What changed in this filing

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Item 1. Financial Statements

2023-07-28 compared with 2023-04-28 · 258 added, 113 removed, 725 unchanged (34% of the section changed)

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DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES

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DOLLAR AMOUNTS IN MILLIONS

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Changes in unamortized actuarial loss, net of tax expense of $ 2 , $ 24 , $ 4 and $ 29

Changes in unamortized net prior service credit, net of tax expense of $ 0 and $ 1

Changes in unamortized net prior service credit, net of tax (expense) benefit of $ 1 , $ 0 , $ 1 and ($ 1 )

Total other comprehensive income

6 unchanged sentences

Cash and cash equivalents

Short-term investments (Note 9)

Receivables, net

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issued and outstanding:

732,507 thousand shares at March 31, 2023 and 732,794 thousand shares at December 31, 2022

730,850 thousand shares at June 30, 2023 and 732,794 thousand shares at December 31, 2022

Other capital

5 unchanged sentences

CONSOLIDATED STATEMENT OF CASH FLOWS

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DOLLAR AMOUNTS IN MILLIONS

3 unchanged sentences

Basis of real estate sold

Deferred income taxes, net

Pension and other post-employment benefits (Note 6)

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Capital expenditures for timberlands reforestation

Acquisition of timberlands

Acquisition of timberlands (Note 15)

Purchase of short-term investments

Net cash from investing activities

3 unchanged sentences

Payments on long-term debt (Note 8)

Proceeds from exercise of stock options

Repurchases of common shares (Note 4)

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Cash, cash equivalents and restricted cash at end of period

Cash paid (received) during the period for:

Cash paid during the period for:

Interest, net of amount capitalized of $ 3 and $ 3

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DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES

36 unchanged sentences

OTHER OPERATING COSTS, NET

TIMBERLAND ACQUISITIONS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE QUARTERS ENDED MARCH 31, 2023 AND 2022

FOR THE QUARTERS AND YEAR-TO-DATE PERIODS ENDED JUNE 30, 2023 AND 2022

BASIS O F PRESENTATION

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Real Estate, Energy and Natural Resources (Real Estate & ENR) –

Real Estate (sales of timberlands) and ENR (rights to explore for and extract hard minerals, construction materials, natural gas, and wind and solar resources) and

Real Estate (sales of timberlands) and ENR (rights to explore for and extract hard minerals, construction materials, natural gas production, and wind and solar);

Wood Products –

2 unchanged sentences

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DOLLAR AMOUNTS IN MILLIONS

17 unchanged sentences

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DOLLAR AMOUNTS IN MILLIONS

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Our basic and diluted earnings per share were:

$ 0.21 during first quarter 2023 and

$ 1.03 during first quarter 2022.

$ 0.31 during second quarter 2023 and $ 0.52 during year-to-date 2023;

$ 1.06 during second quarter 2022 and $ 2.09 during year-to-date 2022.

Basic earnings per share is net earnings divided by the weighted average number of our outstanding common shares, including stock equivalent units where there is no circumstance under which those shares would not be issued.

1 unchanged sentence

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SHARES IN THOUSANDS

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SHARES IN THOUSANDS

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Concurrently, the board terminated the remaining repurchase authorization under the share repurchase program approved by the board in February 2019 (the 2019 Repurchase Program).

We repurchased 1,115,560 common shares for approximately $ 35 million (including transaction fees) under the 2021 Repurchase Program during first quarter 2023.

As of March 31, 2023, we had remaining authorization of $ 342 million fo r future share repurchases.

During first quarter 2022, we repurchased 3,197,675 common shares for approximately $ 121 million (including transaction fees) under the 2021 Repurchase Program.

We repurchased 1,689,874 common shares for approximately $ 50 million (including transaction fees) under the 2021 Repurchase Program during second quarter 2023 and 2,805,434 common shares for approximately $ 85 million under the 2021 Repurchase Program during year-to-date 2023.

As of June 30, 2023, we had remaining authorization of $ 292 million for future share repurchases.

During year-to-date 2022 , we repurchased 6,982,462 common shares for approximately $ 259 million (including transaction fees) under the 2021 Repurchase Program.

All common stock repurchases under the 2021 Repurchase Program were made in open-market transactions.

1 unchanged sentence

We record a liability for repurchases that have not yet been settled as of period end.

There were 27,139 unsettled shares (approximately $ 1 million) as of March 31, 2023 and 223,548 unsettled shares (approximately $ 7 million) as of December 31, 2022.

There were no unsettled shares as of June 30, 2023 , and 223,548 unsettled shares (approximately $ 7 million) as of December 31, 2022.

Inventories include raw materials, work-in-process and finished goods, as well as materials and supplies.

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DOLLAR AMOUNTS IN MILLIONS

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DOLLAR AMOUNTS IN MILLIONS

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For certain assets, primarily private equity funds, the information available consists of net asset values as of an interim date, cash flows between the interim date and the end of the year and market events.

We update the year-end estimated fair value of pension plan assets in the second quarter of each year to incorporate final net asset values reflected in financial statements received after we have filed our Annual Report on Form 10-K.

We update the year-end estimated fair value of pension plan assets in second quarter of each year to incorporate final net asset values reflected in financial statements received after we have filed our Annual Report on Form 10-K.

No adjustments to the fair value of assets or projected benefit obligations were necessary during second quarter 2023.

ACCRU ED LIABILITIES

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LONG-TERM DEBT AND LINE OF CREDIT

In July 2023, we repaid $ 118 million of our 7.125 % notes at maturity.

In May 2023, we completed an offering of debt securities by issuing $ 750 million of 4.750 percent notes due in May 2026 .

The net proceeds after deducting the discount, underwriting fees and issuance costs were $ 743 million.

Of these total net proceeds, $ 664 million was invested in short-term investments classified as held-to-maturity securities.

In March 2022, we completed a series of transactions that lowered our weighted average interest rate and extended our weighted average maturity by issuing $ 900 million in notes and using the net proceeds plus cash on hand to close cash tender offers for $ 931 million of principal in higher interest rate notes.

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Borrowings will bear interest at a floating rate based on either the adjusted term Secured Overnight Financing Rate (SOFR) plus a spread or a mutually agreed upon base rate plus a spread.

We ha d no ou tstanding borrowings on our credit facility as of March 31, 2023 and December 31, 2022 .

We ha d no outstanding borrowings o n our credit facility as of June 30, 2023 and December 31, 2022 .

FAIR VALUE OF FINANCIAL INSTRUMENTS

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This is primarily due to the short-term nature of these instruments and the allowance for doubtful accounts.

As of June 30, 2023, we had $ 665 million in short-term investments classified as held-to-maturity debt securities, which consist of a mixture of term deposits and Treasury bills.

We did no t have any short-term investments classified as held-to-maturity debt securities as of December 31, 2022.

These short-term investments mature within one year and are recorded in "Short-term investments" on our Consolidated Balance Sheet .

We record held-to-maturity debt securities at amortized cost, which approximates fair value.

LEGAL PROCEEDINGS, C OMMITMENTS AND CONTINGENCIES

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have been notified that we may be a potentially responsible party related to the cleanup of other hazardous waste sites for which proceedings have not yet been initiated.

As of March 31, 2023, our total accrual for future estimated remediation costs on active Superfund sites and other sites for which we are potentially responsible was approximately $ 65 million.

As of June 30, 2023, our total accrual for future estimated remediation costs on active Superfund sites and other sites for which we are potentially responsible was approximately $ 75 million.

These amounts are recorded in "Accrued liabilities" and "Other liabilities" on our Consolidated Balance Sheet .

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DOLLAR AMOUNTS IN MILLIONS

Balance at beginning of period

Other comprehensive income (loss) before reclassifications

Other comprehensive (loss) income before reclassifications

Amounts reclassified from accumulated other comprehensive loss to earnings (2)

3 unchanged sentences

Balance at beginning of period

Other comprehensive income before reclassifications

Other comprehensive income (loss) before reclassifications

Amounts reclassified from accumulated other comprehensive loss to earnings (2)

4 unchanged sentences

Translation adjustments

Total other comprehensive income

Total other comprehensive income (loss)

Balance at end of period

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(1) Amounts presented are net of tax.

(2) Amounts of actuarial loss and prior service (cost) credit are components of net periodic benefit cost (credit).

(2) Amounts of actuarial loss and prior service (cost) credit are components of net periodic benefit cost.

Pension and Other Post-Employment Benefit Plans .

SHARE-B ASED COMPENSATION

Share-based compensation activity during first quarter 2023 included the following:

Share-based compensation activity during year-to-date 2023 included the following:

SHARES IN THOUSANDS

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DOLLAR AMOUNTS IN MILLIONS

Foreign exchange losses (gains), net

Environmental remediation charges

Foreign exchange gains, net

Litigation expense, net

6 unchanged sentences

federal statutory tax rate of 21 pe rcent primarily due to state and foreign income taxes and tax benefits associated with our nontaxable REIT earnings.

TIMBERLAND ACQUISITIONS

On July 19, 2023, we completed the purchase of 22 thousand acres of Mississippi timberlands for approximately $ 60 million.

On May 18, 2022, we completed the purchase of 81 thousand acres of North and South Carolina timberlands for approximately $ 265 million.

We recorded $ 263 million of timberland assets in “Timber and timberlands at cost, less depletion”

and $ 2 million of related assets in “Property and equipment, net”

on our Consolidated Balance Sheet .

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)

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our plans, strategies, intentions and expectations;

estimates of invested pension plan assets;

our capital structure and the sufficiency of our liquidity position to meet future cash requirements;

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and evolution of emerging renewable energy and carbon-related markets.

While underlying longer-term fundamentals remain favorable for construction of new housing in the U.S., home sales and building activity have slowed due in part to higher mortgage interest rates, reduced affordability and general macroeconomic conditions.

Over the past year, home sales and building activity slowed due in part to higher mortgage interest rates, reduced affordability and general macroeconomic conditions.

During second quarter 2023, market conditions improved in response to a stabilization in mortgage rates and increased homebuilder sentiment.

On a seasonally adjusted annual basis, as reported by the U.S.

Census Bureau, housing starts for first quarter 2023 averaged 1.4 million units, a 0.2 percent decrease from fourth quarter 2022.

Single-family starts averaged 841 thousand units, a 1.0 percent decrease from fourth quarter 2022.

Multi-family starts averaged 555 thousand units in first quarter 2023, which was a 1.1 percent increase from fourth quarter 2022.

Sales of newly built, single-family homes averaged a seasonally adjusted annual rate of 651 thousand units for first quarter 2023, an increase of 9.0 percent from the prior quarter.

Census Bureau, housing starts for second quarter 2023 averaged 1.45 million units, a 4.5 percent increase from first quarter 2023.

Single-family starts averaged 929 thousand units, an 11.4 percent increase from first quarter 2023.

Multi-family starts averaged 518 thousand units in second quarter 2023, which was a 6.1 percent decrease from first quarter 2023.

Sales of newly built, single-family homes averaged a seasonally adjusted annual rate of 694 thousand units for second quarter 2023, an increase of 8.8 percent from the prior quarter.

Over the medium to long-term, we expect a favorable U.S.

housing construction market supported by strong demographics in the key homebuying age cohorts, a decade of underbuilding and a historically low housing inventory.

Repair and remodeling expenditures decreased by 1.3 percent from fourth quarter 2022 to first quarter 2023 according to the Census Bureau Advance Retail Spending report.

Repair and remodeling expenditures decreased by 1.9 percent from first quarter 2023 to second quarter 2023 according to the Census Bureau Advance Retail Spending report.

Do-it-yourself activity has been returning to more normalized levels while professionally contracted activities have benefited from larger projects and increases in home equity levels.

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housing stock, with a median age of 43 years.

wood product markets, demand continued to be affected by softening in the housing market and a more uncertain economic environment during first quarter 2023.

The Random Lengths Framing Lumber Composite price averaged $412/MBF and the OSB Composite averaged $297/MSF in first quarter 2023.

Over the course of the first quarter, prices increased from $380/MBF to $417/MBF for lumber and from $288/MSF to $297/MSF for OSB.

In Western log markets, Douglas fir sawlog prices fell by 6.3 percent in first quarter 2023 compared with fourth quarter 2022 as reported by RISI Log Lines based on Weyerhaeuser’s sales mix.

Overall, domestic prices in the West fell moderately as a result of lower lumber prices, partially offset by continued constraints in log supply.

In the South, delivered sawlog prices decreased by 2.9 percent in first quarter 2023 compared to fourth quarter 2022 and declined 0.8 percent from first quarter 2022 as reported by Timber Mart-South, as log and haul capacity constraints eased somewhat.

wood product markets, demand in early second quarter 2023 continued to be affected by softening in the housing market and ongoing macroeconomic uncertainty.

As the quarter progressed, improvements in the housing market, combined with supply concerns resulting from a series of temporary and permanent mill curtailments and wildfires in Canada, led to moderately tighter markets.

The Random Lengths Framing Lumber Composite price averaged $409/MBF and the OSB Composite averaged $360/MSF in second quarter 2023.

Over the course of the second quarter, prices increased from $417/MBF to $438/MBF for lumber and from $297/MSF to $432/MSF for OSB.

In Western log markets, Douglas fir sawlog prices rose by 0.4 percent in second quarter 2023 compared with first quarter 2023, as reported by RISI Log Lines based on Weyerhaeuser’s sales mix.

Overall, domestic prices in the West stayed consistent, with lower lumber prices offset by continued constraints in log supply.

In the South, delivered sawlog prices remained flat in second quarter 2023 compared to first quarter 2023 and declined 1.5 percent from second quarter 2022 as reported by TimberMart-South, as log and haul capacity constraints eased somewhat.

Currency exchange rates, available supply from other countries and trade policy affect our export businesses.

During first quarter 2023, end use demand softened in export markets, partially offset by continued disruptions in global log and lumber supply.

In Japan, total housing starts increased 3.0 percent year to date through February compared to the same period in 2022, while the key Post and Beam segment saw a 5.8 percent decrease.

During second quarter 2023, end use demand softened in export markets, partially offset by continued disruptions in global log and lumber supply.

In Japan, total housing starts decreased 1.6 percent year to date through May compared to the same period in 2022, while the key Post and Beam segment saw a 5.9 percent decrease.

An increase in lumber imports to Japan from Europe placed downward pressure on market conditions.

China demand has improved from low levels but remains subdued due to general economic conditions.

However, constrained supply from other countries, particularly Russia, supported demand from U.S.

China demand has improved from low levels late in 2022 but remains subdued due to general economic conditions and increased supply of logs from New Zealand.

Interest rates affect our business primarily through their impact on mortgage rates and housing affordability, their general impact on the economy, and their influence on our capital management activities.

1 unchanged sentence

Federal Reserve, the overall condition of the economy and fluctuations in financial markets are all factors that influence long-term interest rates.

30-year mortgage rates, which are correlated with long-term interest rates, decreased from 6.4 percent at the end of fourth quarter 2022 to 6.3 percent at the end of first quarter 2023.

While mortgage rates fell over the quarter and from a high of over 7 percent in November 2022, the rapid increase in mortgage rates since the end of 2021 has had a negative impact on home affordability and reduced demand for homebuying.

A modest reduction in rates in January and February resulted in a moderate increase in buyer interest and sales for both new and existing homes.

30-year mortgage rates, which are correlated with long-term interest rates, increased from 6.3 percent at the end of first quarter 2023 to 6.7 percent at the end of second quarter 2023.

While mortgage rates remain elevated, home buyers have responded favorably to even small reductions.

Builders have also been able to offset higher mortgage rates through discounts, loan subsidies and modifying product offerings such as home sizes and finishes.

Higher rates have also locked-in many existing homeowners from selling, reducing inventories of existing homes for sale which has led to increased demand for available new homes.

Increased inflation affects the cost of our operations across each of our business segments, including costs for raw materials, transportation, energy and labor.

The Consumer Price Index increased 5.0 percent year over year in March 2023, primarily due to demand and supply for goods and services, fluctuations in labor markets, and monetary policy set by the U.S.

Federal Reserve.

The Consumer Price Index increased 3.0 percent year over year in June 2023, which is markedly down from its peak of over 9.0 percent in June 2022.

While we can offset some of the impacts of inflation through our sales activities, our operational excellence initiatives and our procurement practices, not all of the costs associated with inflation can be fully mitigated or passed on to the consumer.

The condition of the labor market affects all of our businesses as it relates to our ability to attract and retain employees and contractors.

The unemployment rate of 3.5 percent in March 2023 remained near historically low levels and was unchanged from the end of fourth quarter 2022.

Labor force participation has increased to 62.6 percent in March 2023, from 62.4 percent in March 2022, but this remains below pre-pandemic levels of over 63 percent.

The unemployment rate of 3.6 percent in June 2023 remained near historically low levels and increased 0.1 percent from the end of first quarter 2023.

Labor force participation has increased to 62.6 percent in June 2023, from 62.2 percent in June 2022, approaching pre-Pandemic levels of 63 percent.

Governments and businesses across the globe are taking action on climate change and are making significant commitments towards decarbonizing operations and reducing greenhouse gas emissions to net zero.

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CONSOLIDATED RESULTS

How We Did First Quarter 2023

How We Did Second Quarter 2023 and Year-to-Date 2023

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DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES

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Earnings per share, basic and diluted

Comparing First Quarter 2023 with First Quarter 2022

Comparing Second Quarter 2023 with Second Quarter 2022

Net sales decreased $976 million –

33 percent –

primarily due to a $1,201 million decrease in Wood Products sales to unaffiliated customers attributable to decreased sales realizations for structural lumber, oriented strand board and softwood plywood, as well as decreased sales volumes for complementary building products, engineered I-joists, engineered solid section and medium density fiberboard.

primarily due to an $841 million decrease in Wood Products sales to unaffiliated customers attributable to decreased sales volumes and sales realizations across most product lines, as well as a $98 million decrease in Timberlands net sales to unaffiliated customers primarily attributable to decreased sales realizations and sales volumes in the Western region.

Costs of sales

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15 percent –

primarily due to a $117 million decrease in Wood Products attributable to decreased sales volumes for complementary building products, engineered I-joists, engineered solid section and medium density fiberboard.

primarily due to decreased sales volumes and raw material costs across most product lines and decreased freight costs within our Wood Products segment, as well as decreased export log freight costs and third-party log purchases within our Timberlands segment.

Operating income

1 unchanged sentence

70 percent –

primarily due to a $1,096 million decrease in consolidated gross margin (see discussion of components above).

primarily due to a $715 million decrease in consolidated gross margin, as discussed above.

Net earnings decreased $558 million –

1 unchanged sentence

primarily due to the $728 million decrease in operating income, as discussed above.

This decrease in operating income was partially offset by a $276 million pretax charge ($207 million after-tax) related to the early extinguishment of debt in first quarter 2022 (refer to Note 8:

Long-Term Debt and Line of Credit ), as well as a $187 million decrease in income tax expense (refer to Income Taxes ).

How We Did First Quarter 2023

This decrease in operating income was partially offset by a $159 million decrease in income tax expense (refer to Income Taxes ).

Comparing Year-to-Date 2023 with Year-to-Date 2022

Net sales decreased $2,207 million –

36 percent –

primarily due to a $2,042 million decrease in Wood Products sales to unaffiliated customers attributable to decreased sales realizations and sales volumes across most product lines, as well as a $101 million decrease in Timberlands sales to unaffiliated customers attributable to decreased sales realizations in the Western region, partially offset by increased sales volumes in the Southern region and increased stumpage sales.

Costs of sales

Costs of sales decreased $396 million –

12 percent –

primarily due to decreased sales volumes and raw material costs across most product lines within our Wood Products segment, as well as decreased freight costs.

Operating income

Operating income decreased $1,836 million –

77 percent –

primarily due to a $1,811 million decrease in consolidated gross margin, as discussed above.

Net earnings decreased $1,178 million –

76 percent –

primarily due to the $1,836 million decrease in operating income, as discussed above.

This decrease was partially offset by a $346 million decrease in income tax expense (refer to Income Taxes ), as well as a $276 million pretax charge ($207 million after-tax) related to the early extinguishment of debt in first quarter 2022 (refer to Note 8:

Long-Term Debt and Line of Credit ).

How We Did Second Quarter 2023 and Year-to-Date 2023

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DOLLAR AMOUNTS IN MILLIONS

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(1) Other Timberlands sales include sales of seeds and seedlings from our nursery operations as well as wood chips.

Comparing First Quarter 2023 with First Quarter 2022

Comparing Second Quarter 2023 with Second Quarter 2022

Net sales to unaffiliated customers

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19 percent –

primarily due to a $30 million decrease in Western log sales attributable to a 15 percent decrease in sales realizations, partially offset by a 4 percent increase in sales volumes.

This decrease was partially offset by a $14 million increase in Southern log sales attributable to a 6 percent increase in sales volumes and a 3 percent increase in sales realizations, as well as a $7 million increase in stumpage and pay-as-cut timber sales attributable to increased log volumes.

primarily due to a $102 million decrease in Western log sales attributable to a 29 percent decrease in sales realizations and a 7 percent decrease in sales volumes, partially offset by a $4 million increase in stumpage and pay-as-cut timber sales.

Intersegment sales

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4 percent –

primarily due to a 9 percent decrease in sales realizations, as well as a 3 percent decrease in sales volumes.

primarily due to a 9 percent decrease in sales realizations, partially offset by a 6 percent increase in sales volumes.

Costs of sales

Costs of sales increased $38 million –

Costs of sales decreased $56 million –

11 percent –

primarily due to increased logging and hauling costs, as well as increased sales volumes, as discussed above.

primarily due to decreased Western third-party log purchases and export log freight costs.

Operating income and Net contribution to earnings

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primarily due to the change in the components of gross margin, as discussed above.

Comparing Year-to-Date 2023 with Year-to-Date 2022

Net sales to unaffiliated customers

Net sales to unaffiliated customers decreased $101 million –

10 percent –

primarily due to a $132 million decrease in Western log sales attributable to a 22 percent decrease in sales realizations, partially offset by a $16 million increase in Southern log sales, attributable to a 5 percent increase in sales volumes, and an $11 million increase in stumpage and pay-as-cut timber sales.

Intersegment sales

Intersegment sales decreased $25 million –

8 percent –

primarily due to a 9 percent decrease in sales realizations, partially offset by a 2 percent increase in sales volumes.

Costs of sales

Costs of sales decreased $18 million –

2 percent –

primarily due to decreased Western third-party log purchases, partially offset by increased logging and hauling costs as well as increased Southern log sales volumes.

Operating income and Net contribution to earnings

Operating income and net contribution to earnings decreased $111 million –

33 percent –

primarily due to the change in the components of gross margin, as discussed above.

Third-Party Log Sales Volumes and Fee Harvest Volumes

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VOLUMES IN THOUSANDS

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REAL ESTATE, ENERGY A ND NATURAL RESOURCES

How We Did First Quarter 2023

How We Did Second Quarter 2023 and Year-to-Date 2023

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DOLLAR AMOUNTS IN MILLIONS

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In any period, the average sales price per acre will vary based on the location and physical characteristics of parcels sold.

Comparing First Quarter 2023 with First Quarter 2022

Comparing Second Quarter 2023 with Second Quarter 2022

Net sales decreased $37 million –

32 percent –

primarily due to a decrease in acres sold, as well as a decrease in the average price per acre sold.

primarily due to a decrease in acres sold, partially offset by an increase in the average price per acre sold.

Costs of sales

Costs of sales remained consistent due to the mix of acres sold.

Costs of sales decreased $24 million –

53 percent –

primarily due to a decrease in acres sold, as well as a decrease in basis per acre sold.

Operating income and Net contribution to earnings

2 unchanged sentences

primarily due to the change in the components of gross margin, as discussed above.

Comparing Year-to-Date 2023 with Year-to-Date 2022

Net sales decreased $64 million –

26 percent –

primarily due to a decrease in acres sold, partially offset by an increase in the average price per acre sold.

Costs of sales

Cost of sales decreased $24 million –

28 percent –

primarily due to a decrease in acres sold, partially offset by an increase in basis per acre sold.

Operating income and Net contribution to earnings

Operating income and net contribution to earnings decreased $41 million –

28 percent –

primarily due to the change in the components of gross margin, as discussed above.

REAL ESTATE SALES STATISTICS

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Average price per acre

WOOD PRODUCTS

How We Did First Quarter 2023

How We Did Second Quarter 2023 and Year-to-Date 2023

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DOLLAR AMOUNTS IN MILLIONS

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(1) Other products produced sales include wood chips, other byproducts and third-party residual log sales from our Canadian Forestlands operations.

Comparing First Quarter 2023 with First Quarter 2022

Comparing Second Quarter 2023 with Second Quarter 2022

Net sales decreased $841 million –

1 unchanged sentence

a $425 million decrease in structural lumber sales attributable to a 38 percent decrease in sales realizations, as well as a 7 percent decrease in sales volumes;

a $356 million decrease in oriented strand board sales attributable to a 66 percent decrease in sales realizations, partially offset by an 8 percent increase in sales volumes;

a $52 million decrease in complementary building products sales attributable to decreased sales volumes;

a $50 million decrease in engineered I-joists sales attributable to a 41 percent decrease in sales volumes, partially offset by a 7 percent increase in sales realizations;

a $27 million decrease in engineered solid section sales attributable to an 18 percent decrease in sales volumes, partially offset by a 6 percent increase in sales realizations;

a $17 million decrease in softwood plywood sales attributable to a 37 percent decrease in sales realizations, partially offset by an 11 percent increase in sales volumes and

a $10 million decrease in medium density fiberboard sales attributable to a 34 percent decrease in sales volumes, partially offset by a 21 percent increase in sales realizations.

a $282 million decrease in oriented strand board sales attributable to a 56 percent decrease in sales realizations, as well as a 2 percent decrease in sales volumes;

a $42 million decrease in engineered I-joists sales attributable to a 15 percent decrease in sales realizations, as well as a 10 percent decrease in sales volumes;

a $35 million decrease in complementary building products sales attributable to decreased sales realizations and volumes for steel, concrete and cedar, as well as decreased sales volumes for siding and trim;

a $32 million decrease in engineered solid section sales attributable to an 8 percent decrease in sales realizations, as well as a 6 percent decrease in sales volumes;

an $11 million decrease in medium density fiberboard sales attributable to a 31 percent decrease in sales volumes, partially offset by a 14 percent increase in sales realizations;

a $9 million decrease in softwood plywood sales attributable to a 36 percent decrease in sales realizations, partially offset by a 34 percent increase in sales volumes and

a $5 million decrease in other products produced attributable to decreased sales volumes.

Costs of sales

1 unchanged sentence

14 percent –

primarily due to decreased sales volumes for complementary building products, engineered I-joists, engineered solid section and medium density fiberboard, as discussed above.

primarily due to decreased sales volumes and raw material costs across most product lines, as well as decreased freight costs.

Operating income and Net contribution to earnings

2 unchanged sentences

primarily due to the change in the components of gross margin, as discussed above.

Comparing Year-to-Date 2023 with Year-to-Date 2022

Net sales decreased $2,042 million –

42 percent –

a $1,116 million decrease in structural lumber sales attributable to a 48 percent decrease in sales realizations, as well as a 4 percent decrease in sales volumes;

a $638 million decrease in oriented strand board sales attributable to a 61 percent decrease in sales realizations, partially offset by a 3 percent increase in sales volumes;

a $92 million decrease in engineered I-joist sales attributable to a 25 percent decrease in sales volumes, as well as a 6 percent decrease in sales realizations;

an $87 million decrease in complementary building products sales attributable to decreased sales realizations and volumes for steel, concrete and cedar, as well as decreased sales volumes for siding and trim;

a $59 million decrease in engineered solid section sales attributable to a 12 percent decrease in sales volumes, as well as a 2 percent decrease in sales realizations;

a $26 million decrease in softwood plywood sales attributable to a 37 percent decrease in sales realizations, partially offset by a 22 percent increase in sales volumes and

a $21 million decrease in medium density fiberboard sales attributable to a 33 percent decrease in sales volumes, partially offset by an 18 percent increase in sales realizations.

Costs of sales

Costs of sales decreased $313 million –

12 percent –

primarily due to decreased sales volumes and raw material costs across most product lines, as well as decreased freight costs.

Operating income and Net contribution to earnings

Operating income and net contribution to earnings decreased $1,732 million –

85 percent –

primarily due to the change in the components of gross margin, as discussed above.

Third-Party Sales Volumes

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Liability classified share-based compensation

Foreign exchange loss

Foreign exchange gain (loss)

Elimination of intersegment profit in inventory and LIFO

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Net charge to earnings

Comparing First Quarter 2023 with First Quarter 2022

Comparing Second Quarter 2023 with Second Quarter 2022

Net charge to earnings increased $5 million –

11 percent –

primarily due to:

a $15 million increase in elimination of intersegment profit in inventory and LIFO and

a $5 million increase in other, primarily due to increased charges for environmental remediation.

These changes were partially offset by a $17 million increase in interest income and other due to an increase in the interest rate on our cash and short-term investment accounts.

Comparing Year-to-Date 2023 with Year-to-Date 2022

Net charge to earnings decreased $83 million –

52 percent –

primarily due to a $68 million decrease in elimination of intersegment profit in inventory and LIFO and a $13 million increase in interest income and other due to an increase in the interest rate on our cash and investment accounts.

primarily due to a $53 million decrease in elimination of intersegment profit in inventory and LIFO, as well as a $30 million increase in interest income and other due to an increase in the interest rate on our cash and short-term investment accounts.

INTEREST EXPENSE

Our interest expense, net of capitalized interest, was:

$66 million for first quarter 2023 and

$72 million for first quarter 2022.

Interest expense decreased by $6 million compared to first quarter 2022 primarily due to a series of transactions in March 2022 that lowered our weighted average interest rate and extended our weighted average maturity.

$70 million for second quarter 2023 and $136 million year-to-date 2023;

$65 million for second quarter 2022 and $137 million year-to-date 2022.

Interest expense increased by $5 million compared to second quarter 2022 primarily due to an increase in weighted average outstanding debt in second quarter 2023.

Year-to-date 2023 interest expense was comparable to year-to-date 2022 primarily due to the May 2023 issuance of debt securities that increased our weighted average outstanding debt, offset by a series of transactions performed in March 2022 that lowered our weighted average interest rate and extended our weighted average maturity.

Refer to Note 8:

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Our provision for income taxes was:

a $22 million expense for first quarter 2023 and

a $209 million expense for first quarter 2022.

Income tax expense decreased by $187 million compared to first quarter 2022 primarily due to a decrease in our TRS earnings in first quarter 2023, as well as a decrease in our estimated annual effective tax rate.

a $25 million expense for second quarter 2023 and $47 million year-to-date 2023;

a $184 million expense for second quarter 2022 and $393 million year-to-date 2022.

Our provision for income taxes is primarily driven by earnings generated by our TRSs.

Income tax expense decreased by $346 million compared to year-to-date 2022 primarily due to a decrease in our TRS earnings in 2023, as well as a decrease in our estimated annual effective tax rate.

Refer to Note 14:

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We are committed to maintaining an appropriate capital structure that provides flexibility and enables us to protect the interests of our shareholders and meet our obligations to our lenders, while also maintaining access to all major financial markets.

As of March 31, 2023, we had approximately $800 million in cash and cash equivalents and $1.5 billion of availability on our line of credit, which expires in March 2028.

As of June 30, 2023, we had approximately $1.1 billion in cash and cash equivalents, $665 million in short-term investments and $1.5 billion of availability on our line of credit, which expires in March 2028.

We believe we have sufficient liquidity to meet our cash requirements for the foreseeable future.

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Consolidated net cash from operations was:

$126 million for first quarter 2023 and

$957 million for first quarter 2022.

$622 million for year-to-date 2023 and

$2,103 million for year-to-date 2022.

Net cash from operations decreased $1,481 million primarily due to decreased cash inflows from our business operations.

This change was partially offset by a $79 million decrease in cash paid for income taxes, as well as a $21 million decrease in cash used for interest payments.

This change was partially offset by a $336 million decrease in cash paid for income taxes.

CASH FROM INVESTING ACTIVITIES

Consolidated net cash from investing activities was:

$(69) million for first quarter 2023 and

$(87) million for first quarter 2022.

Net cash from investing activities increased $18 million primarily due to an $18 million decrease in cash paid for acquisition of timberlands.

$(818) million for year-to-date 2023 and

$(433) million for year-to-date 2022.

Net cash from investing activities decreased $385 million primarily due to a $664 million increase in cash paid for short-term investments.

This change was partially offset by a $281 million decrease in cash paid for acquisition of timberlands.

Summary of Capital Spending by Business Segment

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Consolidated net cash from financing activities was:

$(841) million for first quarter 2023 and

$(1,664) million for first quarter 2022.

$(290) million for year-to-date 2023 and

$(1,938) million for year-to-date 2022.

Net cash from financing activities increased $1,648 million, primarily due to:

a $419 million decrease in cash used for payments of dividends;

a $322 million decrease in net cash used for payments on long-term debt and

an $84 million decrease in cash used for repurchases of common stock.

a $1,203 million decrease in cash used for payments on long-term debt;

a $414 million decrease in cash used for payments of dividends and

a $174 million decrease in cash used for repurchases of common stock.

These changes were partially offset by a $138 million decrease in net proceeds from issuance of long-term debt.

Line of Credit

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Borrowings will bear interest at a floating rate based on either the adjusted term SOFR plus a spread or a mutually agreed upon base rate plus a spread.

We had no outstanding borrowings on our $1.5 billion five-year senior unsecured revolving credit facility as of March 31, 2023 or December 31, 2022.

We had no outstanding borrowings on our $1.5 billion five-year senior unsecured revolving credit facility as of June 30, 2023 or December 31, 2022.

Refer to Note 8:

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Long-Term Debt

In July 2023, we repaid $118 million of our 7.125% notes at maturity.

We have $860 million of long-term debt scheduled to mature during fourth quarter 2023.

In May 2023, we completed an offering of debt securities by issuing $750 million of 4.750 percent notes due in May 2026.

The net proceeds after deducting the discount, underwriting fees and issuance costs were $743 million.

Of these total net proceeds, $664 million was invested in short-term debt securities which are classified as held-to-maturity.

In March 2022, we completed a series of transactions that lowered our weighted average interest rate and extended our weighted average maturity by issuing $900 million in notes and using the net proceeds plus cash on hand to close cash tender offers for $931 million of principal in higher interest rate notes.

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We paid holders an aggregate $1.2 billion in cash reflecting principal, premium to par and tender premium.

We have $118 million and $860 million of long-term debt scheduled to mature during third and fourth quarter 2023, respectively.

Refer to Note 8:

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Debt Covenants

As of March 31, 2023, Weyerhaeuser Company was in compliance with its debt covenants.

As of June 30, 2023, Weyerhaeuser Company was in compliance with its debt covenants.

There have been no significant changes to the debt covenants presented in our 2022 Annual Report on Form 10-K for our long-term debt instruments, and we expect to remain in compliance with our debt covenants for the foreseeable future.

Option Exercises

We received cash proceeds from the exercise of stock options of:

$2 million for first quarter 2023 and

$12 million for first quarter 2022.

Our average stock price was $31.52 and $39.65 for first quarter 2023 and 2022, respectively.

Dividend Payments

We paid cash dividends on common shares of:

$799 million for first quarter 2023 and

$1,218 million for first quarter 2022.

$938 million for year-to-date 2023 and

$1,352 million for year-to-date 2022.

The decrease in dividends paid is primarily due to a supplemental dividend of $0.90 per share based on 2022 financial results for a total of $660 million paid in first quarter 2023 in comparison to a supplemental dividend of $1.45 per share based on 2021 financial results for a total of $1,084 million paid in first quarter 2022.

Share Repurchases

We repurchased 1,115,560 common shares for approximately $35 million (including transaction fees) during first quarter 2023 and we repurchased 3,197,675 common shares for approximately $121 million (including transaction fees) during first quarter 2022 under the 2021 Repurchase Program.

There were 27,139 unsettled shares (approximately $1 million) as of March 31, 2023 and 223,548 unsettled shares (approximately $7 million) as of December 31, 2022.

We repurchased 1,689,874 common shares for approximately $50 million (including transaction fees) during second quarter 2023 and 2,805,434 common shares for approximately $85 million (including transaction fees) during year-to-date 2023 under the 2021 Repurchase Program.

During second quarter 2022, we repurchased 3,784,787 common shares for approximately $138 million (including transaction fees) and we repurchased 6,982,462 common shares for approximately $259 million (including transaction fees) during year-to-date 2022 under the 2021 Repurchase Program.

There were no unsettled shares as of June 30, 2023 and 223,548 unsettled shares (approximately $7 million) as of December 31, 2022.

Refer to Note 4:

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GAAP measures for each.

The table below reconciles Adjusted EBITDA for the quarter ended March 31, 2023:

The table below reconciles Adjusted EBITDA for the quarter ended June 30, 2023:

DOLLAR AMOUNTS IN MILLIONS

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Basis of real estate sold

Special items included in operating income (loss) (1)

Adjusted EBITDA

The table below reconciles Adjusted EBITDA for the quarter ended March 31, 2022:

(1) Operating income (loss) for Unallocated Items includes a pretax special item consisting of an $11 million noncash environmental remediation charge.

The table below reconciles Adjusted EBITDA for the quarter ended June 30, 2022:

DOLLAR AMOUNTS IN MILLIONS

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Interest expense, net of capitalized interest

Net contribution (charge) to earnings

Non-operating pension and other post-employment benefit costs

Interest income and other

Operating income (loss)

Depreciation, depletion and amortization

Basis of real estate sold

Adjusted EBITDA

The table below reconciles Adjusted EBITDA for the year-to-date period ended June 30, 2023:

DOLLAR AMOUNTS IN MILLIONS

Real Estate &

Adjusted EBITDA by Segment:

Interest expense, net of capitalized interest

Net contribution (charge) to earnings

Non-operating pension and other post-employment benefit costs

Interest income and other

Operating income (loss)

Depreciation, depletion and amortization

Basis of real estate sold

Special items included in operating income (loss) (1)

Adjusted EBITDA

(1) Operating income (loss) for Unallocated Items includes a pretax special item consisting of an $11 million noncash environmental remediation charge.

The table below reconciles Adjusted EBITDA for the year-to-date period ended June 30, 2022:

DOLLAR AMOUNTS IN MILLIONS

Adjusted EBITDA by Segment:

Interest expense, net of capitalized interest

Loss on debt extinguishment (1)

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Adjusted EBITDA

(1) Loss on debt extinguishment is a special item consisting of a pretax charge of $276 million related to early debt retirement.

(1) Loss on debt extinguishment is a special item consisting of a pretax charge of $276 million ($207 million after-tax) related to early debt retirement.

Net Earnings and Net Earnings per Diluted Share Before Special Items

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Environmental remediation charge

Loss on debt extinguishment

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Net earnings per diluted share

Environmental remediation charge

Loss on debt extinguishment

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CRITICAL ACCOUNTING POLICIES

There have been no significant changes during first quarter 2023 to the critical accounting policies presented in our 2022 Annual Report on Form 10-K.

There have been no significant changes during year-to-date 2023 to the critical accounting policies presented in our 2022 Annual Report on Form 10-K.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements