Weyerhaeuser reports third quarter results


Weyerhaeuser reports third quarter results

SEATTLE, Oct. 25, 2019 /PRNewswire/ — Weyerhaeuser Company (NYSE: WY) today reported third quarter net earnings of $99 million, or 13 cents per diluted share, on net sales of $1.7 billion. This compares with net earnings of $255 million, or 34 cents per diluted share, on net sales of $1.9 billion for the same period last year.View our earnings release and financial statements in a printer-friendly PDF.Excluding a net after-tax benefit of $40 million for special items, primarily relating to a product remediation insurance recovery, the company reported third quarter net earnings of $59 million, or eight cents per diluted share. This compares with net earnings before special items of $214 million for the same period last year and $123 million for the second quarter of 2019.Adjusted EBITDA for the third quarter of 2019 was $308 million compared with $505 million for the same period last year and $343 million for the second quarter of 2019.”In the third quarter, we again delivered strong operating performance despite challenging market conditions,” said Devin W. Stockfish, president and chief executive officer. “We also announced the pending sale of 555,000 acres in Michigan, which will further optimize our timberlands portfolio. Looking forward, we continue to expect that U.S. housing activity will follow a modest growth trajectory. We remain intently focused on achieving operational excellence in every aspect of our business and fully capitalizing on every available market opportunity to drive value for our shareholders.”WEYERHAEUSER FINANCIAL HIGHLIGHTS201920192018(millions, except per share data)Q2Q3Q3Net sales$1,692$1,671$1,910Net earnings$128$99$255Net earnings per diluted share$0.17$0.13$0.34Weighted average shares outstanding, diluted746747757Net earnings before special items(1)(2)$123$59$214Net earnings per diluted share before special items(1)$0.16$0.08$0.28Adjusted EBITDA(1)$343$308$505(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 2019 after-tax special items include a $5 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. Third quarter 2019 after-tax special items include a $51 million benefit related to a product remediation insurance recovery and an $11 million legal charge. Third quarter 2018 after-tax special items include a $41 million tax benefit related to a voluntary contribution to our US qualified pension plan. TIMBERLANDSFINANCIAL HIGHLIGHTS20192019(millions)Q2Q3ChangeNet sales$532$523($9)Contribution to pretax earnings$102$72($30)Adjusted EBITDA$175$154($21)Q3 2019 Performance – In the West, average sales realizations for domestic and export logs declined and domestic sales volumes were seasonally lower. Log and haul costs increased as Western harvest activity shifted to higher elevation units. In the South, average sales realizations decreased slightly compared with the second quarter due to mix, and higher fee harvest volumes were partially offset by slightly higher forestry spending.Q4 2019 Outlook – Weyerhaeuser expects fourth quarter earnings will be comparable with the third quarter and Adjusted EBITDA will be slightly lower. In the South, the company anticipates lower fee harvest volumes and slightly lower average log sales realizations. In the West, the company expects seasonally lower road and unit logging costs and modestly higher average domestic sales realizations, partially offset by lower log sales volumes.In September 2019, the company announced an agreement to sell its 555,000 acres of Michigan timberlands. The transaction is subject to customary closing conditions and is expected to close in the fourth quarter of 2019.REAL ESTATE, ENERGY & NATURAL RESOURCESFINANCIAL HIGHLIGHTS20192019(millions)Q2Q3ChangeNet sales$81$69($12)Contribution to pretax earnings$35$32($3)Adjusted EBITDA$71$60($11)Q3 2019 Performance – Earnings and Adjusted EBITDA decreased due to lower real estate sales. The number of acres sold declined and the average price per acre increased due to geographic mix.Q4 2019 Outlook – Weyerhaeuser anticipates fourth quarter earnings and Adjusted EBITDA will be lower than the third quarter. The company continues to expect full year 2019 Adjusted EBITDA for the segment will be approximately $270 million.WOOD PRODUCTSFINANCIAL HIGHLIGHTS20192019(millions)Q2Q3ChangeNet sales$1,210$1,204($6)Contribution to pretax earnings$81$143$62Pretax benefit for special items$—($68)($68)Contribution to pretax earnings before special items$81$75($6)Adjusted EBITDA$128$123($5)Q3 2019 Performance – Seasonally higher sales volumes for most products were more than offset by higher unit manufacturing costs, primarily due to scheduled downtime in engineered wood products and modest hurricane-related downtime in the company’s Southern lumber operations.Average sales realizations for oriented strand board and lumber were comparable with the second quarter average, reflecting the company’s regional mix. Although the published North Central benchmark price for oriented strand board improved during the third quarter, published pricing for other regions trended lower. Similarly, third quarter price improvement for Southern yellow pine lumber trailed the benchmark Framing Lumber Composite.Third quarter special items consist of a $68 million pretax benefit from product remediation insurance proceeds.Q4 2019 Outlook – Weyerhaeuser anticipates fourth quarter earnings before special items and Adjusted EBITDA for Wood Products will be lower than the third quarter, but higher than the fourth quarter of 2018, before any improvement in average sales realizations. The company expects seasonally lower sales volumes across most products, higher Western log costs, and modest improvement in other operating costs.ABOUT WEYERHAEUSERWeyerhaeuser Company, one of the world’s largest private owners of timberlands, began operations in 1900. We own or control approximately 12 million acres of timberlands in the U.S., and manage additional timberlands under long-term licenses in Canada. We manage these timberlands on a sustainable basis in compliance with internationally recognized forestry standards. We are also one of the largest manufacturers of wood products. Our company is a real estate investment trust. In 2018, we generated $7.5 billion in net sales and employed approximately 9,300 people who serve customers worldwide. We are listed on the Dow Jones Sustainability North America Index. Our common stock trades on the New York Stock Exchange under the symbol WY. Learn more at www.weyerhaeuser.com.EARNINGS CALL INFORMATIONWeyerhaeuser will hold a live conference call at 7 a.m. Pacific (10 a.m. Eastern) on October 25, 2019, to discuss third quarter results.To access the live webcast and presentation online, go to the Investor Relations section on www.weyerhaeuser.com on October 25, 2019.To join the conference call from within North America, dial 855-223-0757 (access code: 8899987) at least 15 minutes prior to the call. Those calling from outside North America should dial 574-990-1206 (access code: 8899987). Replays will be available for two weeks at 855-859-2056 (access code: 8899987) from within North America and at 404-537-3406 (access code: 8899987) from outside North America.FORWARD-LOOKING STATEMENTSThis 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; fee harvest volumes as well as road and logging costs in our timber business; sales volumes as well as log and manufacturing operating costs for Wood Products. These statements generally are identified by words such as “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” and expressions such as “will be,” “will continue,” “will likely result,” and similar words and expressions. These statements are based on our current expectations and assumptions and are not guarantees of future performance. The realization of our expectations and the accuracy of our assumptions are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include, but are not limited to: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; andother 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) 539-3907Media – Nancy Thompson (919) 861-0342RECONCILIATION OF ADJUSTED EBITDA TO NET EARNINGS (LOSS)We reconcile Adjusted EBITDA to net earnings (loss) for the consolidated company and to operating income (loss) for the business segments, as those are the most directly comparable U.S. GAAP measures for each.The table below reconciles Adjusted EBITDA for the quarter ended June 30, 2019: (millions)TimberlandsReal Estate& ENRWoodProductsUnallocatedItemsTotalAdjusted EBITDA by Segment:Net earnings$128Interest expense, net of capitalized interest91Income taxes(37)Net contribution to earnings (loss)$102$35$81$(36)$182Non-operating pension and other postretirement benefit costs(1)———1010Interest income and other———(6)(6)Operating income (loss)1023581(32)186Depreciation, depletion and amortization733471124Basis of real estate sold—33——33Adjusted EBITDA$175$71$128$(31)$343(1)Non-operating pension and other postretirement benefit costs includes a pretax special item consisting of a $6 million benefit from finalizing the noncash settlement charge incurred in first quarter 2019 related to the transfer of pension assets and liabilities through the purchase of a group annuity contract.The table below reconciles Adjusted EBITDA for the quarter ended September 30, 2019: (millions)TimberlandsReal Estate& ENRWoodProductsUnallocatedItemsTotalAdjusted EBITDA by Segment:Net earnings$99Interest expense, net of capitalized interest91Income taxes3Net contribution to earnings (loss)$72$32$143$(54)$193Non-operating pension and other postretirement benefit costs———1515Interest income and other———(6)(6)Operating income (loss)7232143(45)202Depreciation, depletion and amortization824481135Basis of real estate sold—24——24Special 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 September 30, 2018: (millions)TimberlandsReal Estate& ENRWoodProductsUnallocatedItemsTotalAdjusted EBITDA by Segment:Net earnings$255Interest expense, net of capitalized interest93Income taxes(1)(15)Net contribution to earnings (loss)$126$36$213$(42)$333Non-operating pension and other postretirement benefit costs———1717Interest income and other———(13)(13)Operating income (loss)12636213(38)337Depreciation, depletion and amortization804371122Basis of real estate sold—46——46Adjusted EBITDA$206$86$250$(37)$505(1)Income taxes includes a $41 million tax benefit related to our $300 million pension contribution. There were no pretax special items in third quarter 2018.RECONCILIATION OF NET EARNINGS BEFORE SPECIAL ITEMS TO NET EARNINGSWe 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:201920192018(millions)Q2Q3Q3Net earnings$128$99$255Legal charge—11—Pension settlement charge(5)——Product remediation recovery—(51)—Tax adjustment——(41)Net earnings before special items$123$59$214The table below reconciles net earnings per diluted share before special items to net earnings per diluted share:201920192018Q2Q3Q3Net earnings per diluted share$0.17$0.13$0.34Legal charge—0.02—Pension settlement charge(0.01)——Product remediation recovery—(0.07)—Tax adjustment——(0.06)Net earnings per diluted share before special items$0.16$0.08$0.28 Weyerhaeuser CompanyExhibit 99.2Q3.2019 Analyst PackagePreliminary results (unaudited)Consolidated Statement of OperationsQ1Q2Q3Year-to-Datein millionsMarch 31,2019June 30,2019September 30,2019September 30,2018September 30,2019September 30,2018Net sales$1,643$1,692$1,671$1,910$5,006$5,840Costs of sales1,3221,3901,3991,4524,1114,247Gross margin3213022724588951,593Selling expenses212120206266General and administrative expenses89808578254236Research and development expenses121246Product remediation recoveries, net——(68)—(68)—Other operating costs, net361332218168Operating income1741862023375621,217Non-operating pension and otherpostretirement benefit costs(470)(10)(15)(17)(495)(54)Interest income and other1066132236Interest expense, net of capitalized interest(107)(91)(91)(93)(289)(278)Earnings (loss) before income taxes(393)91102240(200)921Income taxes10437(3)15138(80)Net earnings (loss)$(289)$128$99$255$(62)$841Per Share InformationQ1Q2Q3Year-to-DateMarch 31,2019June 30,2019September 30,2019September 30,2018September 30,2019September 30,2018Earnings (loss) per share, basic and diluted$(0.39)$0.17$0.13$0.34$(0.08)$1.11Dividends paid per common share$0.34$0.34$0.34$0.34$1.02$0.98Weighted average shares outstanding (in thousands):Basic746,603745,486745,626754,986745,901756,531Diluted746,603746,232746,514757,389745,901759,116Common shares outstanding at end of period (in thousands)744,767744,905745,071749,199745,071749,199Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization (Adjusted EBITDA)Q1Q2Q3Year-to-Datein millionsMarch 31,2019June 30,2019September 30,2019September 30,2018September 30,2019September 30,2018Net earnings (loss)$(289)$128$99$255$(62)$841Non-operating pension and other postretirement benefit costs47010151749554Interest income and other(10)(6)(6)(13)(22)(36)Interest expense, net of capitalized interest107919193289278Income taxes(104)(37)3(15)(138)80Operating income1741862023375621,217Depreciation, depletion and amortization123124135122382361Basis of real estate sold4833244610580Special items included in operating income20—(53)—(33)28Adjusted EBITDA(1)$365$343$308$505$1,016$1,686(1)Adjusted EBITDA is a non-GAAP measure that management uses to evaluate the performance of the company. Adjusted EBITDA, as we define it, is operating income adjusted for depreciation, depletion, amortization, basis of real estate sold, and special items. Our definition of Adjusted EBITDA may be different from similarly titled measures reported by other companies. Adjusted EBITDA should not be considered in isolation from, and is not intended to represent an alternative to, our GAAP results. Weyerhaeuser CompanyTotal Company StatisticsQ3.2019 Analyst PackagePreliminary results (unaudited)Special Items Included in Net Earnings (Income Tax Affected)Q1Q2Q3Year-to-Datein millionsMarch 31,2019June 30,2019September 30,2019September 30,2018September 30,2019September 30,2018Net earnings (loss)$(289)$128$99$255$(62)$841Early extinguishment of debt charge(1)9———9—Environmental remediation charge—————21Legal charges15—11—26—Pension settlement charges345(5)——340—Product remediation recoveries, net——(51)—(51)—Tax adjustment———(41)—(41)Net earnings before special items(2)$80$123$59$214$262$821Q1Q2Q3Year-to-DateMarch 31,2019June 30,2019September 30,2019September 30,2018September 30,2019September 30,2018Net earnings (loss) per diluted share$(0.39)$0.17$0.13$0.34$(0.08)$1.11Early extinguishment of debt charge(1)0.01———0.01—Environmental remediation charge—————0.03Legal charges0.02—0.02—0.04—Pension settlement charges0.47(0.01)——0.46—Product remediation recoveries, net——(0.07)—(0.07)—Tax adjustment———(0.06)—(0.06)Net earnings per diluted share before special items(2)$0.11$0.16$0.08$0.28$0.36$1.08(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 ItemsQ1Q2Q3Year-to-Datein millionsMarch 31,2019June 30,2019September 30,2019September 30,2018September 30,2019September 30,2018Pension and postretirement costs:Pension and postretirement service costs$8$8$8$10$24$28Non-operating pension and other postretirement benefit costs47010151749554Total company pension and postretirement costs$478$18$23$27$519$82 Weyerhaeuser CompanyQ3.2019 Analyst PackagePreliminary results (unaudited)Consolidated Balance Sheetin millionsMarch 31,2019June 30,2019September 30,2019December 31,2018ASSETSCurrent assets:Cash and cash equivalents$259$212$153$334Receivables, less discounts and allowances398408368337Receivables for taxes163157149137Inventories451425393389Assets held for sale——251—Prepaid expenses and other current assets141132141152Current restricted financial investments held by variable interest entities362362362253Total current assets1,7741,6961,8171,602Property and equipment, net1,9171,9011,8601,857Construction in progress102134187136Timber and timberlands at cost, less depletion12,58612,51612,19212,671Minerals and mineral rights, less depletion291288284294Deferred tax assets18333115Other assets444461461312Restricted financial investments held by variable interest entities———362Total assets$17,132$17,029$16,832$17,249LIABILITIES AND EQUITYCurrent liabilities:Current maturities of long-term debt$—$—$—$500Current debt (nonrecourse to the company) held by variable interest entities302302—302Borrowings on line of credit245140440425Accounts payable243271242222Accrued liabilities411510487490Total current liabilities1,2011,2231,1691,939Long-term debt, net6,1566,1536,1505,419Deferred tax liabilities34172543Deferred pension and other postretirement benefits542515506527Other liabilities398397383275Total liabilities8,3318,3058,2338,203Total equity8,8018,7248,5999,046Total liabilities and equity$17,132$17,029$16,832$17,249 Weyerhaeuser CompanyQ3.2019 Analyst PackagePreliminary results (unaudited)Consolidated Statement of Cash FlowsQ1Q2Q3Year-to-Datein millionsMarch 31,2019June 30,2019September 30,2019September 30,2018September 30,2019September 30,2018Cash flows from operations:Net earnings (loss)$(289)$128$99$255$(62)$841Noncash charges to earnings (loss):Depreciation, depletion and amortization123124135122382361Basis of real estate sold4833244610580Deferred income taxes, net(123)(43)286(164)111Pension and other postretirement benefits47818232751982Share-based compensation expense977132331Change in:Receivables, less allowances(77)(10)4046(47)(55)Receivables and payables for taxes(31)67(124)(18)(109)Inventories(60)283027(2)(9)Prepaid expenses and other current assets(5)82(6)5(7)Accounts payable and accrued liabilities(82)127(58)(63)(13)(133)Pension and postretirement benefit contributions and payments(14)(13)(9)(323)(36)(355)Other9(17)(10)(19)(18)(18)Net cash from operations$(14)$396$292$87$674$820Cash flows from investing activities:Capital expenditures for property and equipment$(41)$(71)$(87)$(94)$(199)$(238)Capital expenditures for timberlands reforestation(18)(13)(11)(11)(42)(45)Proceeds from note receivable held by variable interest entities253———253—Other1811(10)2019Net cash from investing activities$212$(83)$(97)$(115)$32$(264)Cash flows from financing activities:Cash dividends on common shares$(254)$(253)$(253)$(256)$(760)$(741)Net proceeds from issuance of long-term debt739———739—Payments of long-term debt(512)———(512)(62)Proceeds from borrowings on line of credit245140490—875—Payments on line of credit(425)(245)(190)—(860)—Payments on debt held by variable interest entities——(302)—(302)—Proceeds from exercise of stock options2244852Repurchases of common shares(60)——(273)(60)(273)Other(8)(4)(3)—(15)(8)Net cash from financing activities$(273)$(360)$(254)$(525)$(887)$(1,032)Net change in cash and cash equivalents$(75)$(47)$(59)$(553)$(181)$(476)Cash and cash equivalents at beginning of period334259212901334824Cash and cash equivalents at end of period$259$212$153$348$153$348Cash paid during the period for:Interest, net of amount capitalized$127$59$124$113$310$285Income taxes$50$1$(5)$22$46$80 Weyerhaeuser CompanyTimberlands SegmentQ3.2019 Analyst PackagePreliminary results (unaudited)Segment Statement of Operations (1)in millionsQ1.2019Q2.2019Q3.2019Q3.2018YTD.2019YTD.2018Sales to unaffiliated customers$431$401$398$459$1,230$1,425Intersegment sales125131125128381409Total net sales5565325235871,6111,834Costs of sales4134054294361,2471,289Gross margin14312794151364545Selling expenses1——112General and administrative expenses222524237169Research and development expenses111235Other operating income, net(1)(1)(3)(1)(5)(7)Operating income and Net contribution to earnings$120$102$72$126$294$476(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 millionsQ1.2019Q2.2019Q3.2019Q3.2018YTD.2019YTD.2018Operating income$120$102$72$126$294$476Depreciation, depletion and amortization73738280228238Adjusted EBITDA(2)$193$175$154$206$522$714(2)See definition of Adjusted EBITDA (a non-GAAP measure) on page 1.Selected Segment Itemsin millionsQ1.2019Q2.2019Q3.2019Q3.2018YTD.2019YTD.2018Total decrease (increase) in working capital(3)$(24)$46$2$(32)$24$(2)Cash spent for capital expenditures$(26)$(25)$(28)$(25)$(79)$(82)(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)Q1.2019Q2.2019Q3.2019Q3.2018YTD.2019YTD.2018Third PartyDelivered logs:Net SalesWest$205$194$172$238$571$766(millions)South159156168157483472North291724257070Total delivered logs3933673644201,1241,308Stumpage and pay-as-cut timber91010132939Recreational and other lease revenue151515164544Other revenue1499103234Total$431$401$398$459$1,230$1,425Delivered LogsWest$106.92$104.07$99.07$125.67$103.50$129.91Third Party SalesSouth$35.35$35.45$35.03$34.88$35.27$34.75Realizations (per ton)North$59.68$62.10$57.35$60.97$59.37$62.00Delivered LogsWest1,9201,8641,7291,8975,5135,900Third Party SalesSouth4,4994,4004,7954,52113,69413,591Volumes (tons, thousands)North4942634294141,1861,131Fee Harvest VolumesWest2,3852,4552,1832,3057,0237,108(tons, thousands)South6,4926,3676,8026,47819,66119,859North6273785605371,5651,509(4)Western logs are primarily transacted in MBF but are converted to ton equivalents for external reporting purposes. Weyerhaeuser CompanyReal Estate, Energy & Natural Resources SegmentQ3.2019 Analyst PackagePreliminary results (unaudited)Segment Statement of Operationsin millionsQ1.2019Q2.2019Q3.2019Q3.2018YTD.2019YTD.2018Net sales$118$81$69$96$268$205Costs of sales56393254127103Gross margin62423742141102General and administrative expenses77662019Other operating income, net——(1)—(1)—Operating income and Net contribution to earnings$55$35$32$36$122$83Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization(1)in millionsQ1.2019Q2.2019Q3.2019Q3.2018YTD.2019YTD.2018Operating income$55$35$32$36$122$83Depreciation, depletion and amortization33441011Basis of real estate sold4833244610580Adjusted EBITDA(1)$106$71$60$86$237$174(1)See definition of Adjusted EBITDA (a non-GAAP measure) on page 1.Selected Segment Itemsin millionsQ1.2019Q2.2019Q3.2019Q3.2018YTD.2019YTD.2018Cash spent for capital expenditures$—$—$—$—$—$— Segment StatisticsQ1.2019Q2.2019Q3.2019Q3.2018YTD.2019YTD.2018Net SalesReal Estate$96$59$45$76$200$148(millions)Energy and Natural Resources222224206857Total$118$81$69$96$268$205Acres SoldReal Estate38,83447,03118,05761,681103,92299,742Price per AcreReal Estate$2,424$1,063$2,415$1,209$1,806$1,452Basis as a Percent of Real Estate Net SalesReal Estate50%56%53%61%53%54% Weyerhaeuser CompanyWood Products SegmentQ3.2019 Analyst PackagePreliminary results (unaudited)Segment Statement of Operations (1)in millionsQ1.2019Q2.2019Q3.2019Q3.2018YTD.2019YTD.2018Net sales$1,094$1,210$1,204$1,355$3,508$4,210Costs of sales9671,0701,0671,0803,1043,225Gross margin127140137275404985Selling expenses192020185961General and administrative expenses3534353210497Research and development expenses—1——11Product remediation recoveries, net——(68)—(68)—Other operating costs, net447121514Operating income and Net contribution to earnings$69$81$143$213$293$812(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 millionsQ1.2019Q2.2019Q3.2019Q3.2018YTD.2019YTD.2018Operating income$69$81$143$213$293$812Depreciation, depletion and amortization46474837141109Special items——(68)—(68)—Adjusted EBITDA(2)$115$128$123$250$366$921(2)See definition of Adjusted EBITDA (a non-GAAP measure) on page 1.Segment Special Items Included in Net Contribution to Earnings (Pretax)in millionsQ1.2019Q2.2019Q3.2019Q3.2018YTD.2019YTD.2018Product remediation recoveries, net$—$—$68$—$68$—Selected Segment Itemsin millionsQ1.2019Q2.2019Q3.2019Q3.2018YTD.2019YTD.2018Total decrease (increase) in working capital(3)$(155)$75$32$71$(48)$(152)Cash spent for capital expenditures$(30)$(53)$(65)$(79)$(148)$(199)(3)Represents the change in prepaid assets, accounts receivable, accounts payable, accrued liabilities and inventory for the Wood Products segment. Segment Statisticsin millions, except for third party sales realizationsQ1.2019Q2.2019Q3.2019Q3.2018YTD.2019YTD.2018Structural LumberThird party net sales$444$495$487$581$1,426$1,831(volumes presentedThird party sales realizations$392$388$389$491$390$511in board feet)Third party sales volumes(4)1,1331,2741,2531,1843,6603,585Production volumes1,1451,1931,1891,1063,5273,446Engineered SolidThird party net sales$116$134$138$132$388$400SectionThird party sales realizations$2,218$2,214$2,188$2,208$2,206$2,150(volumes presentedThird party sales volumes(4)5.26.16.36.017.618.6in cubic feet)Production volumes5.96.05.36.317.219.0EngineeredThird party net sales$70$86$90$91$246$261I-joistsThird party sales realizations$1,709$1,662$1,665$1,668$1,676$1,629(volumes presentedThird party sales volumes(4)41525454147160in lineal feet)Production volumes44474846139154Oriented StrandThird party net sales$160$156$159$215$475$724BoardThird party sales realizations$223$213$214$321$217$335(volumes presentedThird party sales volumes(4)7177337406692,1902,162in square feet 3/8″)Production volumes7297367476652,2122,146Softwood PlywoodThird party net sales$44$44$42$53$130$158(volumes presentedThird party sales realizations$383$380$346$439$369$446in square feet 3/8″)Third party sales volumes(4)115115121122351355Production volumes98104100106302308Medium DensityThird party net sales$38$45$44$48$127$138FiberboardThird party sales realizations$846$833$831$828$836$835(volumes presentedThird party sales volumes(4)44555359152165in square feet 3/4″)Production volumes45614761153168(4)Volumes include sales of internally produced products and products purchased for resale primarily through our distribution business. Weyerhaeuser CompanyUnallocated ItemsQ3.2019 Analyst PackagePreliminary results (unaudited)Unallocated items are gains or charges not related to, or allocated to, an individual operating segment. They include all or a portion of items such as share-based compensation, pension and postretirement costs, elimination of intersegment profit in inventory and LIFO, foreign exchange transaction gains and losses, interest income and other as well as legacy obligations.Contribution to Earningsin millionsQ1.2019Q2.2019Q3.2019Q3.2018YTD.2019YTD.2018Unallocated corporate function and variable compensation expense$(19)$(12)$(19)$(19)$(50)$(56)Liability classified share-based compensation(4)—(1)4(5)2Foreign exchange gain (loss)(3)2(1)(2)(2)(2)Elimination of intersegment profit in inventory and LIFO(5)(5)6—(4)(18)Other, net(39)(17)(30)(21)(86)(80)Operating income (loss)(70)(32)(45)(38)(147)(154)Non-operating pension and other postretirement benefit costs(470)(10)(15)(17)(495)(54)Interest income and other1066132236Net contribution to earnings (loss)$(530)$(36)$(54)$(42)$(620)$(172)Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization(1)in millionsQ1.2019Q2.2019Q3.2019Q3.2018YTD.2019YTD.2018Operating income (loss)$(70)$(32)$(45)$(38)$(147)$(154)Depreciation, depletion and amortization111133Special items20—15—3528Adjusted EBITDA(1)$(49)$(31)$(29)$(37)$(109)$(123)(1)See definition of Adjusted EBITDA (a non-GAAP measure) on page 1.Unallocated Special Items Included in Net Contribution to Earnings (Pretax)in millionsQ1.2019Q2.2019Q3.2019Q3.2018YTD.2019YTD.2018Environmental remediation insurance charge$—$—$—$—$—$(28)Legal charges(20)—(15)—(35)—Special items included in operating income (loss)(20)—(15)—(35)(28)Pension settlement charges(2)(455)6——(449)—Special items included in net contribution to earnings (loss)$(475)$6$(15)$—$(484)$(28)(2)During first quarter 2019, we recorded a $455 million pretax noncash settlement charge related to the transfer of pension assets and liabilities through the purchase of a group annuity contract. This charge was updated based on final pension asset and liability amounts during second quarter 2019, resulting in a $6 million pretax benefit for the quarter and a net $449 million pretax charge for year-to-date 2019.Unallocated Selected Itemsin millionsQ1.2019Q2.2019Q3.2019Q3.2018YTD.2019YTD.2018Cash spent for capital expenditures$(3)$(6)$(5)$(1)$(14)$(2)

 

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