Weyerhaeuser(WY) - 2024 Q3 - Quarterly Report

PART I FINANCIAL INFORMATION Financial Statements This section presents Weyerhaeuser Company's unaudited consolidated financial statements for the third quarter and year-to-date periods, highlighting a significant decrease in net earnings Consolidated Financial Highlights | Indicator | Q3 2024 ($M) | Q3 2023 ($M) | YTD 2024 ($M) | YTD 2023 ($M) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $1,681 | $2,022 | $5,416 | $5,900 | | Operating Income | $78 | $353 | $544 | $908 | | Net Earnings | $28 | $239 | $315 | $620 | | Diluted EPS | $0.04 | $0.33 | $0.43 | $0.85 | Consolidated Balance Sheet Highlights | Account | Sept 30, 2024 ($M) | Dec 31, 2023 ($M) | | :--- | :--- | :--- | | Total Current Assets | $1,994 | $2,313 | | Total Assets | $16,668 | $16,983 | | Total Current Liabilities | $992 | $788 | | Total Liabilities | $6,741 | $6,747 | | Total Equity | $9,927 | $10,236 | Consolidated Cash Flow Highlights (Year-to-Date) | Cash Flow Activity (YTD) | 2024 ($M) | 2023 ($M) | | :--- | :--- | :--- | | Net Cash from Operations | $790 | $1,145 | | Net Cash from Investing | $(381) | $(982) | | Net Cash from Financing | $(674) | $(571) | | Net Change in Cash | $(265) | $(408) | - The company's business is organized into three segments: Timberlands (logs, timber), Real Estate, Energy and Natural Resources (Real Estate & ENR), and Wood Products (lumber, OSB, engineered wood products)[13] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses financial results, highlighting a significant decline in net sales and earnings driven by lower sales realizations and volumes, covering economic conditions, segment performance, liquidity, and non-GAAP measures Economic and Market Conditions The company's performance is heavily influenced by the U.S. housing and repair/remodel markets, which have moderated due to elevated mortgage rates, impacting lumber production - U.S. housing starts for Q3 2024 averaged 1.3 million units, a 1.1% decrease from Q2 2024, with single-family starts decreasing 4.1% to 1.0 million units[38] - The Random Lengths Framing Lumber Composite price averaged $383/MBF and the OSB Composite averaged $346/MSF in Q3 2024[38] - The company reduced its operating rates in Q3 2024, resulting in a 10.1% decrease in lumber production from Q2 2024, which includes the indefinite curtailment of the New Bern, North Carolina lumber mill[38] Consolidated Results Consolidated net sales for Q3 2024 decreased 17% to $1.68 billion, and net earnings fell 88% to $28 million, primarily due to lower Wood Products sales and an impairment charge Consolidated Financial Performance | Indicator | Q3 2024 ($M) | Q3 2023 ($M) | Change ($M) | YTD 2024 ($M) | YTD 2023 ($M) | Change ($M) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net Sales | $1,681 | $2,022 | $(341) | $5,416 | $5,900 | $(484) | | Operating Income | $78 | $353 | $(275) | $544 | $908 | $(364) | | Net Earnings | $28 | $239 | $(211) | $315 | $620 | $(305) | - Q3 2024 net sales decreased by $341 million (17%) year-over-year, mainly due to a $302 million drop in Wood Products sales from decreased prices and volumes[41] - Q3 2024 operating income fell by $275 million (78%) year-over-year, primarily due to a $252 million decrease in consolidated gross margin and a $10 million noncash impairment charge for the New Bern lumber mill[31][42] Segment Results In Q3 2024, all segments saw declines in operating income, with Timberlands, Real Estate & ENR, and especially Wood Products experiencing significant drops due to lower volumes and sales realizations Segment Net Contribution to Earnings | Segment | Q3 2024 Net Contribution to Earnings ($M) | Q3 2023 Net Contribution to Earnings ($M) | Change ($M) | | :--- | :--- | :--- | :--- | | Timberlands | $57 | $78 | $(21) | | Real Estate & ENR | $51 | $56 | $(5) | | Wood Products | $27 | $277 | $(250) | - Timberlands Q3 2024 net sales to unaffiliated customers decreased by $23 million (6%) year-over-year, driven by lower sales volumes and realizations in Western and Southern logs[50] - Real Estate & ENR Q3 2024 net sales decreased by $16 million (15%) year-over-year, as acres sold fell from 25,721 to 17,441 and the average price per acre dropped from $3,033 to $2,808[56][57] - Wood Products Q3 2024 net sales decreased by $302 million (20%) year-over-year, led by a $119 million drop in structural lumber sales and a $78 million drop in oriented strand board sales due to lower prices[58] Liquidity and Capital Resources As of September 30, 2024, Weyerhaeuser maintained a strong liquidity position with $877 million in cash and full availability on its $1.5 billion credit facility, despite decreased cash from operations - The company has $877 million in cash and cash equivalents and $1.5 billion available on its line of credit as of September 30, 2024[69] - Year-to-date 2024 net cash from operations decreased by $355 million to $790 million compared to the prior year, mainly due to lower cash flows from business operations[70] - The company repurchased 3,962,220 common shares for approximately $125 million year-to-date 2024, with $127 million remaining authorized for future repurchases as of September 30, 2024[19][77] - Anticipated capital expenditures for the full year 2024 are approximately $420 million[71] Performance and Liquidity Measures This section details non-GAAP measures, with Adjusted EBITDA for Q3 2024 significantly decreasing to $236 million, primarily driven by the Wood Products segment, and Adjusted FAD also declining Adjusted EBITDA by Segment | Adjusted EBITDA by Segment | Q3 2024 ($M) | Q3 2023 ($M) | YTD 2024 ($M) | YTD 2023 ($M) | | :--- | :--- | :--- | :--- | :--- | | Timberlands | $122 | $143 | $413 | $503 | | Real Estate & ENR | $77 | $94 | $273 | $253 | | Wood Products | $91 | $328 | $500 | $746 | | Total Adjusted EBITDA | $236 | $509 | $998 | $1,373 | Adjusted Funds Available for Distribution (YTD) | Measure | YTD 2024 ($M) | YTD 2023 ($M) | | :--- | :--- | :--- | | Net Cash from Operations | $790 | $1,145 | | Capital Expenditures | $(267) | $(251) | | Adjusted FAD | $498 | $894 | - Net earnings per diluted share before special items was $0.05 for Q3 2024, compared to reported diluted EPS of $0.04, with the adjustment relating to restructuring and impairment charges[86] Quantitative and Qualitative Disclosures About Market Risk The company discloses its exposure to market risk, primarily from changes in interest rates affecting its long-term debt, which had a carrying value of $5.116 billion as of September 30, 2024 Long-Term Debt Maturity | Debt Maturity | Principal Amount ($M) | | :--- | :--- | | 2025 | $210 | | 2026 | $1,022 | | 2027 | $300 | | 2028 | $250 | | Thereafter | $3,333 | | Total | $5,115 | - The total carrying value of long-term debt obligations as of September 30, 2024, was approximately $5.1 billion, with a fair value of approximately $5.15 billion[24][87] Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2024, following the implementation of a new ERP system - The company's principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of September 30, 2024[89] - A new enterprise resource planning (ERP) system was implemented in Q3 2024, leading to modifications in internal controls over financial reporting[90] PART II OTHER INFORMATION Legal Proceedings The company is not currently a party to any legal proceeding that management believes could have a material adverse effect on its financial condition or results of operations - There are no legal proceedings that are expected to have a material adverse effect on the company's financial statements[26] Risk Factors There have been no material changes to the risk factors previously disclosed in the company's 2023 Annual Report on Form 10-K - No material changes to risk factors were reported since the 2023 Annual Report on Form 10-K[92] Unregistered Sales of Equity Securities and Use of Proceeds During Q3 2024, the company repurchased 820,706 shares of common stock for approximately $26 million, with $127 million remaining authorized for future repurchases Common Stock Repurchases (Q3 2024) | Period | Total Shares Purchased | Average Price Paid ($) | | :--- | :--- | :--- | | July 2024 | 293,051 | $29.33 | | August 2024 | 279,733 | $30.72 | | September 2024 | 247,922 | $32.12 | | Q3 2024 Total | 820,706 | $30.64 | - As of September 30, 2024, the company had a remaining authorization of $127 million for future stock repurchases[92] Other Information During the third quarter of 2024, no director or officer adopted, modified, or terminated any Rule 10b5-1 trading plans or other non-Rule 10b5-1 trading arrangements - No directors or officers adopted, modified, or terminated Rule 10b5-1 trading plans during Q3 2024[92] Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files