EX-99.2 3 wy2019q1ex-992.htm EXHIBIT 99.2 Exhibit


Weyerhaeuser Company
 
 
Exhibit 99.2
 
Q1.2019 Analyst Package
 
 

 
Preliminary results (unaudited)
 
 
 
 
 
 
 
 
Consolidated Statement of Operations
 
 
 
 
 
 
 
Q4
 
Q1
in millions
December 31,
2018
 
March 31,
2019
 
March 31,
2018
Net sales
$
1,636

 
$
1,643

 
$
1,865

Costs of sales
1,345

 
1,322

 
1,348

Gross margin
291

 
321

 
517

Selling expenses
22

 
21

 
23

General and administrative expenses
82

 
89

 
78

Research and development expenses
2

 
1

 
2

Other operating costs, net
8

 
36

 
10

Operating income
177

 
174

 
404

Non-operating pension and other postretirement benefit costs
(218
)
 
(470
)
 
(24
)
Interest income and other
24

 
10

 
12

Interest expense, net of capitalized interest
(97
)
 
(107
)
 
(93
)
Earnings (loss) before income taxes
(114
)
 
(393
)
 
299

Income taxes
21

 
104

 
(30
)
Net earnings (loss)
$
(93
)
 
$
(289
)
 
$
269

 
Per Share Information
 
 
Q4
 
Q1
 
December 31,
2018
 
March 31,
2019
 
March 31,
2018
Earnings (loss) per share, basic and diluted
$
(0.12
)
 
$
(0.39
)
 
$
0.35

Dividends paid per common share
$
0.34

 
$
0.34

 
$
0.32

Weighted average shares outstanding (in thousands):
 
 
 
 
 
Basic
748,694

 
746,603

 
756,815

Diluted
750,025

 
746,603

 
759,462

Common shares outstanding at end of period (in thousands)
746,391

 
744,767

 
756,700

 
Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization (Adjusted EBITDA)*
 
 
Q4
 
Q1
in millions
December 31,
2018
 
March 31,
2019
 
March 31,
2018
Net earnings (loss)
$
(93
)
 
$
(289
)
 
$
269

Non-operating pension and other postretirement benefit costs
218

 
470

 
24

Interest income and other
(24
)
 
(10
)
 
(12
)
Interest expense, net of capitalized interest
97

 
107

 
93

Income taxes
(21
)
 
(104
)
 
30

Operating income
177

 
174

 
404

Depreciation, depletion and amortization
125

 
123

 
120

Basis of real estate sold
44

 
48

 
12

Special items included in operating income
—

 
20

 
8

Adjusted EBITDA*
$
346

 
$
365

 
$
544

 
 
 
 
 
 
*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.


Page 1 of 8



Weyerhaeuser Company
 
 
Total Company Statistics
 
Q1.2019 Analyst Package
 
 

 
Preliminary results (unaudited)
 
 
 
 
 
 
 
 
Special Items Included in Net Earnings (Income Tax Affected)
 
 
 
 
 
 
 
Q4
 
Q1
in millions
December 31,
2018
 
March 31,
2019
 
March 31,
2018
Net earnings (loss)
$
(93
)
 
$
(289
)
 
$
269

Gain on sale of nonstrategic assets
(10
)
 
—

 
—

Legal charge
—

 
15

 
—

Environmental remediation charge
—

 
—

 
21

Pension settlement charges
152

 
345

 
—

Product remediation charges (recoveries), net
—

 
—

 
(15
)
Tax adjustment
21

 
—

 
—

Early extinguishment of debt charge(1)
—

 
9

 
—

Net earnings before special items
$
70

 
$
80

 
$
275

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q4
 
Q1
 
December 31,
2018
 
March 31,
2019
 
March 31,
2018
Net earnings (loss) per diluted share
$
(0.12
)
 
$
(0.39
)
 
$
0.35

Gain on sale of nonstrategic assets
(0.01
)
 
—

 
—

Legal charge
—

 
0.02

 
—

Environmental remediation charge
—

 
—

 
0.03

Pension settlement charges
0.20

 
0.47

 
—

Product remediation charges (recoveries), net
—

 
—

 
(0.02
)
Tax adjustment
0.03

 
—

 
—

Early extinguishment of debt charge(1)
—

 
0.01

 
—

Net earnings per diluted share before special items
$
0.10

 
$
0.11

 
$
0.36

 
 
 
 
 
 
Selected Total Company Items
 
 
Q4
 
Q1
in millions
December 31,
2018
 
March 31,
2019
 
March 31,
2018
Pension and postretirement costs:
 
 
 
 
 
Pension and postretirement service costs
$
9

 
$
8

 
$
10

Non-operating pension and other postretirement benefit costs
218

 
470

 
24

Total company pension and postretirement costs
$
227

 
$
478

 
$
34

 
 
 
 
 
 
(1) During first quarter 2019, we recorded a $12 million pretax ($9 million after-tax) charge related to the early extinguishment of debt.


Page 2 of 8



Weyerhaeuser Company
 
 

 
Q1.2019 Analyst Package
 
 
Preliminary results (unaudited)
 
 
 
 
 
Consolidated Balance Sheet
 
 
 
 
 
 
 
December 31,
2018
 
March 31,
2019
 
March 31,
2018
in millions
ASSETS
 
 
 
 
 
Current assets:
 
 
 
 
 
Cash and cash equivalents
$
334

 
$
259

 
$
598

Receivables, less discounts and allowances
337

 
398

 
481

Receivables for taxes
137

 
163

 
24

Inventories
389

 
451

 
445

Prepaid expenses and other current assets
152

 
141

 
118

Current restricted financial investments held by variable interest entities
253

 
362

 
253

Total current assets
1,602

 
1,774

 
1,919

Property and equipment, net
1,857

 
1,917

 
1,573

Construction in progress
136

 
102

 
275

Timber and timberlands at cost, less depletion
12,671

 
12,586

 
12,888

Minerals and mineral rights, less depletion
294

 
291

 
306

Deferred tax assets
15

 
18

 
244

Other assets
312

 
444

 
318

Restricted financial investments held by variable interest entities
362

 
—

 
362

Total assets
$
17,249

 
$
17,132

 
$
17,885

 
 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 
 
Current liabilities:
 
 
 
 
 
Current maturities of long-term debt
$
500

 
$
—

 
$
—

Current debt (nonrecourse to the company) held by variable interest entities
302

 
302

 
209

Borrowings on line of credit
425

 
245

 
—

Accounts payable
222

 
243

 
245

Accrued liabilities
490

 
411

 
457

Total current liabilities
1,939

 
1,201

 
911

Long-term debt
5,419

 
6,156

 
5,928

Long-term debt (nonrecourse to the company) held by variable interest entities
—

 
—

 
302

Deferred tax liabilities
43

 
34

 
—

Deferred pension and other postretirement benefits
527

 
542

 
1,454

Other liabilities
275

 
398

 
299

Total liabilities
8,203

 
8,331

 
8,894

Total equity
9,046

 
8,801

 
8,991

Total liabilities and equity
$
17,249

 
$
17,132

 
$
17,885


Page 3 of 8



Weyerhaeuser Company
 
 

 
Q1.2019 Analyst Package
 
 
Preliminary results (unaudited)
 
 
 
 
 
Consolidated Statement of Cash Flows
 
 
 
 
 
 
 
Q4
 
Q1
in millions
December 31,
2018
 
March 31,
2019
 
March 31,
2018
Cash flows from operations:
 
 
 
 
 
Net earnings (loss)
$
(93
)
 
$
(289
)
 
$
269

Noncash charges (credits) earnings:
 
 
 
 
 
Depreciation, depletion and amortization
125

 
123

 
120

Basis of real estate sold
44

 
48

 
12

Deferred income taxes, net
(39
)
 
(123
)
 
10

Pension and other postretirement benefits
227

 
478

 
34

Share-based compensation expense
11

 
9

 
9

Change in:
 
 
 
 
 
Receivables, less allowances
117

 
(77
)
 
(83
)
Receivables and payables for taxes
6

 
(31
)
 
5

Inventories
(5
)
 
(60
)
 
(66
)
Prepaid expenses and other current assets
(11
)
 
(5
)
 
(5
)
Accounts payable and accrued liabilities
(21
)
 
(82
)
 
(173
)
Pension and postretirement benefit contributions and payments
(26
)
 
(14
)
 
(16
)
Other
(43
)
 
9

 
20

Net cash from (used in) operations
$
292

 
$
(14
)
 
$
136

Cash flows from investing activities:
 
 
 
 
 
Capital expenditures for property and equipment
$
(130
)
 
$
(41
)
 
$
(61
)
Capital expenditures for timberlands reforestation
(14
)
 
(18
)
 
(20
)
Proceeds from note receivable held by variable interest entities
—

 
253

 
—

Other
(32
)
 
18

 
5

Cash from (used in) investing activities
$
(176
)
 
$
212

 
$
(76
)
Cash flows from financing activities:
 
 
 
 
 
Cash dividends on common shares
$
(254
)
 
$
(254
)
 
$
(242
)
Net proceeds from issuance of long-term debt
—

 
739

 
—

Payments of long-term debt
—

 
(512
)
 
(62
)
Proceeds from borrowing on line of credit
425

 
245

 
—

Payments on line of credit
—

 
(425
)
 
—

Payments on debt held by variable interest entities
(209
)
 
—

 
—

Proceeds from exercise of stock options
—

 
2

 
25

Repurchases of common shares
(93
)
 
(60
)
 
—

Other
1

 
(8
)
 
(7
)
Cash from (used in) financing activities
$
(130
)
 
$
(273
)
 
$
(286
)
 
 
 
 
 
 
Net change in cash and cash equivalents
$
(14
)
 
$
(75
)
 
$
(226
)
Cash and cash equivalents at beginning of period
348

 
334

 
824

Cash and cash equivalents at end of period
$
334

 
$
259

 
$
598

 
 
 
 
 
 
Cash paid during the period for:
 
 
 
 
 
Interest, net of amount capitalized
$
73

 
$
127

 
$
105

Income taxes
$
15

 
$
50

 
$
17


Page 4 of 8



Weyerhaeuser Company
 
Timberlands Segment
 
Q1.2019 Analyst Package
 
 
 

 
Preliminary results (unaudited)
 
 
Segment Statement of Operations (1)
in millions
 
Q4.2018
 
Q1.2019
 
Q1.2018
Sales to unaffiliated customers
$
448

 
$
431

 
$
490

Intersegment sales
128

 
125

 
142

Total net sales
576

 
556

 
632

Costs of sales
446

 
413

 
422

Gross margin
130

 
143

 
210

Selling expenses
—

 
1

 
1

General and administrative expenses
24

 
22

 
22

Research and development expenses
1

 
1

 
2

Other operating income, net
(2
)
 
(1
)
 
(4
)
Operating income and Net contribution to earnings
$
107

 
$
120

 
$
189

(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 will 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 period presentation with the current period.
 
Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization*
in millions
 
Q4.2018
 
Q1.2019
 
Q1.2018
Operating income
$
107

 
$
120

 
$
189

Depreciation, depletion and amortization
81

 
73

 
79

Adjusted EBITDA*
$
188

 
$
193

 
$
268

*See definition of Adjusted EBITDA (a non-GAAP measure) on page 1.
 
 
 
 
 
Selected Segment Items
in millions
 
Q4.2018
 
Q1.2019
 
Q1.2018
Total decrease (increase) in working capital(2)
$
(7
)
 
$
(24
)
 
$
(40
)
Cash spent for capital expenditures
$
(35
)
 
$
(26
)
 
$
(28
)
(2) 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(3)
 
Q4.2018
 
Q1.2019
 
Q1.2018
Third Party 
Net Sales
(millions)
Delivered logs:
 
 
 
 
 
West
$
221

 
$
205

 
$
266

South
153

 
159

 
157

North
29

 
29

 
25

Total delivered logs
403

 
393

 
448

Stumpage and pay-as-cut timber
20

 
9

 
15

Recreational and other lease revenue
15

 
15

 
14

Other revenue
10

 
14

 
13

Total
$
448

 
$
431

 
$
490

Delivered Logs
Third Party Sales
Realizations (per ton)
West
$
112.58

 
$
106.92

 
$
131.59

South
$
34.38

 
$
35.35

 
$
34.83

North
$
57.27

 
$
59.68

 
$
60.79

Delivered Logs
Third Party Sales
Volumes (tons, thousands)
West
1,958

 
1,920

 
2,019

South
4,417

 
4,499

 
4,510

North
497

 
494

 
404

Fee Harvest Volumes
(tons, thousands)
West
2,463

 
2,385

 
2,443

South
6,849

 
6,492

 
6,751

North
620

 
627

 
549

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

Page 5 of 8



Weyerhaeuser Company
Real Estate, Energy & Natural Resources Segment
 
Q1.2019 Analyst Package
 
Preliminary results (unaudited)
 
 
 

 
 
 
 
Segment Statement of Operations
 
in millions
 
Q4.2018
 
Q1.2019
 
Q1.2018
Net sales
$
102

 
$
118

 
$
51

Costs of sales
52

 
56

 
19

Gross margin
50

 
62

 
32

General and administrative expenses
7

 
7

 
7

Operating income
43

 
55

 
25

Interest income and other
1

 
—

 
—

Net contribution to earnings
$
44

 
$
55

 
$
25

 
Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization*
 
in millions
 
Q4.2018
 
Q1.2019
 
Q1.2018
Operating income
$
43

 
$
55

 
$
25

Depreciation, depletion and amortization
3

 
3

 
4

Basis of real estate sold
44

 
48

 
12

Adjusted EBITDA*
$
90

 
$
106

 
$
41

*See definition of Adjusted EBITDA (a non-GAAP measure) on page 1.
 
 
 
 
 
Selected Segment Items
 
in millions
 
Q4.2018
 
Q1.2019
 
Q1.2018
Cash spent for capital expenditures
$
—

 
$
—

 
$
—

 
Segment Statistics
 
 
Q4.2018
 
Q1.2019
 
Q1.2018
Net Sales
(millions)
Real Estate
$
81

 
$
96

 
$
34

Energy and Natural Resources
21

 
22

 
17

Total
$
102

 
$
118

 
$
51

Acres Sold
Real Estate
31,833

 
38,834

 
21,771

Price per Acre
Real Estate
$
2,479

 
$
2,424

 
$
1,539

Basis as a Percent of Real Estate Net Sales
Real Estate
54
%
 
50
%
 
35
%

Page 6 of 8



Weyerhaeuser Company
 
 
Wood Products Segment
 
Q1.2019 Analyst Package
 
 
 

 
Preliminary results (unaudited)
 
 
 
 
 
 
 
 
 
Segment Statement of Operations (1)
in millions
 
Q4.2018
 
Q1.2019
 
Q1.2018
Net sales
$
1,087

 
$
1,094

 
$
1,324

Costs of sales
1,003

 
967

 
1,020

Gross margin
84

 
127

 
304

Selling expenses
20

 
19

 
21

General and administrative expenses
33

 
35

 
34

Research and development expenses
1

 
—

 
—

Other operating costs (income), net
4

 
4

 
(21
)
Operating income and Net contribution to earnings
$
26

 
$
69

 
$
270

 
(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 will 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 period presentation with the current period.
 
Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization*
in millions
 
Q4.2018
 
Q1.2019
 
Q1.2018
Operating income
$
26

 
$
69

 
$
270

Depreciation, depletion and amortization
40

 
46

 
36

Special items
—

 
—

 
(20
)
Adjusted EBITDA*
$
66

 
$
115

 
$
286

*See definition of Adjusted EBITDA (a non-GAAP measure) on page 1.
 
 
 
 
 
Segment Special Items Included in Net Contribution to Earnings (Pretax)  
in millions
 
Q4.2018
 
Q1.2019
 
Q1.2018
Product remediation (charges) recoveries, net
$
—

 
$
—

 
$
20

 
Selected Segment Items
in millions
 
Q4.2018
 
Q1.2019
 
Q1.2018
Total decrease (increase) in working capital(2)
$
83

 
$
(155
)
 
$
(226
)
Cash spent for capital expenditures
$
(107
)
 
$
(30
)
 
$
(52
)
(2) Represents the change in prepaid assets, accounts receivable, accounts payable, accrued liabilities and inventory for the Wood Products segment.
 
Segment Statistics
in millions, except for third party sales realizations
Q4.2018
 
Q1.2019
 
Q1.2018
Structural Lumber
(volumes presented
in board feet)
Third party net sales
$
427

 
$
444

 
$
569

Third party sales realizations
$
388

 
$
392

 
$
498

Third party sales volumes(3)
1,099

 
1,133

 
1,140

Production volumes
1,095

 
1,145

 
1,160

Engineered Solid
Section
(volumes presented
in cubic feet)
Third party net sales
$
121

 
$
116

 
$
129

Third party sales realizations
$
2,139

 
$
2,218

 
$
2,088

Third party sales volumes(3)
5.7

 
5.2

 
6.2

Production volumes
5.3

 
5.9

 
6.3

Engineered
I-joists
(volumes presented
in lineal feet)
Third party net sales
$
75

 
$
70

 
$
78

Third party sales realizations
$
1,696

 
$
1,709

 
$
1,585

Third party sales volumes(3)
44

 
41

 
49

Production volumes
37

 
44

 
56

Oriented Strand
Board
(volumes presented
in square feet 3/8")
Third party net sales
$
167

 
$
160

 
$
232

Third party sales realizations
$
252

 
$
223

 
$
314

Third party sales volumes(3)
665

 
717

 
739

Production volumes
691

 
729

 
734

Softwood Plywood
(volumes presented
in square feet 3/8")
Third party net sales
$
42

 
$
44

 
$
50

Third party sales realizations
$
396

 
$
383

 
$
438

Third party sales volumes(3)
104

 
115

 
115

Production volumes
96

 
98

 
97

Medium Density
Fiberboard
(volumes presented
in square feet 3/4")
Third party net sales
$
39

 
$
38

 
$
43

Third party sales realizations
$
835

 
$
846

 
$
839

Third party sales volumes(3)
47

 
44

 
51

Production volumes
52

 
45

 
50

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

Page 7 of 8



Weyerhaeuser Company
 
 
Unallocated Items
 
Q1.2019 Analyst Package
 
 

 
Preliminary results (unaudited)
 
 
 
 
 
 
 
Unallocated items are gains or charges not related to, or allocated to, an individual operating segment. They include all or a portion of items such as share-based compensation, pension and postretirement costs, elimination of intersegment profit in inventory and LIFO, foreign exchange transaction gains and losses, interest income and other as well as legacy obligations.
 
Contribution to Earnings
 
in millions
Q4.2018
 
Q1.2019
 
Q1.2018
Unallocated corporate function and variable compensation expense
$
(28
)
 
$
(19
)
 
$
(18
)
Liability classified share-based compensation
8

 
(4
)
 
—

Foreign exchange gain (loss)
5

 
(3
)
 
(2
)
Elimination of intersegment profit in inventory and LIFO
24

 
(5
)
 
(21
)
Other
(8
)
 
(39
)
 
(39
)
Operating income (loss)
1

 
(70
)
 
(80
)
Non-operating pension and other postretirement benefit costs
(218
)
 
(470
)
 
(24
)
Interest income and other
23

 
10

 
12

Net contribution to earnings (loss)
$
(194
)
 
$
(530
)
 
$
(92
)
 
Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization*
 
in millions
Q4.2018
 
Q1.2019
 
Q1.2018
Operating income (loss)
$
1

 
$
(70
)
 
$
(80
)
Depreciation, depletion and amortization
1

 
1

 
1

Special items
—

 
20

 
28

Adjusted EBITDA*
$
2

 
$
(49
)
 
$
(51
)
*See definition of Adjusted EBITDA (a non-GAAP measure) on page 1.
 
 
 
 
 
 
Unallocated Special Items Included in Net Contribution to Earnings (Pretax)
 
in millions
Q4.2018
 
Q1.2019
 
Q1.2018
Environmental remediation insurance charge
$
—

 
$
—

 
$
(28
)
Legal charge
—

 
(20
)
 
—

Special items included in operating income (loss)
—

 
(20
)
 
(28
)
Pension settlement charges(1)
(200
)
 
(455
)
—

—

Gain on sale of nonstrategic assets
13

 
—

 
—

Special items included in net contribution to earnings (loss)
$
(187
)
 
$
(475
)
 
$
(28
)
(1) First quarter 2019 includes a noncash pension settlement charge related to the transfer of pension assets and liabilities through the purchase of a group annuity contract. Fourth quarter 2018 includes a noncash pension settlement charge related to a lump sum offer for our U.S. qualified pension plan.
 
Unallocated Selected Items
 
in millions
Q4.2018
 
Q1.2019
 
Q1.2018
Cash spent for capital expenditures
$
(2
)
 
$
(3
)
 
$
(1
)

Page 8 of 8