Financial Performance & Capital Allocation - Weyerhaeuser returned over $2 billion of cash to shareholders based on 2021 results and increased the share repurchase authorization to $1 billion[5] - The company is targeting $175-250 million of additional OpX margin improvements from 2022-2025[8,81] - Weyerhaeuser is committed to growing the base dividend by 5% annually from 2022-2025[8] - The company targets annually returning 75-80% of Adjusted FAD to shareholders through a combination of base dividend, variable supplemental dividend, and share repurchase[8,88] - Weyerhaeuser reduced debt by $375 million, resulting in a total debt reduction of $1.2 billion since 2020 Q3[5] Strategic Investments & Growth Initiatives - Weyerhaeuser plans to grow its timber portfolio with $1 billion of disciplined investments through 2025[8] - The company aims to grow EBITDA from Natural Climate Solutions to $100 million by 2025[8] - Weyerhaeuser expects lumber production to grow by 5% annually through organic growth through 2025, increasing from 4.8 BBF in 2021 to 5.7 BBF in 2025[8,76] Sustainability & ESG - The company has set a science-based GHG reduction target at the most ambitious level[5] - Weyerhaeuser's forests store billions of tons of carbon, making the company significantly carbon negative[5] - Weyerhaeuser removes the equivalent of 35 million metric tons of CO2 in its forests & wood products annually[30]

Financial Data and Key Metrics Changes - Weyerhaeuser reported Q1 2022 GAAP earnings of $771 million or $1.03 per diluted share on net sales of $3.1 billion, with adjusted earnings of $978 million or $1.31 per diluted share excluding special items [4] - The company achieved its strongest first quarter adjusted EBITDA on record at $1.5 billion, representing a 122% increase over Q4 2021 [4] - Cash from operations reached $957 million, an increase of over $460 million from Q4, marking the highest first quarter operating cash flow on record [20] Business Line Data and Key Metrics Changes - Timberlands contributed $182 million to Q1 earnings, with adjusted EBITDA increasing by $71 million compared to Q4 [5] - Wood Products contributed $1.2 billion to Q1 earnings, with adjusted EBITDA increasing by $716 million, a 138% improvement compared to Q4 [12] - Real Estate, Energy, and Natural Resources contributed $81 million to Q1 earnings, with adjusted EBITDA of $116 million, which was $67 million higher than Q4 due to the timing of real estate transactions [10] Market Data and Key Metrics Changes - In Japan, demand for logs remained strong, with sales realizations significantly increasing compared to Q4 due to high North American lumber prices and global logistics challenges [6] - In China, log inventories at ports remained elevated, leading to lower takeaway, but sales realizations for export logs increased slightly due to supply disruptions [7] - Southern Timberlands saw adjusted EBITDA comparable to Q4, with favorable sawlog markets despite higher per unit log and haul costs [8] Company Strategy and Development Direction - The company announced an agreement to acquire approximately 81,000 acres of high-quality timberlands in North and South Carolina for about $265 million, enhancing its portfolio and operational synergies [18][19] - Weyerhaeuser is pursuing its first carbon capture and storage project in partnership with Oxy Low Carbon Ventures, expected to come online in 2025 or 2026, as part of its strategy to grow its Natural Climate Solutions business [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the housing market, noting strong demand fundamentals despite potential headwinds from rising mortgage rates and inflation [34] - The company anticipates Q2 earnings before special items and adjusted EBITDA to be significantly lower than Q1 but still higher than any quarter since Q4 2018 [24] - Management expects domestic log demand to soften in Q2 due to ample supply and elevated mill inventories, but still anticipates strong demand from homebuilders [25] Other Important Information - The company initiated a series of transactions to refinance $900 million of debt, resulting in a meaningful reduction in the weighted average coupon in its debt portfolio [20][21] - Weyerhaeuser returned $121 million to shareholders through share repurchase activity and increased its quarterly base dividend by 5.9% to $0.18 per share [23] Q&A Session Summary Question: Inventory levels and pricing outlook - Management noted that elevated log inventories in Oregon may put pressure on pricing in the log market, but overall demand remains strong [50] Question: Supplemental dividend prospects - Management clarified that the supplemental dividend is expected to be paid annually in Q1 for the prior fiscal year, with no interim dividend anticipated this year [52] Question: Carbon sequestration project updates - The carbon project in Maine is progressing as planned, with third-party validation ongoing and credits expected to be issued later this year [51] Question: Southern lumber capacity and production rates - Management indicated that COVID-related labor issues have impacted production rates, but expects production to improve year-over-year in 2022 [78]

[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q) [Filing Details](index=1&type=section&id=Filing%20Details) This document is a Quarterly Report on Form 10-Q for the period ended March 31, 2022, filed by Weyerhaeuser Company, a large accelerated filer that has complied with all SEC filing requirements - The registrant, Weyerhaeuser Company, is a large accelerated filer and has filed all required reports during the preceding 12 months and for the past 90 days[2](index=2&type=chunk)[113](index=113&type=chunk) Common Stock Information (as of April 25, 2022) | Title of Class | Trading Symbol | Exchange Registered On | | :--------------- | :------------- | :--------------------- | | Common Stock, par value $1.25 per share | WY | New York Stock Exchange | **Outstanding Shares:** 744,498 thousand shares [PART I FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [ITEM 1. FINANCIAL STATEMENTS](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited consolidated financial statements for Weyerhaeuser Company, including the statements of operations, comprehensive income, balance sheet, cash flows, and changes in equity, along with their accompanying notes for the quarters ended March 31, 2022, and 2021 [CONSOLIDATED STATEMENT OF OPERATIONS](index=3&type=section&id=CONSOLIDATED%20STATEMENT%20OF%20OPERATIONS) The Consolidated Statement of Operations shows a significant increase in net sales, gross margin, operating income, and net earnings for Q1 2022 compared to Q1 2021, despite a substantial loss on debt extinguishment Consolidated Statement of Operations (Q1 2022 vs. Q1 2021) | Metric (Millions USD, except per-share) | March 2022 | March 2021 | Change (YoY) | | :-------------------------------------- | :--------- | :--------- | :----------- | | Net sales | $3,112 | $2,506 | +$606 | | Costs of sales | $1,647 | $1,430 | +$217 | | Gross margin | $1,465 | $1,076 | +$389 | | Operating income | $1,344 | $956 | +$388 | | Loss on debt extinguishment | $(276) | — | $(276) | | Net earnings | $771 | $681 | +$90 | | Earnings per share, basic and diluted | $1.03 | $0.91 | +$0.12 | [CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME](index=4&type=section&id=CONSOLIDATED%20STATEMENT%20OF%20COMPREHENSIVE%20INCOME) Total comprehensive income increased in Q1 2022 compared to Q1 2021, driven by higher net earnings and positive foreign currency translation adjustments Consolidated Statement of Comprehensive Income (Q1 2022 vs. Q1 2021) | Metric (Millions USD) | March 2022 | March 2021 | | :-------------------- | :--------- | :--------- | | Net earnings | $771 | $681 | | Foreign currency translation adjustments | $16 | $9 | | Total other comprehensive income | $29 | $30 | | Total comprehensive income | $800 | $711 | [CONSOLIDATED BALANCE SHEET](index=5&type=section&id=CONSOLIDATED%20BALANCE%20SHEET) The balance sheet as of March 31, 2022, shows a decrease in total assets and total equity compared to December 31, 2021, primarily due to a reduction in cash and cash equivalents and retained earnings, while total liabilities remained relatively stable Consolidated Balance Sheet (March 31, 2022 vs. December 31, 2021) | Metric (Millions USD) | March 31, 2022 | December 31, 2021 | | :-------------------- | :------------- | :---------------- | | Cash and cash equivalents | $1,205 | $1,879 | | Total current assets | $2,775 | $3,135 | | Total assets | $17,116 | $17,652 | | Total current liabilities | $984 | $954 | | Total liabilities | $6,879 | $6,885 | | Total equity | $10,237 | $10,767 | [CONSOLIDATED STATEMENT OF CASH FLOWS](index=6&type=section&id=CONSOLIDATED%20STATEMENT%20OF%20CASH%20FLOWS) Net cash from operations significantly increased in Q1 2022, but this was offset by a substantial net cash outflow from financing activities, primarily due to higher dividend payments and debt repayments, resulting in a net decrease in cash and cash equivalents Consolidated Statement of Cash Flows (Q1 2022 vs. Q1 2021) | Metric (Millions USD) | March 2022 | March 2021 | | :-------------------- | :--------- | :--------- | | Net cash from operations | $957 | $698 | | Net cash from investing activities | $(87) | $(53) | | Net cash from financing activities | $(1,664) | $(124) | | Net change in cash, cash equivalents and restricted cash | $(794) | $521 | | Cash, cash equivalents and restricted cash at end of period | $1,205 | $1,016 | [CONSOLIDATED STATEMENT OF CHANGES IN EQUITY](index=7&type=section&id=CONSOLIDATED%20STATEMENT%20OF%20CHANGES%20IN%20EQUITY) Total equity decreased in Q1 2022 compared to Q1 2021, primarily due to significantly higher dividends on common shares and share repurchases, partially offset by net earnings Consolidated Statement of Changes in Equity (Q1 2022 vs. Q1 2021) | Metric (Millions USD, except per-share) | March 2022 | March 2021 | | :-------------------------------------- | :--------- | :--------- | | Balance at beginning of period (Retained earnings) | $2,131 | $411 | | Net earnings | $771 | $681 | | Dividends on common shares | $(1,223) | $(130) | | Balance at end of period (Retained earnings) | $1,679 | $962 | | Total equity at end of period | $10,237 | $9,328 | | Dividends paid per common share | $1.63 | $0.17 | [INDEX FOR NOTES TO CONSOLIDATED FINANCIAL STATEMENTS](index=8&type=section&id=INDEX%20FOR%20NOTES%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides an index to the detailed notes accompanying the consolidated financial statements, covering various accounting policies, business segments, revenue recognition, debt, and other financial disclosures [NOTES TO CONSOLIDATED FINANCIAL STATEMENTS](index=9&type=section&id=NOTES%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) The notes provide detailed explanations and disclosures for the unaudited consolidated financial statements, covering accounting policies, business segment performance, revenue recognition, earnings per share, inventory valuation, pension plans, accrued liabilities, debt, fair value measurements, legal matters, comprehensive loss, share-based compensation, other operating costs, income taxes, restricted cash, and a recent timberland acquisition [NOTE 1: BASIS OF PRESENTATION](index=9&type=section&id=NOTE%201%3A%20BASIS%20OF%20PRESENTATION) The consolidated financial statements provide an overall view of the company's operations, financial condition, and cash flows, including controlled entities and eliminating intercompany transactions, prepared in accordance with SEC rules for interim financial statements - The financial statements are unaudited and reflect management's necessary adjustments for fair presentation, prepared under SEC rules for interim statements[17](index=17&type=chunk)[128](index=128&type=chunk) - Interim results are not necessarily indicative of full-year expectations[17](index=17&type=chunk)[128](index=128&type=chunk) [NOTE 2: BUSINESS SEGMENTS](index=9&type=section&id=NOTE%202%3A%20BUSINESS%20SEGMENTS) Weyerhaeuser operates in three primary business segments: Timberlands, Real Estate, Energy and Natural Resources (Real Estate & ENR), and Wood Products, all of which showed increased sales and net contribution to earnings in Q1 2022 compared to Q1 2021 - The company's business segments are Timberlands, Real Estate, Energy and Natural Resources (Real Estate & ENR), and Wood Products[18](index=18&type=chunk)[129](index=129&type=chunk) Sales to Unaffiliated Customers by Segment (Millions USD) | Segment | March 2022 | March 2021 | | :---------------- | :--------- | :--------- | | Timberlands | $465 | $379 | | Real Estate & ENR | $128 | $106 | | Wood Products | $2,519 | $2,021 | | **Total** | **$3,112** | **$2,506** | Net Contribution to Earnings by Segment (Millions USD) | Segment | March 2022 | March 2021 | | :---------------- | :--------- | :--------- | | Timberlands | $182 | $108 | | Real Estate & ENR | $81 | $66 | | Wood Products | $1,182 | $840 | | **Total** | **$1,445** | **$1,014** | [NOTE 3: REVENUE RECOGNITION](index=10&type=section&id=NOTE%203%3A%20REVENUE%20RECOGNITION) Net sales to unaffiliated customers increased across all segments in Q1 2022, with Wood Products being the largest contributor, followed by Timberlands and Real Estate & ENR Net Sales to Unaffiliated Customers by Major Product (Millions USD) | Product Category | March 2022 | March 2021 | | :----------------------- | :--------- | :--------- | | **Timberlands segment** | | | | Delivered logs | $428 | $348 | | Stumpage and pay-as-cut timber | $9 | $6 | | Recreational and other lease revenue | $17 | $16 | | Other Timberlands sales | $11 | $9 | | **Real Estate & ENR segment** | | | | Real estate | $97 | $84 | | Energy and natural resources | $31 | $22 | | **Wood Products segment** | | | | Structural lumber | $1,206 | $990 | | Oriented strand board | $564 | $438 | | Engineered solid section | $196 | $142 | | Engineered I-joists | $137 | $83 | | Softwood plywood | $58 | $56 | | Medium density fiberboard | $48 | $48 | | Complementary building products | $215 | $171 | | Other Wood Products sales | $95 | $93 | | **Total net sales** | **$3,112** | **$2,506** | [NOTE 4: NET EARNINGS PER SHARE AND SHARE REPURCHASES](index=10&type=section&id=NOTE%204%3A%20NET%20EARNINGS%20PER%20SHARE%20AND%20SHARE%20REPURCHASES) Basic and diluted EPS increased in Q1 2022, and the company repurchased **3.2 million common shares for $121 million** under its new $1 billion repurchase program, with **$806 million remaining authorization** Earnings Per Share (Q1 2022 vs. Q1 2021) | Metric | March 2022 | March 2021 | | :---------------------------- | :--------- | :--------- | | Basic and diluted EPS | $1.03 | $0.91 | Weighted Average Shares Outstanding (Thousands) | Metric | March 2022 | March 2021 | | :-------------------------------------- | :--------- | :--------- | | Basic | 747,507 | 748,718 | | Diluted | 748,823 | 750,024 | - The company repurchased **3,197,675 common shares** for approximately **$121 million** during Q1 2022 under the 2021 Repurchase Program, with **$806 million remaining authorization**[27](index=27&type=chunk)[138](index=138&type=chunk) [NOTE 5: INVENTORIES](index=11&type=section&id=NOTE%205%3A%20INVENTORIES) Total inventories increased to **$611 million** as of March 31, 2022, from **$520 million** at December 31, 2021, with the company using LIFO for major U.S. inventory products and moving average cost or FIFO for other inventories Inventories (Millions USD) | Metric | March 31, 2022 | December 31, 2021 | | :-------------------- | :------------- | :---------------- | | Total Inventories | $611 | $520 | - LIFO method applies to major inventory products at U.S. locations, while moving average cost or FIFO applies to other U.S. raw material, product, and all foreign inventories[28](index=28&type=chunk)[139](index=139&type=chunk) [NOTE 6: PENSION AND OTHER POST-EMPLOYMENT BENEFIT PLANS](index=12&type=section&id=NOTE%206%3A%20PENSION%20AND%20OTHER%20POST-EMPLOYMENT%20BENEFIT%20PLANS) Net periodic benefit cost for pensions increased in Q1 2022, while other post-employment benefit costs remained stable, with the company updating pension plan asset fair values annually in the second quarter Net Periodic Benefit Cost (Millions USD) | Metric | March 2022 | March 2021 | | :-------------------------------------- | :--------- | :--------- | | Total net periodic benefit cost – pension | $23 | $17 | | Total net periodic benefit cost – other post-employment benefits | $2 | $2 | - Service cost is included in 'Costs of sales,' 'Selling expenses,' and 'General and administrative expenses,' while other components are in 'Non-operating pension and other post-employment benefit costs'[30](index=30&type=chunk)[141](index=141&type=chunk) [NOTE 7: ACCRUED LIABILITIES](index=12&type=section&id=NOTE%207%3A%20ACCRUED%20LIABILITIES) Total accrued liabilities remained stable at **$674 million** as of March 31, 2022, compared to **$673 million** at December 31, 2021, with notable changes in taxes payable and compensation costs Accrued Liabilities (Millions USD) | Component | March 31, 2022 | December 31, 2021 | | :-------------------------------------- | :------------- | :---------------- | | Compensation and employee benefit costs | $166 | $225 | | Customer rebates, volume discounts and deferred income | $119 | $164 | | Taxes payable | $202 | $106 | | Other | $92 | $71 | | **Total** | **$674** | **$673** | [NOTE 8: LONG-TERM DEBT AND LINE OF CREDIT](index=12&type=section&id=NOTE%208%3A%20LONG-TERM%20DEBT%20AND%20LINE%20OF%20CREDIT) In Q1 2022, the company refinanced debt by issuing **$900 million** in new notes and retiring **$931 million** of higher interest rate notes, incurring a **$276 million** pretax charge for early extinguishment, while the **$1.5 billion** revolving credit facility remains undrawn - In March 2022, the company issued **$900 million** in new notes (3.375% due 2033 and 4.000% due 2052) and used proceeds plus cash to retire **$931 million** of higher interest rate notes[34](index=34&type=chunk)[145](index=145&type=chunk) - A pretax charge of **$276 million** (**$207 million** after-tax) was recorded for the loss on debt extinguishment[34](index=34&type=chunk)[145](index=145&type=chunk) - The **$1.5 billion** revolving credit facility, expiring in January 2025, had no outstanding borrowings as of March 31, 2022[34](index=34&type=chunk)[145](index=145&type=chunk) [NOTE 9: FAIR VALUE OF FINANCIAL INSTRUMENTS](index=13&type=section&id=NOTE%209%3A%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) The fair value of long-term fixed rate debt decreased to **$5,538 million** as of March 31, 2022, from **$6,221 million** at December 31, 2021, while its carrying value also slightly decreased, and other financial instruments' carrying values approximate their fair values Long-Term Fixed Rate Debt (Millions USD) | Metric | March 31, 2022 | December 31, 2021 | | :-------------------- | :------------- | :---------------- | | Carrying value | $5,053 | $5,099 | | Fair value (level 2) | $5,538 | $6,221 | - Fair value of fixed rate long-term debt is estimated using the market approach based on quoted market prices[36](index=36&type=chunk)[147](index=147&type=chunk) [NOTE 10: LEGAL PROCEEDINGS, COMMITMENTS AND CONTINGENCIES](index=13&type=section&id=NOTE%2010%3A%20LEGAL%20PROCEEDINGS%2C%20COMMITMENTS%20AND%20CONTINGENCIES) The company is involved in various legal proceedings in the ordinary course of business, none of which are expected to have a material adverse effect, and an accrual of approximately **$62 million** is maintained for future estimated environmental remediation costs - No current legal proceeding is believed to have a material adverse effect on the company's financial statements[38](index=38&type=chunk)[149](index=149&type=chunk) - An accrual of approximately **$62 million** is held for future estimated remediation costs on Superfund and other hazardous waste sites[39](index=39&type=chunk)[150](index=150&type=chunk) [NOTE 11: ACCUMULATED OTHER COMPREHENSIVE LOSS](index=14&type=section&id=NOTE%2011%3A%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20LOSS) The accumulated other comprehensive loss decreased to **$(450) million** as of March 31, 2022, from **$(479) million** at December 31, 2021, primarily due to positive foreign currency translation adjustments and reclassifications from pension and other post-employment benefits Changes in Accumulated Other Comprehensive Loss (Millions USD) | Component | March 2022 | March 2021 | | :-------------------------------------- | :--------- | :--------- | | Pension (net of tax) - Balance at end of period | $(709) | $(1,044) | | Other post-employment benefits (net of tax) - Balance at end of period | $0 | $(11) | | Translation adjustments and other - Balance at end of period | $259 | $263 | | **Accumulated other comprehensive loss, end of period** | **$(450)** | **$(792)** | [NOTE 12: SHARE-BASED COMPENSATION](index=14&type=section&id=NOTE%2012%3A%20SHARE-BASED%20COMPENSATION) During Q1 2022, the company granted **615 thousand Restricted Stock Units (RSUs)** and **295 thousand Performance Share Units (PSUs)**, with a total of **1.3 million common shares** issued from RSU vestings, PSU vestings, and stock option exercises Share-Based Compensation Activity (Thousands of Shares) | Metric | Granted | Vested | | :-------------------- | :------ | :----- | | Restricted stock units (RSUs) | 615 | 830 | | Performance share units (PSUs) | 295 | 419 | - **1.3 million shares** of common stock were issued from RSU vestings, PSU vestings, and stock option exercises[43](index=43&type=chunk)[154](index=154&type=chunk) - The weighted average fair value of RSUs granted in 2022 was **$42.13**, and PSUs was **$49.77**[44](index=44&type=chunk)[45](index=45&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk) [NOTE 13: OTHER OPERATING COSTS, NET](index=15&type=section&id=NOTE%2013%3A%20OTHER%20OPERATING%20COSTS%2C%20NET) Total other operating costs, net, decreased to **$6 million** in Q1 2022 from **$10 million** in Q1 2021, primarily due to foreign exchange gains compared to losses in the prior year Other Operating Costs, Net (Millions USD) | Component | March 2022 | March 2021 | | :-------------------------------------- | :--------- | :--------- | | Foreign exchange losses (gains), net | $(1) | $2 | | Litigation expense, net | $4 | $3 | | Research and development expenses | $1 | $1 | | Other, net | $2 | $4 | | **Total other operating costs, net** | **$6** | **$10** | [NOTE 14: INCOME TAXES](index=15&type=section&id=NOTE%2014%3A%20INCOME%20TAXES) As a REIT, the company is generally not subject to federal corporate income taxes on distributed REIT taxable income but pays corporate income taxes on earnings from its Taxable REIT Subsidiaries (TRSs), with the 2022 estimated annual effective tax rate differing from the U.S. federal statutory rate due to state, foreign taxes, and REIT tax benefits - The company operates as a REIT, generally avoiding federal corporate income taxes on distributed REIT taxable income[49](index=49&type=chunk)[160](index=160&type=chunk) - Corporate income taxes are paid on earnings of wholly-owned Taxable REIT Subsidiaries (TRSs), which include Wood Products segment earnings and portions of Timberlands and Real Estate & ENR segments' earnings[49](index=49&type=chunk)[160](index=160&type=chunk) [NOTE 15: RESTRICTED CASH](index=15&type=section&id=NOTE%2015%3A%20RESTRICTED%20CASH) Restricted cash, which was **$120 million** at December 31, 2021, was released in Q1 2022 as a like-kind property for reinvestment in timberlands was not identified Cash, Cash Equivalents and Restricted Cash (Millions USD) | Metric | March 31, 2022 | December 31, 2021 | | :-------------------------------------- | :------------- | :---------------- | | Cash and cash equivalents | $1,205 | $1,879 | | Restricted cash included in other assets | $0 | $120 | | **Total cash, cash equivalents and restricted cash** | **$1,205** | **$1,999** | - Restricted cash from December 31, 2021, intended for timberland reinvestment, was released in Q1 2022 due to the non-identification of a like-kind property[51](index=51&type=chunk)[162](index=162&type=chunk) [NOTE 16: TIMBERLAND ACQUISITION](index=15&type=section&id=NOTE%2016%3A%20TIMBERLAND%20ACQUISITION) The company announced an agreement to acquire **81 thousand acres** of North and South Carolina timberlands for approximately **$265 million**, with closing expected in Q2 2022 - Agreement to purchase **81 thousand acres** of timberlands in North and South Carolina for approximately **$265 million**[52](index=52&type=chunk)[163](index=163&type=chunk) - The transaction is expected to close in the second quarter of 2022[52](index=52&type=chunk)[163](index=163&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)](index=16&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS%20(MD%26A)) This section provides management's perspective on the company's financial condition and results of operations for the first quarter of 2022, including an overview of economic and market conditions, detailed segment performance, liquidity, capital resources, and key performance measures [NOTE ABOUT FORWARD-LOOKING STATEMENTS](index=16&type=section&id=NOTE%20ABOUT%20FORWARD-LOOKING%20STATEMENTS) This section contains forward-looking statements regarding future results and performance, which are subject to various risks and uncertainties, including economic conditions, market demand, exchange rates, operational disruptions, and regulatory changes, and the company disclaims any obligation to update these statements - Forward-looking statements cover expected financial and operating performance, plans, strategies, estimated taxes, capital structure, liquidity, debt compliance, contingent liabilities, capital expenditures, and market conditions[54](index=54&type=chunk)[165](index=165&type=chunk) - Risks and uncertainties include general economic conditions (employment, interest rates, inflation, housing starts), COVID-19 impacts, market demand, currency exchange rates, trade restrictions, shipping costs, economic activity in Asia, manufacturing performance, competition, strategic execution, raw material prices, weather, climate change, natural disasters, energy prices, labor costs, tax policies, environmental regulations, legal proceedings, and pension fund performance[54](index=54&type=chunk)[165](index=165&type=chunk) [RESULTS OF OPERATIONS](index=17&type=section&id=RESULTS%20OF%20OPERATIONS) The company experienced strong consolidated results in Q1 2022, with significant increases in net sales, operating income, and net earnings, driven by robust performance across all business segments, particularly Wood Products, amidst favorable market conditions [ECONOMIC AND MARKET CONDITIONS AFFECTING OUR OPERATIONS](index=17&type=section&id=ECONOMIC%20AND%20MARKET%20CONDITIONS%20AFFECTING%20OUR%20OPERATIONS) Market conditions in Q1 2022 were influenced by strong U.S. housing activity, repair and remodel demand, and rising prices for wood products and logs, with housing starts increasing and log prices rising in both Western and Southern markets - U.S. housing starts averaged **1.75 million units** (seasonally adjusted annual basis) in Q1 2022, a **5% increase** from Q4 2021[167](index=167&type=chunk) - Repair and remodeling expenditures increased by **5.2%** from Q4 2021 to Q1 2022[167](index=167&type=chunk) - Douglas fir sawlog prices in Western markets increased by **18%** in Q1 2022 compared to Q4 2021, and Southern sawlog prices increased by **6% QoQ** and **13% YoY**[167](index=167&type=chunk) [CONSOLIDATED RESULTS](index=17&type=section&id=CONSOLIDATED%20RESULTS) Consolidated net sales increased by **24%** to **$3,112 million** in Q1 2022, driving a **41% increase** in operating income and a **13% increase** in net earnings, despite a significant charge from debt extinguishment Consolidated Financial Performance (Q1 2022 vs. Q1 2021) | Metric (Millions USD, except per-share) | March 2022 | March 2021 | Change (YoY) | | :-------------------------------------- | :--------- | :--------- | :----------- | | Net sales | $3,112 | $2,506 | +$606 (24%) | | Costs of sales | $1,647 | $1,430 | +$217 (15%) | | Operating income | $1,344 | $956 | +$388 (41%) | | Net earnings | $771 | $681 | +$90 (13%) | | Earnings per share, basic and diluted | $1.03 | $0.91 | +$0.12 | - Net sales increase was primarily driven by a **$498 million increase** in Wood Products sales and an **$86 million increase** in Timberlands sales[58](index=58&type=chunk)[169](index=169&type=chunk) - Net earnings increase was partially offset by a **$276 million** pretax charge for early debt extinguishment and a **$20 million increase** in income tax expense[61](index=61&type=chunk)[172](index=172&type=chunk) [TIMBERLANDS](index=18&type=section&id=TIMBERLANDS) The Timberlands segment saw a **23% increase** in net sales to unaffiliated customers and a **69% increase** in operating income in Q1 2022, driven by higher sales realizations and volumes in Western and Southern regions Timberlands Segment Performance (Q1 2022 vs. Q1 2021) | Metric (Millions USD) | March 2022 | March 2021 | Change (YoY) | | :-------------------------------------- | :--------- | :--------- | :----------- | | Net sales to unaffiliated customers | $465 | $379 | +$86 (23%) | | Intersegment sales | $161 | $134 | +$27 (20%) | | Total sales | $626 | $513 | +$113 | | Costs of sales | $423 | $383 | +$40 (10%) | | Operating income and Net contribution to earnings | $182 | $108 | +$74 (69%) | - Western log sales increased by **$58 million** due to a **23% increase** in sales realizations and a **4% increase** in sales volumes[63](index=63&type=chunk)[174](index=174&type=chunk) - Southern log sales increased by **$23 million** due to a **9% increase** in sales volumes and an **8% increase** in sales realizations[63](index=63&type=chunk)[174](index=174&type=chunk) Timberlands Volumes (Thousands of Tons) | Metric | March 2022 | March 2021 | Change (YoY) | | :-------------------- | :--------- | :--------- | :----------- | | Third-party log sales | 5,949 | 5,582 | +367 | | Fee harvest volumes | 8,360 | 7,814 | +546 | [REAL ESTATE, ENERGY AND NATURAL RESOURCES](index=19&type=section&id=REAL%20ESTATE%2C%20ENERGY%20AND%20NATURAL%20RESOURCES) The Real Estate, Energy and Natural Resources segment reported a **21% increase** in net sales and a **23% increase** in operating income in Q1 2022, driven by higher acres sold and increased energy and natural resources sales Real Estate, Energy and Natural Resources Segment Performance (Q1 2022 vs. Q1 2021) | Metric (Millions USD) | March 2022 | March 2021 | Change (YoY) | | :-------------------------------------- | :--------- | :--------- | :----------- | | Net sales | $128 | $106 | +$22 (21%) | | Costs of sales | $41 | $34 | +$7 (21%) | | Operating income and Net contribution to earnings | $81 | $66 | +$15 (23%) | Real Estate Sales Statistics (Q1 2022 vs. Q1 2021) | Metric | March 2022 | March 2021 | Change (YoY) | | :-------------------- | :--------- | :--------- | :----------- | | Acres sold | 24,126 | 19,455 | +4,671 | | Average price per acre | $3,785 | $3,803 | $(18) | [WOOD PRODUCTS](index=20&type=section&id=WOOD%20PRODUCTS) The Wood Products segment achieved a **25% increase** in net sales and a **41% increase** in operating income in Q1 2022, primarily due to higher sales realizations across structural lumber, oriented strand board, and engineered wood products Wood Products Segment Performance (Q1 2022 vs. Q1 2021) | Metric (Millions USD) | March 2022 | March 2021 | Change (YoY) | | :-------------------------------------- | :--------- | :--------- | :----------- | | Net sales | $2,519 | $2,021 | +$498 (25%) | | Costs of sales | $1,276 | $1,124 | +$152 (14%) | | Operating income and Net contribution to earnings | $1,182 | $840 | +$342 (41%) | - Structural lumber sales increased by **$216 million** (**21%** sales realizations, **1%** sales volumes)[70](index=70&type=chunk)[181](index=181&type=chunk) - Oriented strand board sales increased by **$126 million** (**28%** sales realizations)[70](index=70&type=chunk)[181](index=181&type=chunk) Wood Products Third-Party Sales Volumes (Millions) | Product | March 2022 | March 2021 | Change (YoY) | | :-------------------- | :--------- | :--------- | :----------- | | Structural lumber (board feet) | 1,157 | 1,145 | +12 | | Oriented strand board (square feet 3/8") | 717 | 714 | +3 | | Engineered solid section (cubic feet) | 5.7 | 6.2 | (0.5) | | Engineered I-joists (lineal feet) | 46 | 47 | (1) | | Softwood plywood (square feet 3/8") | 75 | 94 | (19) | | Medium density fiberboard (square feet 3/4") | 44 | 57 | (13) | [UNALLOCATED ITEMS](index=22&type=section&id=UNALLOCATED%20ITEMS) Net charge to earnings from unallocated items increased by **$52 million** in Q1 2022, primarily due to a **$42 million increase** in the elimination of intersegment profit in inventory and LIFO adjustments Net Charge to Earnings – Unallocated Items (Millions USD) | Component | March 2022 | March 2021 | Change (YoY) | | :-------------------------------------- | :--------- | :--------- | :----------- | | Unallocated corporate function and variable compensation expense | $(31) | $(25) | $(6) | | Elimination of intersegment profit in inventory and LIFO | $(59) | $(17) | $(42) | | Non-operating pension and other post-employment benefit costs | $(15) | $(8) | $(7) | | **Net charge to earnings** | **$(117)** | **$(65)** | **$(52)** | [INTEREST EXPENSE](index=22&type=section&id=INTEREST%20EXPENSE) Interest expense, net of capitalized interest, decreased by **$7 million** in Q1 2022 compared to Q1 2021, primarily due to a decrease in average outstanding debt and weighted average interest rate Interest Expense, Net (Millions USD) | Metric | March 2022 | March 2021 | Change (YoY) | | :-------------------------------------- | :--------- | :--------- | :----------- | | Interest expense, net of capitalized interest | $72 | $79 | $(7) | [INCOME TAXES](index=22&type=section&id=INCOME%20TAXES) The provision for income taxes increased by **$20 million** in Q1 2022, driven by higher earnings from Taxable REIT Subsidiaries (TRSs), partially offset by a tax benefit from the debt extinguishment loss Provision for Income Taxes (Millions USD) | Metric | March 2022 | March 2021 | Change (YoY) | | :-------------------- | :--------- | :--------- | :----------- | | Income taxes expense | $209 | $189 | +$20 | - Increase in income tax expense primarily due to higher TRS earnings, partially offset by a **$69 million** tax benefit from the **$276 million** pretax loss on debt extinguishment[79](index=79&type=chunk)[190](index=190&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=22&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) The company maintains a strong liquidity position with over **$1.2 billion** in cash and cash equivalents and a **$1.5 billion** undrawn credit facility, with cash from operations increasing significantly, but cash from financing activities seeing a substantial outflow due to higher dividends and debt repayments - As of March 31, 2022, the company had over **$1.2 billion** in cash and cash equivalents and **$1.5 billion** available on its line of credit, expiring in January 2025[80](index=80&type=chunk)[191](index=191&type=chunk) [CASH FROM OPERATIONS](index=22&type=section&id=CASH%20FROM%20OPERATIONS) Net cash from operations increased by **$259 million** in Q1 2022, primarily due to increased cash inflows from business operations, partially offset by higher income tax payments Net Cash from Operations (Millions USD) | Metric | March 2022 | March 2021 | Change (YoY) | | :-------------------- | :--------- | :--------- | :----------- | | Net cash from operations | $957 | $698 | +$259 | [CASH FROM INVESTING ACTIVITIES](index=24&type=section&id=CASH%20FROM%20INVESTING%20ACTIVITIES) Net cash used in investing activities increased by **$34 million** in Q1 2022, mainly due to higher capital expenditures and a timberland acquisition Net Cash from Investing Activities (Millions USD) | Metric | March 2022 | March 2021 | Change (YoY) | | :-------------------------------------- | :--------- | :--------- | :----------- | | Net cash from investing activities | $(87) | $(53) | $(34) | | Capital expenditures for property and equipment | $(50) | $(31) | $(19) | | Acquisition of timberlands | $(18) | — | $(18) | - Anticipated capital expenditures for 2022 are approximately **$440 million**[84](index=84&type=chunk)[195](index=195&type=chunk) [CASH FROM FINANCING ACTIVITIES](index=24&type=section&id=CASH%20FROM%20FINANCING%20ACTIVITIES) Net cash used in financing activities significantly increased by **$1,540 million** in Q1 2022, primarily driven by a substantial increase in dividend payments and common stock repurchases, alongside debt refinancing activities Net Cash from Financing Activities (Millions USD) | Metric | March 2022 | March 2021 | Change (YoY) | | :-------------------------------------- | :--------- | :--------- | :----------- | | Net cash from financing activities | $(1,664) | $(124) | $(1,540) | | Cash dividends on common shares | $(1,218) | $(127) | $(1,091) | | Payments on long-term debt | $(1,203) | — | $(1,203) | | Net proceeds from issuance of long-term debt | $881 | — | +$881 | | Repurchases of common shares | $(118) | — | $(118) | [Line of Credit](index=24&type=section&id=Line%20of%20Credit) The company's **$1.5 billion** senior unsecured revolving credit facility, expiring in January 2025, had no outstanding borrowings as of March 31, 2022, and plans to transition from LIBOR to an alternate reference rate in 2022 - No outstanding borrowings on the **$1.5 billion** revolving credit facility as of March 31, 2022[86](index=86&type=chunk)[197](index=197&type=chunk) - Plans to transition the revolving credit facility from LIBOR to an alternate reference rate in 2022[86](index=86&type=chunk)[197](index=197&type=chunk) [Long-Term Debt](index=24&type=section&id=Long-Term%20Debt) In March 2022, the company executed a debt refinancing, issuing **$900 million** in new notes (3.375% due 2033 and 4.000% due 2052) and retiring **$931 million** of higher interest rate notes, which lowered the weighted average interest rate and extended maturity - Issued **$900 million** in new notes (**$450 million** at 3.375% due 2033 and **$450 million** at 4.000% due 2052)[87](index=87&type=chunk)[198](index=198&type=chunk) - Retired **$931 million** of principal in higher interest rate notes, including 7.375% notes due 2032, 8.500% notes due 2025, 7.125% notes due 2023, 7.950% notes due 2025, and 7.850% notes due 2026[87](index=87&type=chunk)[198](index=198&type=chunk) [Debt Covenants](index=24&type=section&id=Debt%20Covenants) As of March 31, 2022, Weyerhaeuser Company was in compliance with all debt covenants, with no significant changes from the prior annual report, and expects to remain compliant - The company was in compliance with its debt covenants as of March 31, 2022[88](index=88&type=chunk)[199](index=199&type=chunk) - No significant changes to debt covenants from the 2021 Annual Report on Form 10-K, and compliance is expected for the foreseeable future[88](index=88&type=chunk)[199](index=199&type=chunk) [Option Exercises](index=24&type=section&id=Option%20Exercises) Cash proceeds from stock option exercises decreased to **$12 million** in Q1 2022 from **$17 million** in Q1 2021, despite an increase in the average stock price Cash Proceeds from Stock Option Exercises (Millions USD) | Metric | March 2022 | March 2021 | | :-------------------------------------- | :--------- | :--------- | | Proceeds from exercise of stock options | $12 | $17 | - Average stock price was **$39.65** in Q1 2022, up from **$34.05** in Q1 2021[91](index=91&type=chunk)[202](index=202&type=chunk) [Dividend Payments](index=26&type=section&id=Dividend%20Payments) Cash dividends on common shares increased significantly to **$1,218 million** in Q1 2022, primarily due to a **$1.45 per share supplemental dividend** based on 2021 financial results Cash Dividends on Common Shares (Millions USD) | Metric | March 2022 | March 2021 | Change (YoY) | | :-------------------------------------- | :--------- | :--------- | :----------- | | Cash dividends on common shares | $1,218 | $127 | +$1,091 | - The increase is primarily due to a **$1.45 per share supplemental dividend** (**$1,084 million** total) paid in Q1 2022 based on 2021 results[91](index=91&type=chunk)[202](index=202&type=chunk) [Share Repurchases](index=26&type=section&id=Share%20Repurchases) The company repurchased **3,197,675 common shares** for approximately **$121 million** in Q1 2022 under the 2021 Repurchase Program, which has **$806 million** remaining authorization - Repurchased **3,197,675 common shares** for approximately **$121 million** in Q1 2022 under the 2021 Repurchase Program[92](index=92&type=chunk)[203](index=203&type=chunk) - As of March 31, 2022, **$806 million** remained authorized for future share repurchases[92](index=92&type=chunk)[203](index=203&type=chunk) [PERFORMANCE MEASURES](index=26&type=section&id=PERFORMANCE%20MEASURES) This section presents non-GAAP performance measures, including Adjusted EBITDA by segment and Net Earnings before Special Items, which are used to evaluate company and segment performance and provide supplemental information to investors [Adjusted EBITDA by Segment](index=26&type=section&id=Adjusted%20EBITDA%20by%20Segment) Consolidated Adjusted EBITDA increased by **36%** to **$1,497 million** in Q1 2022, with strong contributions from all segments, particularly Wood Products Adjusted EBITDA by Segment (Millions USD) | Segment | March 2022 | March 2021 | Change (YoY) | | :---------------- | :--------- | :--------- | :----------- | | Timberlands | $247 | $172 | +$75 | | Real Estate & ENR | $116 | $96 | +$20 | | Wood Products | $1,233 | $889 | +$344 | | Unallocated Items | $(99) | $(56) | $(43) | | **Adjusted EBITDA** | **$1,497** | **$1,101** | **+$396** | - Adjusted EBITDA is defined as operating income adjusted for depreciation, depletion, amortization, basis of real estate sold, and special items[93](index=93&type=chunk)[204](index=204&type=chunk) [Net Earnings and Net Earnings per Diluted Share Before Special Items](index=27&type=section&id=Net%20Earnings%20and%20Net%20Earnings%20per%20Diluted%20Share%20Before%20Special%20Items) Net earnings before special items increased to **$978 million** in Q1 2022, and diluted EPS before special items rose to **$1.31**, primarily by excluding the loss on debt extinguishment Net Earnings Before Special Items (Millions USD) | Metric | March 2022 | March 2021 | | :-------------------------------------- | :--------- | :--------- | | Net earnings | $771 | $681 | | Loss on debt extinguishment | $207 | — | | **Net earnings before special items** | **$978** | **$681** | Net Earnings per Diluted Share Before Special Items | Metric | March 2022 | March 2021 | | :-------------------------------------- | :--------- | :--------- | | Net earnings per diluted share | $1.03 | $0.91 | | Loss on debt extinguishment | $0.28 | — | | **Net earnings per diluted share before special items** | **$1.31** | **$0.91** | [CRITICAL ACCOUNTING POLICIES](index=27&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) There have been no significant changes to the critical accounting policies disclosed in the company's 2021 Annual Report on Form 10-K during the first quarter of 2022 - No significant changes to critical accounting policies during Q1 2022[101](index=101&type=chunk)[212](index=212&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=28&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section provides disclosures on the company's exposure to market risks, specifically focusing on long-term indebtedness obligations, including scheduled principal repayments, weighted average interest rates, and estimated fair values [LONG-TERM INDEBTEDNESS OBLIGATIONS](index=28&type=section&id=LONG-TERM%20INDEDBTEDNESS%20OBLIGATIONS) The company's long-term fixed-rate debt totaled **$5,093 million** (carrying value) as of March 31, 2022, with a weighted average interest rate of **5.36%**, and significant maturities are scheduled for 2023 and 2025, with the majority due thereafter Summary of Long-Term Indebtedness Principal Obligations (Millions USD) as of March 31, 2022 | Year | Principal Obligations | Average Interest Rate | | :--- | :-------------------- | :-------------------- | | 2022 | $0 | 0% | | 2023 | $978 | 5.44% | | 2024 | $0 | 0% | | 2025 | $210 | 8.31% | | 2026 | $272 | 7.65% | | Thereafter | $3,633 | 5.00% | | **Total** | **$5,093** | **5.36%** | | Fair Value | $5,538 | N/A | - Fair value of debt instruments is estimated using quoted market prices or discounted future cash flows based on market yields[102](index=102&type=chunk)[213](index=213&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=28&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) This section confirms the effectiveness of the company's disclosure controls and procedures and reports no material changes in internal control over financial reporting during Q1 2022 [EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES](index=28&type=section&id=EVALUATION%20OF%20DISCLOSURE%20CONTROLS%20AND%20PROCEDURES) The company's principal executive and financial officers concluded that disclosure controls and procedures were effective as of March 31, 2022, ensuring timely and accurate reporting of required information - Disclosure controls and procedures were effective as of March 31, 2022[104](index=104&type=chunk)[215](index=215&type=chunk) [CHANGES IN INTERNAL CONTROLS](index=28&type=section&id=CHANGES%20IN%20INTERNAL%20CONTROLS) No material changes occurred in the company's internal control over financial reporting during the first quarter of 2022 - No material changes in internal control over financial reporting during Q1 2022[105](index=105&type=chunk)[216](index=216&type=chunk) [PART II OTHER INFORMATION](index=28&type=section&id=PART%20II%20OTHER%20INFORMATION) [ITEM 1. LEGAL PROCEEDINGS](index=28&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is involved in routine legal proceedings, none of which are expected to have a material adverse effect on its financial statements, and environmental proceedings are disclosed if monetary sanctions exceed **$1 million** - No legal proceeding is currently expected to have a material adverse effect on the company's financial statements[106](index=106&type=chunk)[217](index=217&type=chunk) - Environmental proceedings are disclosed if monetary sanctions are reasonably believed to exceed **$1 million**[106](index=106&type=chunk)[217](index=217&type=chunk) [ITEM 1A. RISK FACTORS](index=28&type=section&id=ITEM%201A.%20RISK%20FACTORS) There have been no material changes to the risk factors previously disclosed in the company's 2021 Annual Report on Form 10-K - No material changes to risk factors disclosed in the 2021 Annual Report on Form 10-K[107](index=107&type=chunk)[218](index=218&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=29&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) During Q1 2022, the company repurchased **3,197,675 common shares** for approximately **$121 million** under the 2021 Repurchase Program, leaving **$806 million** in remaining authorization Common Share Repurchases During First Quarter 2022 | Period | Total Shares Purchased | Average Price Per Share | Approximate Dollar Value of Shares That May Yet Be Purchased Under The Programs | | :-------------------- | :--------------------- | :---------------------- | :---------------------------------------------------------------------------- | | January 1 – January 31 | 1,320,787 | $37.87 | $876,697,873 | | February 1 – February 28 | 221,913 | $37.31 | $868,422,515 | | March 1 – March 31 | 1,654,975 | $37.97 | $805,603,171 | | **Total** | **3,197,675** | **$37.87** | **$805,603,171** | - The 2021 Repurchase Program authorizes repurchases up to **$1 billion**, with **$806 million** remaining as of March 31, 2022[108](index=108&type=chunk)[109](index=109&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES – NOT APPLICABLE](index=28&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES%20%E2%80%93%20NOT%20APPLICABLE) This item is not applicable to the company for the reporting period [ITEM 4. MINE SAFETY DISCLOSURES – NOT APPLICABLE](index=28&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES%20%E2%80%93%20NOT%20APPLICABLE) This item is not applicable to the company for the reporting period [ITEM 5. OTHER INFORMATION – NOT APPLICABLE](index=28&type=section&id=ITEM%205.%20OTHER%20INFORMATION%20%E2%80%93%20NOT%20APPLICABLE) This item is not applicable to the company for the reporting period [ITEM 6. EXHIBITS](index=30&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed as part of the Form 10-Q, including forms for long-term incentive plans, certifications from executive officers, and XBRL-related documents - Exhibits include forms for the 2013 Long-Term Incentive Plan (Performance Share Unit and Restricted Stock Unit Award Terms), CEO and CFO certifications, and various Inline XBRL documents[110](index=110&type=chunk)[221](index=221&type=chunk) [SIGNATURES](index=31&type=section&id=SIGNATURES) The report is signed by David M. Wold, Vice President and Chief Accounting Officer of Weyerhaeuser Company, on April 29, 2022, certifying its submission in accordance with the Securities Exchange Act of 1934 - The report was signed by David M. Wold, Vice President and Chief Accounting Officer, on April 29, 2022[111](index=111&type=chunk)[222](index=222&type=chunk)

Part I [Financial Information](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section presents the company's comprehensive financial data, including statements, notes, and management's analysis [Item 1. Financial Statements](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) The company's financial statements for the period ended September 30, 2021, reflect significant year-over-year growth in net sales and earnings, alongside a strengthened balance sheet and robust cash flow from operations Consolidated Statement of Operations Highlights (in millions, except per-share figures) | Metric | Q3 2021 | Q3 2020 | YTD 2021 | YTD 2020 | | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | $2,345 | $2,110 | $7,995 | $5,469 | | **Gross Margin** | $756 | $720 | $3,393 | $1,414 | | **Operating Income** | $649 | $510 | $3,034 | $993 | | **Net Earnings** | $482 | $283 | $2,191 | $505 | | **Earnings Per Share (diluted)** | $0.64 | $0.38 | $2.92 | $0.68 | Consolidated Balance Sheet Highlights (in millions) | Metric | Sept 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $2,326 | $495 | | **Total current assets** | $3,540 | $1,609 | | **Total assets** | $18,092 | $16,311 | | **Long-term debt, net** | $5,100 | $5,325 | | **Total liabilities** | $7,723 | $7,580 | | **Total equity** | $10,369 | $8,731 | Consolidated Statement of Cash Flows Highlights (YTD, in millions) | Metric | YTD 2021 | YTD 2020 | | :--- | :--- | :--- | | **Net cash from operations** | $2,665 | $1,085 | | **Net cash from investing activities** | $(108) | $311 | | **Net cash from financing activities** | $(606) | $(695) | | **Net change in cash** | $1,951 | $701 | [Notes to Consolidated Financial Statements](index=9&type=section&id=NOTES%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) These notes provide details on the company's business segments, significant timberland transactions, a new $1 billion share repurchase program, and debt management activities - The company's operations are divided into **three primary business segments**: Timberlands, Real Estate, Energy and Natural Resources (Real Estate & ENR), and Wood Products[15](index=15&type=chunk) Sales to Unaffiliated Customers by Segment (YTD, in millions) | Segment | YTD 2021 | YTD 2020 | | :--- | :--- | :--- | | Timberlands | $1,207 | $1,085 | | Real Estate & ENR | $285 | $246 | | Wood Products | $6,503 | $4,138 | | **Total** | **$7,995** | **$5,469** | - On September 22, 2021, the board approved a new **$1 billion share repurchase program**, terminating the previous 2019 program, with **$26 million** of shares repurchased YTD 2021[24](index=24&type=chunk) - In 2021, the company sold 145,000 acres of timberlands in Washington for **$261 million**, resulting in a **$32 million gain**, and acquired 69,000 acres in Alabama for approximately **$149 million**[48](index=48&type=chunk)[49](index=49&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=17&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS%20%28MD%26A%29) Management attributes strong year-to-date performance to robust demand for wood products, leading to significant increases in net earnings and operating income, supported by strong liquidity and a substantial rise in Adjusted EBITDA - Market conditions rebounded strongly after the initial COVID-19 impact, with growth in repair/remodel and new residential construction driving demand for wood products to record price levels through mid-2021[60](index=60&type=chunk) - YTD 2021 net sales increased by **$2.5 billion (46%)** and operating income grew by **$2.0 billion (206%)** compared to YTD 2020, primarily driven by a **$2.37 billion** increase in Wood Products sales due to higher price realizations[68](index=68&type=chunk)[69](index=69&type=chunk) Adjusted EBITDA by Segment (YTD, in millions) | Segment | YTD 2021 | YTD 2020 | | :--- | :--- | :--- | | Timberlands | $517 | $443 | | Real Estate & ENR | $247 | $218 | | Wood Products | $2,840 | $997 | | Unallocated Items | $(184) | $(114) | | **Total Adjusted EBITDA** | **$3,420** | **$1,544** | [Segment Performance](index=20&type=section&id=Segment%20Performance) Segment performance highlights significant operating income growth across Wood Products, Timberlands, and Real Estate & ENR, primarily driven by higher sales realizations and strategic asset management - Timberlands segment operating income increased by **$185 million** YTD, primarily due to an **$80 million** timber casualty loss in 2020 not recurring, a **$32 million** gain on a timberland sale in 2021, and a **30%** increase in Western log sales realizations[79](index=79&type=chunk)[76](index=76&type=chunk) - Real Estate & ENR segment operating income increased by **$102 million** YTD, mainly due to a higher average price per acre sold (**$3,632** in 2021 vs. **$1,662** in 2020), which more than offset a decrease in acres sold[85](index=85&type=chunk)[86](index=86&type=chunk) - Wood Products segment operating income surged by **$1.84 billion** YTD, driven by significantly higher sales realizations, including a **60%** increase for structural lumber and a **151%** increase for oriented strand board (OSB)[91](index=91&type=chunk)[92](index=92&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) The company significantly strengthened its liquidity position with increased cash from operations, supporting dividends, debt repayment, and share repurchases, while maintaining substantial credit availability - As of September 30, 2021, the company had over **$2.3 billion** in cash and cash equivalents and **$1.5 billion** of availability on its line of credit[102](index=102&type=chunk) - YTD net cash from operations increased by **$1.58 billion** to **$2.67 billion**, primarily due to increased cash inflows from business operations[103](index=103&type=chunk) - Key financing activities YTD included paying **$382 million** in dividends, making **$225 million** in payments on long-term debt, and repurchasing **$26 million** of common shares[106](index=106&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk exposure relates to its long-term fixed-rate debt, with its fair value exceeding principal obligations as of September 30, 2021 Summary of Long-Term Indebtedness Principal Obligations as of September 30, 2021 (in millions) | Maturity | 2021 | 2022 | 2023 | 2024 | 2025 | Thereafter | Total | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Fixed-rate debt** | $150 | $— | $1,051 | $— | $436 | $3,638 | **$5,275** | | **Fair Value** | | | | | | | **$6,467** | [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's principal executive and financial officers concluded that disclosure controls and procedures were effective as of September 30, 2021, with no material changes to internal control over financial reporting during the year-to-date period - The company's principal executive and financial officers concluded that disclosure controls and procedures were effective as of September 30, 2021[127](index=127&type=chunk) - There were no material changes to the company's internal control over financial reporting during the year-to-date 2021 period[128](index=128&type=chunk) Part II [Other Information](index=31&type=section&id=PART%20II%20OTHER%20INFORMATION) This section covers various other disclosures, including legal proceedings, risk factors, equity security sales, and required exhibits [Item 1. Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings that arise in the ordinary course of business, none of which are expected to have a material adverse effect on its financial statements - Management does not believe any current legal proceedings will have a material adverse effect on the company's financial condition or results of operations[38](index=38&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) The company highlights risks from catastrophic events, including natural disasters, geopolitical conditions, and global health pandemics such as COVID-19, which continue to pose significant uncertainties to business operations and financial results - The company is subject to risks from various catastrophic events, including fires, severe weather, geopolitical issues, and health pandemics[130](index=130&type=chunk) - The COVID-19 pandemic continues to pose a significant risk, with potential adverse effects on product demand, supply chains, and overall financial condition, and the full extent of the impact remains highly uncertain[130](index=130&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q3 2021, the company repurchased shares under its 2019 program and subsequently authorized a new **$1 billion** share repurchase program Common Share Repurchases During Third Quarter 2021 | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | July 1 - July 31 | — | $— | | August 1 - August 31 | 741,132 | $33.81 | | September 1 - September 30 | 39,096 | $33.99 | | **Total** | **780,228** | **$33.82** | - On September 22, 2021, the company's board approved a new share repurchase program authorizing up to **$1 billion** of outstanding shares and terminated the prior program[133](index=133&type=chunk) [Item 6. Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications from the Chief Executive Officer and Chief Financial Officer as required by the Securities Exchange Act of 1934, and XBRL data files