF but are converted to ton equivalents for external reporting purposes.
Weyerhaeuser Company Real Estate, Energy and Natural
Resources Segment
Q2.2018 Analyst Package
Preliminary results (unaudited)
Segment Statement of Operations
in millions Q1.2018 Q2.2018 Q2.2017 YTD.2018 YTD.2017
------- ------- ------- -------- --------
Net sales $51 $58 $46 $109 $99
Cost of products sold 19 30 16 49 36
--- --- --- --- ---
Gross margin 32 28 30 60 63
General and administrative expenses 7 6 7 13 14
Other operating costs (income), net - - - - -
Operating income and net contribution
to earnings $25 $22 $23 $47 $49
=== === === === ===
Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization*
in millions Q1.2018 Q2.2018 Q2.2017 YTD.2018 YTD.2017
------- ------- ------- -------- --------
Operating income $25 $22 $23 $47 $49
Depreciation, depletion and
amortization 4 3 4 7 7
Basis of real estate sold 12 22 10 34 24
Adjusted EBITDA* $41 $47 $37 $88 $80
=== === === === ===
*See definition of Adjusted EBITDA (a non-GAAP measure) on page 1.
Selected Segment Items
in millions Q1.2018 Q2.2018 Q2.2017 YTD.2018 YTD.2017
------- ------- ------- -------- --------
Cash spent for capital expenditures $ - $ - $(1) $ - $(1
Segment Statistics
Q1.2018 Q2.2018 Q2.2017 YTD.2018 YTD.2017
------- ------- ------- -------- --------
Net Sales Real Estate $34 $38 $27 $72 $64
(millions)
---------
Energy and
Natural
Resources 17 20 19 37 35
---
Total $51 $58 $46 $109 $99
=== === === ==== ===
Acres Sold Real Estate 21,771 16,290 10,003 38,061 23,260
----------
Price per
Acre Real Estate $1,539 $2,258 $2,714 $1,847 $2,537
---------
Weyerhaeuser Company Wood Products Segment
Q2.2018 Analyst Package
Preliminary results (unaudited)
Segment Statement of Operations
in millions Q1.2018 Q2.2018 Q2.2017 YTD.2018 YTD.2017
------- ------- ------- -------- --------
Net sales $1,309 $1,525 $1,293 $2,834 $2,447
Cost of products sold 1,005 1,119 1,002 2,124 1,928
----- ----- ----- ----- -----
Gross margin 304 406 291 710 519
Selling expenses 21 22 19 43 40
General and administrative expenses 34 31 32 65 64
Research and development expenses - 1 - 1 1
Charges for integration and restructuring, closures and
asset impairments 2 - 2 2 3
Charges (recoveries) for product remediation, net (20) 20 - - -
Other operating costs (income), net (3) 3 61 - 62
--- --- --- --- ---
Operating income and Net contribution to earnings $270 $329 $177 $599 $349
==== ==== ==== ==== ====
Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization*
in millions Q1.2018 Q2.2018 Q2.2017 YTD.2018 YTD.2017
------- ------- ------- -------- --------
Operating income $270 $329 $177 $599 $349
Depreciation, depletion and amortization 36 36 36 72 71
Special items (20) 20 61 - 61
--- ---
Adjusted EBITDA* $286 $385 $274 $671 $481
==== ==== ==== ==== ====
*See definition of Adjusted EBITDA (a non-GAAP measure) on page 1.
Segment Special Items Included in Net Contribution to Earnings (Pre-Tax)
in millions Q1.2018 Q2.2018 Q2.2017 YTD.2018 YTD.2017
------- ------- ------- -------- --------
Countervailing and antidumping duties (charges) credits(1) $ - $ - $(11) $ - $(11)
Product remediation (charges) recoveries, net 20 (20) (50) - (50)
--- --- --- --- ---
Total $20 $(20) $(61) $ - $(61)
=== ==== ==== === === ====
(1) As of first quarter 2018, countervailing and antidumping duties are no longer reported as a special item.
Selected Segment Items
in millions Q1.2018 Q2.2018 Q2.2017 YTD.2018 YTD.2017
------- ------- ------- -------- --------
Total decrease (increase) in working capital(2) $(226) $3 $113 $(223) $(9)
Cash spent for capital expenditures $(52) $(68) $(61) $(120) $(105)
(2) Represents the change in prepaid assets, accounts receivable, accounts payable, accrued liabilities and inventory for the Wood Products segment.
Segment Statistics
in millions, except for third party sales realizations Q1.2018 Q2.2018 Q2.2017 YTD.2018 YTD.2017
------- ------- ------- -------- --------
Structural Lumber Third party net sales $569 $681 $538 $1,250 $1,016
(volumes presented
in board feet)
-------------
Third party
sales
realizations $498 $541 $441 $521 $427
Third party
sales
volumes(3) 1,140 1,261 1,218 2,401 2,376
Production
volumes 1,160 1,180 1,146 2,340 2,298
Engineered Solid Third party net sales $129 $139 $130 $268 $247
Section
(volumes presented
in cubic feet)
-------------
Third party
sales
realizations $2,088 $2,156 $1,979 $2,123 $1,931
Third party
sales
volumes(3) 6.2 6.4 6.6 12.6 12.8
Production
volumes 6.3 6.4 6.6 12.7 12.9
Engineered Third party net sales $78 $92 $85 $170 $158
I-joists
(volumes presented
in lineal feet)
--------------
Third party
sales
realizations $1,585 $1,630 $1,522 $1,609 $1,503
Third party
sales
volumes(3) 49 57 57 106 106
Production
volumes 56 52 53 108 103
Oriented Strand Third party net sales $232 $277 $225 $509 $428
Board
(volumes presented
in square feet 3/8")
--------------------
Third party
sales
realizations $314 $367 $295 $341 $279
Third party
sales
volumes(3) 739 754 764 1,493 1,533
Production
volumes 734 747 754 1,481 1,512
Softwood Plywood Third party net sales $50 $55 $47 $105 $91
(volumes presented
in square feet 3/8")
--------------------
Third party
sales
realizations $438 $461 $380 $450 $379
Third party
sales
volumes(3) 115 118 123 233 241
Production
volumes 97 105 99 202 196
Medium Density Third party net sales $43 $47 $51 $90 $98
Fiberboard
(volumes presented
in square feet 3/4")
--------------------
Third party
sales
realizations $839 $839 $845 $839 $820
Third party
sales
volumes(3) 51 55 60 106 119
Production
volumes 50 57 63 107 119
(3) Volumes include sales of internally produced products and products purchased for resale primarily through our distribution business.
Weyerhaeuser Company Unallocated Items
Q2.2018 Analyst Package
Preliminary results (unaudited)
Unallocated items are gains or charges not related to or allocated to an individual operating segment. They include a portion of items such as share-based compensation expense, pension and postretirement costs, foreign exchange
transaction gains and losses and the elimination of intersegment profit in inventory and LIFO.
Contribution to Earnings
in millions Q1.2018 Q2.2018 Q2.2017 YTD.2018 YTD.2017
------- ------- ------- -------- --------
Unallocated
corporate function
and variable
compensation
expense $(18) $(19) $(17) $(37) $(36)
Liability classified
share-based
compensation - (2) - (2) (6)
Foreign exchange
gains (losses) (2) 2 - - (3)
Elimination of
intersegment profit
in inventory and
LIFO (21) 3 (3) (18) (9)
Charges for
integration and
restructuring,
closures and asset
impairments - - (2) - (14)
Other (39) (20) (9) (59) (16)
--- --- --- --- ---
Operating income
(loss) (80) (36) (31) (116) (84)
Non-operating
pension and other
postretirement
benefit (costs)
credits (24) (13) (8) (37) (30
Interest income and
other 12 11 9 23 18
Net contribution to
earnings $(92) $(38) $(30) $(130) $(96)
==== ==== ==== ===== ====
Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization*
in millions Q1.2018 Q2.2018 Q2.2017 YTD.2018 YTD.2017
------- ------- ------- -------- --------
Operating income
(loss) $(80) $(36) $(31) $(116) $(84)
Depreciation,
depletion and
amortization 1 1 2 2 3
Unallocated pension
service costs - - - - 2
Special items 28 - 2 28 14
--- --- --- --- ---
Adjusted EBITDA* $(51) $(35) $(27) $(86) $(65)
==== ==== ==== ==== ====
*See definition of Adjusted EBITDA (a non-GAAP measure) on page 1.
Unallocated Special Items Included in Net Contribution to Earnings (Pre-Tax)
in millions Q1.2018 Q2.2018 Q2.2017 YTD.2018 YTD.2017
------- ------- ------- -------- --------
Plum Creek merger
and integration-
related costs $ - $ - $(2) $ - $(14)
Environmental
remediation
insurance (charges)
recoveries (28) - - (28) -
--- --- --- ---
Total $(28) $ - $(2) $(28) $(14)
==== === === === ==== ====
Unallocated Selected Items
in millions Q1.2018 Q2.2018 Q2.2017 YTD.2018 YTD.2017
------- ------- ------- -------- --------
Cash spent for
capital
expenditures $(1) $ - $ - $(1) $(1)
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SOURCE Weyerhaeuser Company
