Weyerhaeuser reports fourth quarter, full year results

|Jan 31|magazine94 min read

SEATTLE, Jan. 31, 2020 /PRNewswire/ -- Weyerhaeuser Company (NYSE: WY) today reported a fourth quarter net loss of $14 million, or two cents per diluted share, on net sales of $1.5 billion. This compares with a net loss of $93 million, or 12 cents per diluted share, on net sales of $1.6 billion for the same period last year and net earnings of $99 million for the third quarter of 2019.

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

Excluding net after-tax charges of $37 million for special items, the company reported fourth quarter net earnings of $23 million, or three cents per diluted share. This compares with net earnings before special items of $70 million for the same period last year and $59 million for the third quarter of 2019.

Adjusted EBITDA for the fourth quarter of 2019 was $260 million compared with $346 million for the same period last year and $308 million for the third quarter of 2019.

For the full year 2019, Weyerhaeuser reported a net loss of $76 million, or 10 cents per diluted share, on net sales of $6.6 billion. This compares with net earnings of $748 million on net sales of $7.5 billion for the full year 2018.

Full year 2019 includes net after-tax charges of $361 million for special items. Excluding these items, the company reported net earnings before special items of $285 million, or 39 cents per diluted share. This compares with net earnings before special items of $891 million for the full year 2018.

"Our 2019 performance reflects strong execution across all businesses despite significant headwinds from a sluggish housing market, global trade uncertainty, and persistently challenged commodity prices," said Devin W. Stockfish, president and chief executive officer. "Through our continued focus on operational excellence, we achieved record low cost performance in lumber and oriented strand board and delivered the highest EBITDA ever from our Real Estate & ENR business. Additionally, we reduced our pension obligations by $1.5 billion, strategically optimized a significant portion of our Northern timberlands portfolio, and returned over $1 billion of cash to shareholders. Entering 2020, we are encouraged by the recent pickup in U.S. housing activity, and we expect modest growth will drive improvement across our markets as the year progresses. We remain focused on creating value for shareholders through industry-leading operating performance and disciplined capital allocation."

WEYERHAEUSER FINANCIAL HIGHLIGHTS

2019


2019


2018


2019


2018

(millions, except per share data)

Q3


Q4


Q4


Full Year


Full Year

Net sales

$1,671


$1,548


$1,636


$6,554


$7,476

Net earnings (loss)

$99


($14)


($93)


($76)


$748

Net earnings (loss) per diluted share

$0.13


($0.02)


($0.12)


($0.10)


$0.99

Weighted average shares outstanding, diluted

747


746


750


746


757

Net earnings before special items(1)(2)

$59


$23


$70


$285


$891

Net earnings per diluted share before special items(1)

$0.08


$0.03


$0.10


$0.39


$1.18

Adjusted EBITDA(1)

$308


$260


$346


$1,276


$2,032



(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)

Fourth quarter 2019 after-tax special items include an $80 million noncash impairment charge related to the previously announced sale of our Montana timberlands, a $48 million gain on the sale of our Michigan timberlands and a $5 million pension settlement charge related to the transfer of Canadian pension assets and liabilities through purchases of group annuity contracts. Special items for other periods presented are included in the reconciliation tables following this release.

TIMBERLANDS

FINANCIAL HIGHLIGHTS

2019


2019



(millions)

Q3


Q4


Change

Net sales

$523


$510


($13)

Net contribution to pretax earnings

$72


$53


($19)

Pretax charge for special items

$—


$32


$32

Net contribution to pretax earnings before special items

$72


$85


$13

Adjusted EBITDA

$154


$158


$4

Q4 2019 Performance – In the West, average sales realizations for domestic and Japan export logs were modestly higher and fee harvest volumes increased slightly. Western road and forestry spending was seasonally lower. In the South, average log sales realizations declined slightly and fee harvest volumes were lower.

Fourth quarter special items include a $48 million gain on the sale of the company's Michigan timberlands, which closed in November, and an $80 million noncash impairment charge related to the previously announced sale of our Montana timberlands. The Montana transaction is subject to customary closing conditions and is expected to be completed in the second quarter.

Q1 2020 Outlook – Weyerhaeuser expects first quarter earnings and Adjusted EBITDA will be slightly higher than the fourth quarter. In the West, the company anticipates higher domestic and export log sales volumes, modestly higher average domestic log sales realizations and lower road spending. In the South, the company expects seasonally lower fee harvest volumes and average log sales realizations comparable with the fourth quarter average.

REAL ESTATE, ENERGY & NATURAL RESOURCES

FINANCIAL HIGHLIGHTS

2019


2019



(millions)

Q3


Q4


Change

Net sales

$69


$46


($23)

Net contribution to pretax earnings

$32


$22


($10)

Adjusted EBITDA

$60


$37


($23)

Q4 2019 Performance – Earnings and Adjusted EBITDA decreased due to fewer real estate sales and lower construction materials and energy royalties in our Energy & Natural Resources business. The segment reported full year Adjusted EBITDA of $274 million.

Q1 2020 Outlook – Weyerhaeuser anticipates first quarter earnings and Adjusted EBITDA will be significantly higher than the fourth quarter due to the timing of Real Estate transactions. The company expects full year 2020 Adjusted EBITDA for the segment will be approximately $255 million. This guidance incorporates the effect of fewer available real estate acres following the divestitures of our Montana and Michigan timberlands.

WOOD PRODUCTS

FINANCIAL HIGHLIGHTS

2019


2019



(millions)

Q3


Q4


Change

Net sales

$1,204


$1,115


($89)

Net contribution to pretax earnings

$143


$60


($83)

Pretax benefit for special items

($68)


$—


$68

Net contribution to pretax earnings before special items

$75


$60


($15)

Adjusted EBITDA

$123


$110


($13)

Q4 2019 Performance – Sales volumes declined seasonally and Western and Canadian log costs increased compared with the third quarter. Per unit manufacturing costs improved due to strong operating performance and ongoing operational excellence initiatives.

Average sales realizations for oriented strand board improved slightly. In lumber, although the benchmark Framing Lumber Composite price improved modestly in the fourth quarter, published average pricing for wide-width Southern yellow pine lumber decreased. Weyerhaeuser's average lumber sales realizations were comparable with the third quarter average, reflecting the company's regional and product mix.

Q1 2020 Outlook – Weyerhaeuser anticipates first quarter earnings and Adjusted EBITDA will be slightly higher than the fourth quarter, before any improvement in average sales realizations. The company expects seasonally improved operating rates and manufacturing costs for engineered wood products and slightly higher sales volumes for lumber and oriented strand board.

UNALLOCATED

FINANCIAL HIGHLIGHTS

2019


2019



(millions)

Q3


Q4


Change

Net charge to pretax earnings

($54)


($59)


($5)

Pretax charge for special items

$15


$6


($9)

Net charge to pretax earnings before special items

($39)


($53)


($14)

Adjusted EBITDA

($29)


($45)


($16)

Q4 2019 Performance – Unallocated corporate function and variable compensation expense increased due to seasonally higher spending and a year-to-date adjustment for incentive compensation. Fourth quarter results also include a small expense from elimination of intersegment profit in inventory and LIFO compared with income from this item in the third quarter.

Fourth quarter pretax special items consist of a $6 million noncash non-operating settlement charge related to the transfer of Canadian pension assets and liabilities through purchases of group annuity contracts.

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 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 https://www.weyerhaeuser.com/.

EARNINGS CALL INFORMATION

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

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

To join the conference call from within North America, dial 855-223-0757 (access code: 2195447) at least 15 minutes prior to the call. Those calling from outside North America should dial 574-990-1206 (access code: 2195447). Replays will be available for two weeks at 855-859-2056 (access code: 2195447) from within North America and at 404-537-3406 (access code: 2195447) from outside North America.

FORWARD-LOOKING STATEMENTS

This news release contains statements concerning the company's future results and performance that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934, including with respect to the following: our earnings, earnings before special items, Adjusted EBITDA; average log sale realizations; log sale volumes; and fee harvest volumes in our timber business; sales volumes as well as manufacturing operating costs and operating rates 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:

  • the effect of general economic conditions, including employment rates, interest rate levels, housing starts, availability of financing for home mortgages and strength of the U.S. dollar;
  • market demand for our products, including market demand for our timberland properties with higher and better uses, which is related to, among other factors, the strength of the various U.S. business segments and U.S. and international economic conditions;
  • changes in currency exchange rates, particularly the relative value of the U.S. dollar to the Japanese yen, the Chinese yuan and the Canadian dollar, and the relative value of the euro to the yen;
  • restrictions on international trade and tariffs imposed on imports or exports;
  • the availability and cost of shipping and transportation;
  • economic activity in Asia, especially Japan and China;
  • performance of our manufacturing operations, including maintenance and capital 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;
  • 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;
  • our operational excellence initiatives;
  • the successful and timely execution and integration of our strategic acquisitions, including our ability to realize expected benefits and synergies, and the successful and timely execution of our strategic divestitures, each of which is subject to a number of risks and conditions beyond our control including, but not limited to, timing and required regulatory approvals;
  • transportation and labor availability and costs;
  • federal tax policies;
  • the effect of forestry, land use, environmental and other governmental regulations;
  • legal proceedings;
  • performance of pension fund investments and related derivatives;
  • the effect of timing of retirements and changes in the market price of our common stock on charges for share-based compensation;
  • the accuracy of our estimates of costs and expenses related to contingent liabilities;
  • changes in accounting principles; and
  • other matters described under "Risk Factors" in our annual reports on Form 10-K, as well as those set forth from time to time in our other public statements and other reports and filings with the Securities and Exchange Commission.

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

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

RECONCILIATION OF ADJUSTED EBITDA TO NET EARNINGS (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 year ended December 31, 2019:

 (millions)

Timberlands



Real Estate

& ENR



Wood

Products



Unallocated

Items



Total

Adjusted EBITDA by Segment:



















Net earnings (loss)

















$

(76)

Interest expense, net of capitalized interest(1)


















378

Income taxes


















(137)

Net contribution (charge) to earnings

$

347



$

144



$

353



$

(679)



$

165

Non-operating pension and other postretirement benefit costs(2)











516




516

Interest income and other











(30)




(30)

Operating income (loss)


347




144




353




(193)




651

Depreciation, depletion and amortization


301




14




191




4




510

Basis of real estate sold





116










116

Special items included in operating income (loss)(3)(4)(5)


32







(68)




35




(1)

Adjusted EBITDA

$

680



$

274



$

476



$

(154)



$

1,276



(1)

Interest expense, net of capitalized interest includes a pretax special item consisting of a $12 million charge related to the early extinguishment of debt.

(2)

Non-operating pension and other postretirement benefit costs includes pretax special items consisting of $455 million of noncash settlement charges related to transfers of pension plan assets and liabilities to an insurance company through the purchase of group annuity contracts.

(3)

Operating income (loss) for Timberlands includes pretax special items consisting of an $80 million noncash impairment charge related to the previously announced sale of our Montana timberlands and a $48 million gain on sale of our Michigan timberlands.

(4)

Operating income (loss) for Wood Products includes a pretax special item consisting of a $68 million product remediation insurance recovery.

(5)

Operating income (loss) for Unallocated Items includes pretax special items consisting of $35 million of legal charges.

The table below reconciles Adjusted EBITDA for the year ended December 31, 2018:

(millions)

Timberlands



Real Estate

& ENR



Wood

Products



Unallocated

Items



Total

Adjusted EBITDA by Segment:



















Net earnings

















$

748

Interest expense, net of capitalized interest


















375

Income taxes(1)


















59

Net contribution (charge) to earnings

$

583



$

127



$

838



$

(366)



$

1,182

Non-operating pension and other postretirement benefit costs(2)











272




272

Interest income and other(3)





(1)







(59)




(60)

Operating income (loss)


583




126




838




(153)




1,394

Depreciation, depletion and amortization


319




14




149




4




486

Basis of real estate sold





124










124

Special items included in operating income (loss)(4)











28




28

Adjusted EBITDA

$

902



$

264



$

987



$

(121)



$

2,032



(1)

Income taxes include special items consisting of a $41 million tax benefit related to our pension contribution and a $21 million tax adjustment charge.

(2)

Non-operating pension and other postretirement benefit costs include a pretax special item consisting of a $200 million noncash settlement charge related to our U.S. qualified pension plan lump sum offer.

(3)

Interest income and other includes a pretax special item consisting of a $13 million gain on sale of a nonstrategic asset.

(4)

Operating income (loss) includes a pretax special item consisting of $28 million of environmental remediation expense.

The table below reconciles Adjusted EBITDA for the quarter ended December 31, 2019:

 (millions)

Timberlands



Real Estate

& ENR



Wood

Products



Unallocated

Items



Total

Adjusted EBITDA by Segment:



















Net earnings (loss)

















$

(14)

Interest expense, net of capitalized interest


















89

Income taxes


















1

Net contribution (charge) to earnings

$

53



$

22



$

60



$

(59)



$

76

Non-operating pension and other postretirement benefit costs(1)











21




21

Interest income and other











(8)




(8)

Operating income (loss)


53




22




60




(46)




89

Depreciation, depletion and amortization


73




4




50




1




128

Basis of real estate sold





11










11

Special items included in operating income (loss)(2)


32













32

Adjusted EBITDA

$

158



$

37



$

110



$

(45)



$

260



(1)

Non-operating pension and other postretirement benefit costs include a pretax special item consisting of a $6 million noncash settlement charge related to the transfer of Canadian pension assets and liabilities through purchases of group annuity contracts.

(2)

Operating income (loss) for Timberlands includes pretax special items consisting of an $80 million noncash impairment charge related to the previously announced sale of our Montana timberlands and a $48 million gain on sale of our Michigan timberlands.

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

 (millions)

Timberlands



Real Estate

& ENR



Wood

Products



Unallocated

Items



Total

Adjusted EBITDA by Segment:



















Net earnings

















$

99

Interest expense, net of capitalized interest


















91

Income taxes


















3

Net contribution (charge) to earnings

$

72



$

32



$

143



$

(54)



$

193

Non-operating pension and other postretirement benefit costs











15




15

Interest income and other











(6)




(6)

Operating income (loss)


72




32




143




(45)




202

Depreciation, depletion and amortization


82




4




48




1




135

Basis of real estate sold





24










24

Special items included in operating income (loss)(1)








(68)




15




(53)

Adjusted EBITDA

$

154



$

60



$

123



$

(29)



$

308



(1)

Operating income (loss) includes pretax special items consisting of a $68 million product remediation insurance recovery and a $15 million legal charge.

The table below reconciles Adjusted EBITDA for the quarter ended December 31, 2018:

 (millions)

Timberlands



Real Estate

& ENR



Wood

Products



Unallocated

Items



Total

Adjusted EBITDA by Segment:



















Net earnings (loss)

















$

(93)

Interest expense, net of capitalized interest


















97

Income taxes(1)


















(21)

Net contribution (charge) to earnings

$

107



$

44



$

26



$

(194)



$

(17)

Non-operating pension and other postretirement benefit costs(2)











218




218

Interest income and other(3)





(1)







(23)




(24)

Operating income


107




43




26




1




177

Depreciation, depletion and amortization


81




3




40




1




125

Basis of real estate sold





44










44

Adjusted EBITDA

$

188



$

90



$

66



$

2



$

346



(1)

Income taxes include a special item consisting of a $21 million tax adjustment charge.

(2)

Non-operating pension and other postretirement benefit costs include a pretax special item consisting of a $200 million noncash settlement charge related to our U.S. qualified pension plan lump sum offer.

(3)

Interest income and other includes a pretax special item consisting of a $13 million gain on sale of a nonstrategic asset.

RECONCILIATION OF NET EARNINGS BEFORE SPECIAL ITEMS TO NET EARNINGS (LOSS)

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 (loss):


2019


2019


2018


2019


2018

(millions)

Q3


Q4


Q4


Full Year


Full Year

Net earnings (loss)

$99


$(14)


$(93)


$(76)


$748

Early extinguishment of debt charge




9


Environmental remediation charge





21

Gain on sale of timberlands and other nonstrategic assets


(48)


(10)


(48)


(10)

Legal charges

11




26


Pension settlement charges


5


152


345


152

Product remediation recoveries, net

(51)




(51)


Restructuring, impairments and other charges


80



80


Tax adjustments



21



(20)

Net earnings before special items

$59


$23


$70


$285


$891

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


2019


2019


2018


2019


2018


Q3


Q4


Q4


Full Year


Full Year

Net earnings (loss) per diluted share

$0.13


$(0.02)


$(0.12)


$(0.10)


$0.99

Early extinguishment of debt charge




0.01


Environmental remediation charge





0.03

Gain on sale of timberlands and other nonstrategic assets


(0.07)


(0.01)


(0.07)


(0.01)

Legal charges

0.02




0.04


Pension settlement charges


0.01


0.20


0.47


0.20

Product remediation recoveries, net

(0.07)




(0.07)


Restructuring, impairments and other charges


0.11



0.11


Tax adjustments



0.03



(0.03)

Net earnings per diluted share before special items

$0.08


$0.03


$0.10


$0.39


$1.18

 


Weyerhaeuser Company

Exhibit 99.2

Q4.2019 Analyst Package

Preliminary results (unaudited)


Consolidated Statement of Operations



Q1



Q2



Q3



Q4



Year-to-Date


in millions

Mar 31,

2019



Jun 30,

2019



Sept 30,

2019



Dec 31,

2019



Dec 31,

2018



Dec 31,

2019



Dec 31,

2018


Net sales

$

1,643



$

1,692



$

1,671



$

1,548



$

1,636



$

6,554



$

7,476


Costs of sales


1,322




1,390




1,399




1,301




1,345




5,412




5,592


Gross margin


321




302




272




247




291




1,142




1,884


Selling expenses


21




21




20




22




22




84




88


General and administrative expenses


89




80




85




94




82




348




318


Charges for integration and restructuring, closures and asset impairments











80







80




2


Product remediation recoveries, net








(68)










(68)





Other operating costs (income), net


37




15




33




(38)




10




47




82


Operating income


174




186




202




89




177




651




1,394


Non-operating pension and other

postretirement benefit costs


(470)




(10)




(15)




(21)




(218)




(516)




(272)


Interest income and other


10




6




6




8




24




30




60


Interest expense, net of capitalized interest


(107)




(91)




(91)




(89)




(97)




(378)




(375)


Earnings (loss) before income taxes


(393)




91




102




(13)




(114)




(213)




807


Income taxes


104




37




(3)




(1)




21




137




(59)


Net earnings (loss)

$

(289)



$

128



$

99



$

(14)



$

(93)



$

(76)



$

748




Per Share Information



Q1



Q2



Q3



Q4



Year-to-Date



Mar 31,

2019



Jun 30,

2019



Sept 30,

2019



Dec 31,

2019



Dec 31,

2018



Dec 31,

2019



Dec 31,

2018


Earnings (loss) per share, basic and diluted

$

(0.39)



$

0.17



$

0.13



$

(0.02)



$

(0.12)



$

(0.10)



$

0.99


Dividends paid per common share

$

0.34



$

0.34



$

0.34



$

0.34



$

0.34



$

1.36



$

1.32


Weighted average shares outstanding (in thousands):




























Basic


746,603




745,486




745,626




745,886




748,694




745,897




754,556


Diluted


746,603




746,232




746,514




745,886




750,025




745,897




756,827


Common shares outstanding at end of period (in thousands)


744,767




744,905




745,071




745,300




746,391




745,300




746,391




Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization (Adjusted EBITDA)



Q1



Q2



Q3



Q4



Year-to-Date


in millions

Mar 31,

2019



Jun 30,

2019



Sept 30,

2019



Dec 31,

2019



Dec 31,

2018



Dec 31,

2019



Dec 31,

2018


Net earnings (loss)

$

(289)



$

128



$

99



$

(14)



$

(93)



$

(76)



$

748


Non-operating pension and other postretirement benefit costs


470




10




15




21




218




516




272


Interest income and other


(10)




(6)




(6)




(8)




(24)




(30)




(60)


Interest expense, net of capitalized interest


107




91




91




89




97




378




375


Income taxes


(104)




(37)




3




1




(21)




(137)




59


Operating income


174




186




202




89




177




651




1,394


Depreciation, depletion and amortization


123




124




135




128




125




510




486


Basis of real estate sold


48




33




24




11




44




116




124


Special items included in operating income


20







(53)




32







(1)




28


Adjusted EBITDA(1)

$

365



$

343



$

308



$

260



$

346



$

1,276



$

2,032




(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.










Weyerhaeuser Company


Total Company Statistics

Q4.2019 Analyst Package

Preliminary results (unaudited)


Special Items Included in Net Earnings (Income Tax Affected)



Q1



Q2



Q3



Q4



Year-to-Date


in millions

Mar 31,

2019



Jun 30,

2019



Sept 30,

2019



Dec 31,

2019



Dec 31,

2018



Dec 31,

2019



Dec 31,

2018


Net earnings (loss)

$

(289)



$

128



$

99



$

(14)



$

(93)



$

(76)



$

748


Early extinguishment of debt charge(1)


9
















9





Environmental remediation charge




















21


Gain on sale of timberlands and other nonstrategic assets











(48)




(10)




(48)




(10)


Legal charges


15







11










26





Pension settlement charges


345




(5)







5




152




345




152


Product remediation recoveries, net








(51)










(51)





Restructuring, impairments and other charges











80







80





Tax adjustments














21







(20)


Net earnings before special items(2)

$

80



$

123



$

59



$

23



$

70



$

285



$

891






Q1



Q2



Q3



Q4



Year-to-Date



Mar 31,

2019



Jun 30,

2019



Sept 30,

2019



Dec 31,

2019



Dec 31,

2018



Dec 31,

2019



Dec 31,

2018


Net earnings (loss) per diluted share

$

(0.39)



$

0.17



$

0.13



$

(0.02)



$

(0.12)



$

(0.10)



$

0.99


Early extinguishment of debt charge(1)


0.01
















0.01





Environmental remediation charge




















0.03


Gain on sale of timberlands and other nonstrategic assets











(0.07)




(0.01)




(0.07)




(0.01)


Legal charges


0.02







0.02










0.04





Pension settlement charges


0.47




(0.01)







0.01




0.20




0.47




0.20


Product remediation recoveries, net








(0.07)










(0.07)





Restructuring, impairments and other charges











0.11







0.11





Tax adjustments














0.03







(0.03)


Net earnings per diluted share before special items(2)

$

0.11



$

0.16



$

0.08



$

0.03



$

0.10



$

0.39



$

1.18



(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



Q3



Q4



Year-to-Date


in millions

Mar 31,

2019



Jun 30,

2019



Sept 30,

2019



Dec 31,

2019



Dec 31,

2018



Dec 31,

2019



Dec 31,

2018


Pension and postretirement costs:




























Pension and postretirement service costs

$

8



$

8



$

8



$

8



$

9



$

32



$

37


Non-operating pension and other postretirement benefit costs


470




10




15




21




218




516




272


Total company pension and postretirement costs

$

478



$

18



$

23



$

29



$

227



$

548



$

309





Weyerhaeuser Company

Q4.2019 Analyst Package

Preliminary results (unaudited)


Consolidated Balance Sheet


in millions

March 31,

2019



June 30,

2019



September 30,

2019



December 31,

2019



December 31,

2018


ASSETS




















Current assets:




















Cash and cash equivalents

$

259



$

212



$

153



$

139



$

334


Receivables, less discounts and allowances


398




408




368




309




337


Receivables for taxes


163




157




149




98




137


Inventories


451




425




393




416




389


Assets held for sale








251




140





Prepaid expenses and other current assets


141




132




141




147




152


Current restricted financial investments held by variable interest entities


362




362




362




362




253


Total current assets


1,774




1,696




1,817




1,611




1,602


Property and equipment, net


1,917




1,901




1,860




1,969




1,857


Construction in progress


102




134




187




130




136


Timber and timberlands at cost, less depletion


12,586




12,516




12,192




11,929




12,671


Minerals and mineral rights, less depletion


291




288




284




281




294


Deferred tax assets


18




33




31




72




15


Other assets


444




461




461




414




312


Restricted financial investments held by variable interest entities














362


Total assets

$

17,132



$

17,029



$

16,832



$

16,406



$

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




440




230




425


Accounts payable


243




271




242




246




222


Accrued liabilities


411




510




487




530




490


Total current liabilities


1,201




1,223




1,169




1,006




1,939


Long-term debt, net


6,156




6,153




6,150




6,147




5,419


Deferred tax liabilities


34




17




25




6




43


Deferred pension and other postretirement benefits


542




515




506




693




527


Other liabilities


398




397




383




377




275


Total liabilities


8,331




8,305




8,233




8,229




8,203


Total equity


8,801




8,724




8,599




8,177




9,046


Total liabilities and equity

$

17,132



$

17,029



$

16,832



$

16,406



$

17,249





Weyerhaeuser Company

Q4.2019 Analyst Package

Preliminary results (unaudited)


Consolidated Statement of Cash Flows



Q1



Q2



Q3



Q4



Year-to-Date


in millions

Mar 31,

2019



Jun 30,

2019



Sept 30,

2019



Dec 31,

2019



Dec 31,

2018



Dec 31,

2019



Dec 31,

2018


Cash flows from operations:




























Net earnings (loss)

$

(289)



$

128



$

99



$

(14)



$

(93)



$

(76)



$

748


Noncash charges (credits) to earnings (loss):




























Depreciation, depletion and amortization


123




124




135




128




125




510




486


Basis of real estate sold


48




33




24




11




44




116




124


Deferred income taxes, net


(123)




(43)




2




(5)




(39)




(169)




72


Pension and other postretirement benefits


478




18




23




29




227




548




309


Share-based compensation expense


9




7




7




7




11




30




42


Charges for impairment of assets











80







80




1


Net gains on sale of nonstrategic timberlands











(48)







(48)





Change in:




























Receivables, less allowances


(77)




(10)




40




60




117




13




62


Receivables and payables for taxes


(31)




6




7




51




6




33




(103)


Inventories


(60)




28




30




(21)




(5)




(23)




(14)


Prepaid expenses and other current assets


(5)




8




2




1




(11)




6




(18)


Accounts payable and accrued liabilities


(82)




127




(58)




50




(21)




37




(154)


Pension and postretirement benefit contributions and payments


(14)




(13)




(9)




(9)




(26)




(45)




(381)


Other


9




(17)




(10)




(28)




(43)




(46)




(62)


Net cash from operations

$

(14)



$

396



$

292



$

292



$

292



$

966



$

1,112


Cash flows from investing activities:




























Capital expenditures for property and equipment

$

(41)



$

(71)



$

(87)



$

(128)



$

(130)



$

(327)



$

(368)


Capital expenditures for timberlands reforestation


(18)




(13)




(11)




(15)




(14)




(57)




(59)


Proceeds from note receivable held by variable interest entities


253
















253





Proceeds from sale of Michigan timberlands











297







297





Other


18




1




1




1




(32)




21




(13)


Net cash from investing activities

$

212



$

(83)



$

(97)



$

155



$

(176)



$

187



$

(440)


Cash flows from financing activities:




























Cash dividends on common shares

$

(254)



$

(253)



$

(253)



$

(253)



$

(254)



$

(1,013)



$

(995)


Net proceeds from issuance of long-term debt


739
















739





Payments of long-term debt


(512)
















(512)




(62)


Proceeds from borrowings on line of credit


245




140




490




220




425




1,095




425


Payments on line of credit


(425)




(245)




(190)




(430)







(1,290)





Payments on debt held by variable interest entities








(302)







(209)




(302)




(209)


Proceeds from exercise of stock options


2




2




4




5







13




52


Repurchases of common shares


(60)













(93)




(60)




(366)


Other


(8)




(4)




(3)




(3)




1




(18)




(7)


Net cash from financing activities

$

(273)



$

(360)



$

(254)



$

(461)



$

(130)



$

(1,348)



$

(1,162)






























Net change in cash and cash equivalents

$

(75)



$

(47)



$

(59)



$

(14)



$

(14)



$

(195)



$

(490)


Cash and cash equivalents at beginning of period


334




259




212




153




348




334




824


Cash and cash equivalents at end of period

$

259



$

212



$

153



$

139



$

334



$

139



$

334






























Cash paid (received) during the period for:




























Interest, net of amounts capitalized

$

127



$

59



$

124



$

60



$

73



$

370



$

358


Income taxes, net of refunds

$

50



$

1



$

(5)



$

(48)



$

15



$

(2)



$

95





Weyerhaeuser Company

Timberlands Segment

Q4.2019 Analyst Package

Preliminary results (unaudited)


Segment Statement of Operations (1)


in millions

Q1.2019



Q2.2019



Q3.2019



Q4.2019



Q4.2018



YTD.2019



YTD.2018


Sales to unaffiliated customers

$

431



$

401



$

398



$

388



$

448



$

1,618



$

1,873


Intersegment sales


125




131




125




122




128




503




537


Total net sales


556




532




523




510




576




2,121




2,410


Costs of sales


413




405




429




402




446




1,649




1,735


Gross margin


143




127




94




108




130




472




675


Selling expenses


1
















1




2


General and administrative expenses


22




25




24




23




24




94




93


Charges for integration and restructuring, closures and asset impairments











80







80





Other operating income, net








(2)




(48)




(1)




(50)




(3)


Operating income and Net contribution to earnings

$

120



$

102



$

72



$

53



$

107



$

347



$

583




(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 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



Q3.2019



Q4.2019



Q4.2018



YTD.2019



YTD.2018


Operating income

$

120



$

102



$

72



$

53



$

107



$

347



$

583


Depreciation, depletion and amortization


73




73




82




73




81




301




319


Special items











32







32





Adjusted EBITDA(2)

$

193



$

175



$

154



$

158



$

188



$

680



$

902


(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



Q3.2019



Q4.2019



Q4.2018



YTD.2019



YTD.2018


Gain on sale of timberlands and other nonstrategic assets

$



$



$



$

(48)



$



$

(48)



$


Restructuring, impairments and other charges











80







80







Selected Segment Items


in millions

Q1.2019



Q2.2019



Q3.2019



Q4.2019



Q4.2018



YTD.2019



YTD.2018


Total decrease (increase) in working capital(3)

$

(24)



$

46



$

2



$

(12)



$

(7)



$

12



$

(9)


Cash spent for capital expenditures

$

(26)



$

(25)



$

(28)



$

(33)



$

(35)



$

(112)



$

(117)




(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



Q3.2019



Q4.2019



Q4.2018



YTD.2019



YTD.2018


Third Party

Delivered logs:





























Net Sales

West


$

205



$

194



$

172



$

169



$

221



$

740



$

987


(millions)

South



159




156




168




157




153




640




625



North



29




17




24




22




29




92




99



Total delivered logs



393




367




364




348




403




1,472




1,711



Stumpage and pay-as-cut timber



9




10




10




13




20




42




59



Recreational and other lease revenue



15




15




15




16




15




61




59



Other revenue



14




9




9




11




10




43




44



Total


$

431



$

401



$

398



$

388



$

448



$

1,618



$

1,873


Delivered Logs

West


$

106.92



$

104.07



$

99.07



$

102.12



$

112.58



$

103.18



$

125.59


Third Party Sales

South


$

35.35



$

35.45



$

35.03



$

34.71



$

34.38



$

35.13



$

34.66


Realizations (per ton)

North


$

59.68



$

62.10



$

57.35



$

56.95



$

57.27



$

58.80



$

60.55


Delivered Logs

West



1,920




1,864




1,729




1,660




1,958




7,173




7,858


Third Party Sales

South



4,499




4,400




4,795




4,538




4,417




18,232




18,008


Volumes (tons, thousands)

North



494




263




429




372




497




1,558




1,628


Fee Harvest Volumes

West



2,385




2,455




2,183




2,214




2,463




9,237




9,571


(tons, thousands)

South



6,492




6,367




6,802




6,617




6,849




26,278




26,708



North



627




378




560




477




620




2,042




2,129




(4)

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







Weyerhaeuser Company

Real Estate, Energy & Natural Resources Segment

Q4.2019 Analyst Package

Preliminary results (unaudited)


Segment Statement of Operations


in millions

Q1.2019



Q2.2019



Q3.2019



Q4.2019



Q4.2018



YTD.2019



YTD.2018


Net sales

$

118



$

81



$

69



$

46



$

102



$

314



$

307


Costs of sales


56




39




32




18




52




145




155


Gross margin


62




42




37




28




50




169




152


General and administrative expenses


7




7




6




7




7




27




26


Other operating income, net








(1)




(1)







(2)





Operating income


55




35




32




22




43




144




126


Interest income and other














1







1


Net contribution to earnings

$

55



$

35



$

32



$

22



$

44



$

144



$

127




Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization(1)






















in millions

Q1.2019



Q2.2019



Q3.2019



Q4.2019



Q4.2018



YTD.2019



YTD.2018


Operating income

$

55



$

35



$

32



$

22



$

43



$

144



$

126


Depreciation, depletion and amortization


3




3




4




4




3




14




14


Basis of real estate sold


48




33




24




11




44




116




124


Adjusted EBITDA(1)

$

106



$

71



$

60



$

37



$

90



$

274



$

264




(1)

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



Selected Segment Items


in millions


Q1.2019



Q2.2019



Q3.2019



Q4.2019



Q4.2018



YTD.2019



YTD.2018


Cash spent for capital expenditures


$



$



$



$



$



$



$
































Segment Statistics




Q1.2019



Q2.2019



Q3.2019



Q4.2019



Q4.2018



YTD.2019



YTD.2018


Net Sales

Real Estate

$

96



$

59



$

45



$

25



$

81



$

225



$

229


(millions)

Energy and Natural Resources


22




22




24




21




21




89




78



Total

$

118



$

81



$

69



$

46



$

102



$

314



$

307


Acres Sold

Real Estate


38,834




47,031




18,057




9,394




31,833




113,315




131,575


Price per Acre

Real Estate

$

2,424



$

1,063



$

2,415



$

2,308



$

2,479



$

1,848



$

1,701


Basis as a Percent of Real Estate Net Sales

Real Estate


50

%



56

%



53

%



44

%



54

%



52

%



54

%







Weyerhaeuser Company

Wood Products Segment

Q4.2019 Analyst Package

Preliminary results (unaudited)


Segment Statement of Operations (1)


in millions

Q1.2019



Q2.2019



Q3.2019



Q4.2019



Q4.2018



YTD.2019



YTD.2018


Net sales

$

1,094



$

1,210



$

1,204



$

1,115



$

1,087



$

4,623



$

5,297


Costs of sales


967




1,070




1,067




994




1,003




4,098




4,228


Gross margin


127




140




137




121




84




525




1,069


Selling expenses


19




20




20




21




20




80




81


General and administrative expenses


35




34




35




35




33




139




130


Product remediation recoveries, net








(68)










(68)





Other operating costs, net


4




5




7




5




5




21




20


Operating income and Net contribution to earnings

$

69



$

81



$

143



$

60



$

26



$

353



$

838




(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 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



Q3.2019



Q4.2019



Q4.2018



YTD.2019



YTD.2018


Operating income

$

69



$

81



$

143



$

60



$

26



$

353



$

838


Depreciation, depletion and amortization


46




47




48




50




40




191




149


Special items








(68)










(68)





Adjusted EBITDA(2)

$

115



$

128



$

123



$

110



$

66



$

476



$

987




(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



Q3.2019



Q4.2019



Q4.2018



YTD.2019



YTD.2018


Product remediation recoveries, net

$



$



$

68



$



$



$

68



$
































Selected Segment Items


in millions

Q1.2019



Q2.2019



Q3.2019



Q4.2019



Q4.2018



YTD.2019



YTD.2018


Total decrease (increase) in working capital(3)

$

(155)



$

75



$

32



$

49



$

83



$

1



$

(69)


Cash spent for capital expenditures

$

(30)



$

(53)



$

(65)



$

(109)



$

(107)



$

(257)



$

(306)




(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



Q3.2019



Q4.2019



Q4.2018



YTD.2019



YTD.2018


Structural Lumber

Third party net sales

$

444



$

495



$

487



$

466



$

427



$

1,892



$

2,258


(volumes presented

Third party sales realizations

$

392



$

388



$

389



$

389



$

388



$

389



$

482


in board feet)

Third party sales volumes(4)


1,133




1,274




1,253




1,197




1,099




4,857




4,684



Production volumes


1,145




1,193




1,189




1,178




1,095




4,705




4,541


Engineered Solid

Third party net sales

$

116



$

134



$

138



$

122



$

121



$

510



$

521


Section

Third party sales realizations

$

2,218



$

2,214



$

2,188



$

2,166



$

2,139



$

2,196



$

2,148


(volumes presented

Third party sales volumes(4)


5.2




6.1




6.3




5.6




5.7




23.2




24.3


in cubic feet)

Production volumes


5.9




6.0




5.3




5.4




5.3




22.6




24.3


Engineered

Third party net sales

$

70



$

86



$

90



$

77



$

75



$

323



$

336


I-joists

Third party sales realizations

$

1,709



$

1,662



$

1,665



$

1,678



$

1,696



$

1,677



$

1,643


(volumes presented

Third party sales volumes(4)


41




52




54




45




44




192




204


in lineal feet)

Production volumes


44




47




48




43




37




182




191


Oriented Strand

Third party net sales

$

160



$

156



$

159



$

157



$

167



$

632



$

891


Board

Third party sales realizations

$

223



$

213



$

214



$

216



$

252



$

217



$

315


(volumes presented

Third party sales volumes(4)


717




733




740




726




665




2,916




2,827


in square feet 3/8")

Production volumes


729




736




747




757




691




2,969




2,837


Softwood Plywood

Third party net sales

$

44



$

44



$

42



$

31



$

42



$

161



$

200


(volumes presented

Third party sales realizations

$

383



$

380



$

346



$

337



$

396



$

363



$

435


in square feet 3/8")

Third party sales volumes(4)


115




115




121




94




104




445




459



Production volumes


98




104




100




84




96




386




404


Medium Density

Third party net sales

$

38



$

45



$

44



$

39



$

39



$

166



$

177


Fiberboard

Third party sales realizations

$

846



$

833



$

831



$

826



$

835



$

834



$

835


(volumes presented

Third party sales volumes(4)


44




55




53




48




47




200




212


in square feet 3/4")

Production volumes


45




61




47




49




52




202




220




(4)

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







Weyerhaeuser Company

Unallocated Items

Q4.2019 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.


Net Charge to Earnings


in millions

Q1.2019



Q2.2019



Q3.2019



Q4.2019



Q4.2018



YTD.2019



YTD.2018


Unallocated corporate function and variable compensation expense

$

(19)



$

(12)



$

(19)



$

(30)



$

(28)



$

(80)



$

(84)


Liability classified share-based compensation


(4)







(1)




(2)




8




(7)




10


Foreign exchange gain (loss)


(3)




2




(1)







5




(2)




3


Elimination of intersegment profit in inventory and LIFO


(5)




(5)




6




(1)




24




(5)




6


Other, net


(39)




(17)




(30)




(13)




(8)




(99)




(88)


Operating income (loss)


(70)




(32)




(45)




(46)




1




(193)




(153)


Non-operating pension and other postretirement benefit costs


(470)




(10)




(15)




(21)




(218)




(516)




(272)


Interest income and other


10




6




6




8




23




30




59


Net charge to earnings

$

(530)



$

(36)



$

(54)



$

(59)



$

(194)



$

(679)



$

(366)




Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization(1)


in millions

Q1.2019



Q2.2019



Q3.2019



Q4.2019



Q4.2018



YTD.2019



YTD.2018


Operating income (loss)

$

(70)



$

(32)



$

(45)



$

(46)



$

1



$

(193)



$

(153)


Depreciation, depletion and amortization


1




1




1




1




1




4




4


Special items


20







15









35




28


Adjusted EBITDA(1)

$

(49)



$

(31)



$

(29)



$

(45)



$

2



$

(154)



$

(121)




(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

Q1.2019



Q2.2019



Q3.2019



Q4.2019



Q4.2018



YTD.2019



YTD.2018


Environmental remediation charge

$



$



$



$



$



$



$

(28)


Legal charges


(20)







(15)










(35)




Special items included in operating income (loss)


(20)







(15)










(35)




(28)


Pension settlement charges


(455)




6







(6)




(200)




(455)




(200)


Gain on sale of timberlands and other nonstrategic assets














13





13


Special items included in net charge to earnings

$

(475)



$

6



$

(15)



$

(6)



$

(187)



$

(490)



$

(215)




Unallocated Selected Items


in millions

Q1.2019



Q2.2019



Q3.2019



Q4.2019



Q4.2018



YTD.2019



YTD.2018


Cash spent for capital expenditures

$

(3)



$

(6)



$

(5)



$

(1)



$

(2)



$

(15)



$

(4)






























 

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SOURCE Weyerhaeuser Company