Weyerhaeuser reports third quarter results

October 25, 2019 3:05 AM

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.

Weyerhaeuser Company logo. (PRNewsFoto/Weyerhaeuser Company)

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 HIGHLIGHTS	2019	2019	2018
(millions, except per share data)	Q2	Q3	Q3
Net sales	$1,692	$1,671	$1,910
Net earnings	$128	$99	$255
Net earnings per diluted share	$0.17	$0.13	$0.34
Weighted average shares outstanding, diluted	746	747	757
Net earnings before special items(1)(2)	$123	$59	$214
Net earnings per diluted share before special items(1)	$0.16	$0.08	$0.28
Adjusted 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.

TIMBERLANDS

FINANCIAL HIGHLIGHTS	2019	2019
(millions)	Q2	Q3	Change
Net 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 RESOURCES

FINANCIAL HIGHLIGHTS	2019	2019
(millions)	Q2	Q3	Change
Net 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 PRODUCTS

FINANCIAL HIGHLIGHTS	2019	2019
(millions)	Q2	Q3	Change
Net sales	$1,210	$1,204	($6)
Contribution to pretax earnings	$81	$143	$62
Pretax 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 WEYERHAEUSER

Weyerhaeuser 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 INFORMATION

Weyerhaeuser 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 STATEMENTS

This news release contains statements concerning the company's future results and performance that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934, including with respect to the following: our earnings, earnings before special items, Adjusted EBITDA; average log sale realizations; log sale volumes; 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; and
other matters described under "Risk Factors" in our annual reports on Form 10-K, as well as those set forth from time to time in our other public statements and other reports and filings with the Securities and Exchange Commission.

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

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

RECONCILIATION OF ADJUSTED EBITDA TO NET EARNINGS (LOSS)

We reconcile Adjusted EBITDA to net earnings (loss) for the consolidated company and to operating income (loss) for the business segments, as those are the most directly comparable U.S. GAAP measures for each.

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

(millions)	Timberlands		Real Estate & ENR		Wood Products		Unallocated Items		Total
Adjusted EBITDA by Segment:
Net earnings									$	128
Interest expense, net of capitalized interest										91
Income taxes										(37)
Net contribution to earnings (loss)	$	102	$	35	$	81	$	(36)	$	182
Non-operating pension and other postretirement benefit costs(1)		—		—		—		10		10
Interest income and other		—		—		—		(6)		(6)
Operating income (loss)		102		35		81		(32)		186
Depreciation, depletion and amortization		73		3		47		1		124
Basis of real estate sold		—		33		—		—		33
Adjusted 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)	Timberlands		Real Estate & ENR		Wood Products		Unallocated Items		Total
Adjusted EBITDA by Segment:
Net earnings									$	99
Interest expense, net of capitalized interest										91
Income taxes										3
Net contribution to earnings (loss)	$	72	$	32	$	143	$	(54)	$	193
Non-operating pension and other postretirement benefit costs		—		—		—		15		15
Interest income and other		—		—		—		(6)		(6)
Operating income (loss)		72		32		143		(45)		202
Depreciation, depletion and amortization		82		4		48		1		135
Basis of real estate sold		—		24		—		—		24
Special items included in operating income (loss)(1)		—		—		(68)		15		(53)
Adjusted EBITDA	$	154	$	60	$	123	$	(29)	$	308


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

The table below reconciles Adjusted EBITDA for the quarter ended September 30, 2018:

(millions)	Timberlands		Real Estate & ENR		Wood Products		Unallocated Items		Total
Adjusted EBITDA by Segment:
Net earnings									$	255
Interest expense, net of capitalized interest										93
Income taxes(1)										(15)
Net contribution to earnings (loss)	$	126	$	36	$	213	$	(42)	$	333
Non-operating pension and other postretirement benefit costs		—		—		—		17		17
Interest income and other		—		—		—		(13)		(13)
Operating income (loss)		126		36		213		(38)		337
Depreciation, depletion and amortization		80		4		37		1		122
Basis of real estate sold		—		46		—		—		46
Adjusted 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 EARNINGS

We reconcile net earnings before special items to net earnings and net earnings per diluted share before special items to net earnings per diluted share, as those are the most directly comparable U.S. GAAP measures. We believe the measures provide meaningful supplemental information for investors about our operating performance, better facilitate period to period comparisons, and are widely used by analysts, lenders, rating agencies and other interested parties.

The table below reconciles net earnings before special items to net earnings:

	2019	2019	2018
(millions)	Q2	Q3	Q3
Net earnings	$128	$99	$255
Legal charge	—	11	—
Pension settlement charge	(5)	—	—
Product remediation recovery	—	(51)	—
Tax adjustment	—	—	(41)
Net earnings before special items	$123	$59	$214

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

	2019	2019	2018
	Q2	Q3	Q3
Net earnings per diluted share	$0.17	$0.13	$0.34
Legal 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 Company												Exhibit 99.2
Q3.2019 Analyst Package Preliminary results (unaudited)

Consolidated Statement of Operations

	Q1		Q2		Q3				Year-to-Date
in millions	March 31, 2019		June 30, 2019		September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
Net sales	$	1,643	$	1,692	$	1,671	$	1,910	$	5,006	$	5,840
Costs of sales		1,322		1,390		1,399		1,452		4,111		4,247
Gross margin		321		302		272		458		895		1,593
Selling expenses		21		21		20		20		62		66
General and administrative expenses		89		80		85		78		254		236
Research and development expenses		1		2		1		2		4		6
Product remediation recoveries, net		—		—		(68)		—		(68)		—
Other operating costs, net		36		13		32		21		81		68
Operating income		174		186		202		337		562		1,217
Non-operating pension and other postretirement benefit costs		(470)		(10)		(15)		(17)		(495)		(54)
Interest income and other		10		6		6		13		22		36
Interest expense, net of capitalized interest		(107)		(91)		(91)		(93)		(289)		(278)
Earnings (loss) before income taxes		(393)		91		102		240		(200)		921
Income taxes		104		37		(3)		15		138		(80)
Net earnings (loss)	$	(289)	$	128	$	99	$	255	$	(62)	$	841

Per Share Information

	Q1		Q2		Q3				Year-to-Date
	March 31, 2019		June 30, 2019		September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
Earnings (loss) per share, basic and diluted	$	(0.39)	$	0.17	$	0.13	$	0.34	$	(0.08)	$	1.11
Dividends paid per common share	$	0.34	$	0.34	$	0.34	$	0.34	$	1.02	$	0.98
Weighted average shares outstanding (in thousands):
Basic		746,603		745,486		745,626		754,986		745,901		756,531
Diluted		746,603		746,232		746,514		757,389		745,901		759,116
Common shares outstanding at end of period (in thousands)		744,767		744,905		745,071		749,199		745,071		749,199

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

	Q1		Q2		Q3				Year-to-Date
in millions	March 31, 2019		June 30, 2019		September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
Net earnings (loss)	$	(289)	$	128	$	99	$	255	$	(62)	$	841
Non-operating pension and other postretirement benefit costs		470		10		15		17		495		54
Interest income and other		(10)		(6)		(6)		(13)		(22)		(36)
Interest expense, net of capitalized interest		107		91		91		93		289		278
Income taxes		(104)		(37)		3		(15)		(138)		80
Operating income		174		186		202		337		562		1,217
Depreciation, depletion and amortization		123		124		135		122		382		361
Basis of real estate sold		48		33		24		46		105		80
Special items included in operating income		20		—		(53)		—		(33)		28
Adjusted 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 Company													Total Company Statistics
Q3.2019 Analyst Package Preliminary results (unaudited)

Special Items Included in Net Earnings (Income Tax Affected)

		Q1		Q2		Q3				Year-to-Date
in millions		March 31, 2019		June 30, 2019		September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
Net earnings (loss)		$	(289)	$	128	$	99	$	255	$	(62)	$	841
Early extinguishment of debt charge(1)			9		—		—		—		9		—
Environmental remediation charge			—		—		—		—		—		21
Legal charges			15		—		11		—		26		—
Pension settlement charges			345		(5)		—		—		340		—
Product remediation recoveries, net			—		—		(51)		—		(51)		—
Tax adjustment			—		—		—		(41)		—		(41)
Net earnings before special items(2)		$	80	$	123	$	59	$	214	$	262	$	821

		Q1		Q2		Q3				Year-to-Date
		March 31, 2019		June 30, 2019		September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
Net earnings (loss) per diluted share		$	(0.39)	$	0.17	$	0.13	$	0.34	$	(0.08)	$	1.11
Early extinguishment of debt charge(1)			0.01		—		—		—		0.01		—
Environmental remediation charge			—		—		—		—		—		0.03
Legal charges			0.02		—		0.02		—		0.04		—
Pension settlement charges			0.47		(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 Items

		Q1		Q2		Q3				Year-to-Date
in millions		March 31, 2019		June 30, 2019		September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
Pension and postretirement costs:
Pension and postretirement service costs		$	8	$	8	$	8	$	10	$	24	$	28
Non-operating pension and other postretirement benefit costs			470		10		15		17		495		54
Total company pension and postretirement costs		$	478	$	18	$	23	$	27	$	519	$	82

Weyerhaeuser Company
Q3.2019 Analyst Package Preliminary results (unaudited)

Consolidated Balance Sheet

in millions	March 31, 2019		June 30, 2019		September 30, 2019		December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	259	$	212	$	153	$	334
Receivables, less discounts and allowances		398		408		368		337
Receivables for taxes		163		157		149		137
Inventories		451		425		393		389
Assets held for sale		—		—		251		—
Prepaid expenses and other current assets		141		132		141		152
Current restricted financial investments held by variable interest entities		362		362		362		253
Total current assets		1,774		1,696		1,817		1,602
Property and equipment, net		1,917		1,901		1,860		1,857
Construction in progress		102		134		187		136
Timber and timberlands at cost, less depletion		12,586		12,516		12,192		12,671
Minerals and mineral rights, less depletion		291		288		284		294
Deferred tax assets		18		33		31		15
Other assets		444		461		461		312
Restricted financial investments held by variable interest entities		—		—		—		362
Total assets	$	17,132	$	17,029	$	16,832	$	17,249

LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt	$	—	$	—	$	—	$	500
Current debt (nonrecourse to the company) held by variable interest entities		302		302		—		302
Borrowings on line of credit		245		140		440		425
Accounts payable		243		271		242		222
Accrued liabilities		411		510		487		490
Total current liabilities		1,201		1,223		1,169		1,939
Long-term debt, net		6,156		6,153		6,150		5,419
Deferred tax liabilities		34		17		25		43
Deferred pension and other postretirement benefits		542		515		506		527
Other liabilities		398		397		383		275
Total liabilities		8,331		8,305		8,233		8,203
Total equity		8,801		8,724		8,599		9,046
Total liabilities and equity	$	17,132	$	17,029	$	16,832	$	17,249

Weyerhaeuser Company
Q3.2019 Analyst Package Preliminary results (unaudited)

Consolidated Statement of Cash Flows

	Q1		Q2		Q3				Year-to-Date
in millions	March 31, 2019		June 30, 2019		September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
Cash flows from operations:
Net earnings (loss)	$	(289)	$	128	$	99	$	255	$	(62)	$	841
Noncash charges to earnings (loss):
Depreciation, depletion and amortization		123		124		135		122		382		361
Basis of real estate sold		48		33		24		46		105		80
Deferred income taxes, net		(123)		(43)		2		86		(164)		111
Pension and other postretirement benefits		478		18		23		27		519		82
Share-based compensation expense		9		7		7		13		23		31
Change in:
Receivables, less allowances		(77)		(10)		40		46		(47)		(55)
Receivables and payables for taxes		(31)		6		7		(124)		(18)		(109)
Inventories		(60)		28		30		27		(2)		(9)
Prepaid expenses and other current assets		(5)		8		2		(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)
Other		9		(17)		(10)		(19)		(18)		(18)
Net cash from operations	$	(14)	$	396	$	292	$	87	$	674	$	820
Cash 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 entities		253		—		—		—		253		—
Other		18		1		1		(10)		20		19
Net 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 debt		739		—		—		—		739		—
Payments of long-term debt		(512)		—		—		—		(512)		(62)
Proceeds from borrowings on line of credit		245		140		490		—		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 options		2		2		4		4		8		52
Repurchases 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 period		334		259		212		901		334		824
Cash and cash equivalents at end of period	$	259	$	212	$	153	$	348	$	153	$	348

Cash paid during the period for:
Interest, net of amount capitalized	$	127	$	59	$	124	$	113	$	310	$	285
Income taxes	$	50	$	1	$	(5)	$	22	$	46	$	80

Weyerhaeuser Company													Timberlands Segment
Q3.2019 Analyst Package Preliminary results (unaudited)

Segment Statement of Operations (1)

in millions		Q1.2019		Q2.2019		Q3.2019		Q3.2018		YTD.2019		YTD.2018
Sales to unaffiliated customers		$	431	$	401	$	398	$	459	$	1,230	$	1,425
Intersegment sales			125		131		125		128		381		409
Total net sales			556		532		523		587		1,611		1,834
Costs of sales			413		405		429		436		1,247		1,289
Gross margin			143		127		94		151		364		545
Selling expenses			1		—		—		1		1		2
General and administrative expenses			22		25		24		23		71		69
Research and development expenses			1		1		1		2		3		5
Other 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 millions		Q1.2019		Q2.2019		Q3.2019		Q3.2018		YTD.2019		YTD.2018
Operating income		$	120	$	102	$	72	$	126	$	294	$	476
Depreciation, depletion and amortization			73		73		82		80		228		238
Adjusted EBITDA(2)		$	193	$	175	$	154	$	206	$	522	$	714

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

Selected Segment Items

in millions		Q1.2019		Q2.2019		Q3.2019		Q3.2018		YTD.2019		YTD.2018
Total 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)

			Q1.2019		Q2.2019		Q3.2019		Q3.2018		YTD.2019		YTD.2018
Third Party		Delivered logs:
Net Sales		West	$	205	$	194	$	172	$	238	$	571	$	766
(millions)		South		159		156		168		157		483		472
		North		29		17		24		25		70		70
		Total delivered logs		393		367		364		420		1,124		1,308
		Stumpage and pay-as-cut timber		9		10		10		13		29		39
		Recreational and other lease revenue		15		15		15		16		45		44
		Other revenue		14		9		9		10		32		34
		Total	$	431	$	401	$	398	$	459	$	1,230	$	1,425
Delivered Logs		West	$	106.92	$	104.07	$	99.07	$	125.67	$	103.50	$	129.91
Third Party Sales		South	$	35.35	$	35.45	$	35.03	$	34.88	$	35.27	$	34.75
Realizations (per ton)		North	$	59.68	$	62.10	$	57.35	$	60.97	$	59.37	$	62.00
Delivered Logs		West		1,920		1,864		1,729		1,897		5,513		5,900
Third Party Sales		South		4,499		4,400		4,795		4,521		13,694		13,591
Volumes (tons, thousands)		North		494		263		429		414		1,186		1,131
Fee Harvest Volumes		West		2,385		2,455		2,183		2,305		7,023		7,108
(tons, thousands)		South		6,492		6,367		6,802		6,478		19,661		19,859
		North		627		378		560		537		1,565		1,509

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

Weyerhaeuser Company													Real Estate, Energy & Natural Resources Segment
Q3.2019 Analyst Package Preliminary results (unaudited)

Segment Statement of Operations

in millions		Q1.2019		Q2.2019		Q3.2019		Q3.2018		YTD.2019		YTD.2018
Net sales		$	118	$	81	$	69	$	96	$	268	$	205
Costs of sales			56		39		32		54		127		103
Gross margin			62		42		37		42		141		102
General and administrative expenses			7		7		6		6		20		19
Other operating income, net			—		—		(1)		—		(1)		—
Operating income and Net contribution to earnings		$	55	$	35	$	32	$	36	$	122	$	83

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

in millions		Q1.2019		Q2.2019		Q3.2019		Q3.2018		YTD.2019		YTD.2018
Operating income		$	55	$	35	$	32	$	36	$	122	$	83
Depreciation, depletion and amortization			3		3		4		4		10		11
Basis of real estate sold			48		33		24		46		105		80
Adjusted EBITDA(1)		$	106	$	71	$	60	$	86	$	237	$	174

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

Selected Segment Items

in millions		Q1.2019		Q2.2019		Q3.2019		Q3.2018		YTD.2019		YTD.2018
Cash spent for capital expenditures		$	—	$	—	$	—	$	—	$	—	$	—

Segment Statistics

		Q1.2019			Q2.2019			Q3.2019			Q3.2018			YTD.2019			YTD.2018
Net Sales	Real Estate	$	96		$	59		$	45		$	76		$	200		$	148
(millions)	Energy and Natural Resources		22			22			24			20			68			57
	Total	$	118		$	81		$	69		$	96		$	268		$	205
Acres Sold	Real Estate		38,834			47,031			18,057			61,681			103,922			99,742
Price per Acre	Real Estate	$	2,424		$	1,063		$	2,415		$	1,209		$	1,806		$	1,452
Basis as a Percent of Real Estate Net Sales	Real Estate		50	%		56	%		53	%		61	%		53	%		54	%

Weyerhaeuser Company													Wood Products Segment
Q3.2019 Analyst Package Preliminary results (unaudited)

Segment Statement of Operations (1)

in millions		Q1.2019		Q2.2019		Q3.2019		Q3.2018		YTD.2019		YTD.2018
Net sales		$	1,094	$	1,210	$	1,204	$	1,355	$	3,508	$	4,210
Costs of sales			967		1,070		1,067		1,080		3,104		3,225
Gross margin			127		140		137		275		404		985
Selling expenses			19		20		20		18		59		61
General and administrative expenses			35		34		35		32		104		97
Research and development expenses			—		1		—		—		1		1
Product remediation recoveries, net			—		—		(68)		—		(68)		—
Other operating costs, net			4		4		7		12		15		14
Operating 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 millions		Q1.2019		Q2.2019		Q3.2019		Q3.2018		YTD.2019		YTD.2018
Operating income		$	69	$	81	$	143	$	213	$	293	$	812
Depreciation, depletion and amortization			46		47		48		37		141		109
Special 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 millions		Q1.2019		Q2.2019		Q3.2019		Q3.2018		YTD.2019		YTD.2018
Product remediation recoveries, net		$	—	$	—	$	68	$	—	$	68	$	—


Selected Segment Items

in millions		Q1.2019		Q2.2019		Q3.2019		Q3.2018		YTD.2019		YTD.2018
Total 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 Statistics

in millions, except for third party sales realizations		Q1.2019		Q2.2019		Q3.2019		Q3.2018		YTD.2019		YTD.2018
Structural Lumber	Third party net sales	$	444	$	495	$	487	$	581	$	1,426	$	1,831
(volumes presented	Third party sales realizations	$	392	$	388	$	389	$	491	$	390	$	511
in board feet)	Third party sales volumes(4)		1,133		1,274		1,253		1,184		3,660		3,585
	Production volumes		1,145		1,193		1,189		1,106		3,527		3,446
Engineered Solid	Third party net sales	$	116	$	134	$	138	$	132	$	388	$	400
Section	Third party sales realizations	$	2,218	$	2,214	$	2,188	$	2,208	$	2,206	$	2,150
(volumes presented	Third party sales volumes(4)		5.2		6.1		6.3		6.0		17.6		18.6
in cubic feet)	Production volumes		5.9		6.0		5.3		6.3		17.2		19.0
Engineered	Third party net sales	$	70	$	86	$	90	$	91	$	246	$	261
I-joists	Third party sales realizations	$	1,709	$	1,662	$	1,665	$	1,668	$	1,676	$	1,629
(volumes presented	Third party sales volumes(4)		41		52		54		54		147		160
in lineal feet)	Production volumes		44		47		48		46		139		154
Oriented Strand	Third party net sales	$	160	$	156	$	159	$	215	$	475	$	724
Board	Third party sales realizations	$	223	$	213	$	214	$	321	$	217	$	335
(volumes presented	Third party sales volumes(4)		717		733		740		669		2,190		2,162
in square feet 3/8")	Production volumes		729		736		747		665		2,212		2,146
Softwood Plywood	Third party net sales	$	44	$	44	$	42	$	53	$	130	$	158
(volumes presented	Third party sales realizations	$	383	$	380	$	346	$	439	$	369	$	446
in square feet 3/8")	Third party sales volumes(4)		115		115		121		122		351		355
	Production volumes		98		104		100		106		302		308
Medium Density	Third party net sales	$	38	$	45	$	44	$	48	$	127	$	138
Fiberboard	Third party sales realizations	$	846	$	833	$	831	$	828	$	836	$	835
(volumes presented	Third party sales volumes(4)		44		55		53		59		152		165
in square feet 3/4")	Production volumes		45		61		47		61		153		168

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

Weyerhaeuser Company													Unallocated Items
Q3.2019 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		Q1.2019		Q2.2019		Q3.2019		Q3.2018		YTD.2019		YTD.2018
Unallocated corporate function and variable compensation expense		$	(19)	$	(12)	$	(19)	$	(19)	$	(50)	$	(56)
Liability classified share-based compensation			(4)		—		(1)		4		(5)		2
Foreign 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 other			10		6		6		13		22		36
Net contribution to earnings (loss)		$	(530)	$	(36)	$	(54)	$	(42)	$	(620)	$	(172)

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

in millions		Q1.2019		Q2.2019		Q3.2019		Q3.2018		YTD.2019		YTD.2018
Operating income (loss)		$	(70)	$	(32)	$	(45)	$	(38)	$	(147)	$	(154)
Depreciation, depletion and amortization			1		1		1		1		3		3
Special items			20		—		15		—		35		28
Adjusted 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 millions		Q1.2019		Q2.2019		Q3.2019		Q3.2018		YTD.2019		YTD.2018
Environmental 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 Items

in millions		Q1.2019		Q2.2019		Q3.2019		Q3.2018		YTD.2019		YTD.2018
Cash spent for capital expenditures		$	(3)	$	(6)	$	(5)	$	(1)	$	(14)	$	(2)

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Weyerhaeuser reports third quarter results

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