Item 1. Financial Statements
Item 1. FINANCIAL STATEMENTS
WEYERHAEUSER COMPANY
CONSOLIDATED STATEM ENT OF OPERATIONS
(UNAUDITED)
QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES
MARCH 2024
MARCH 2023
Net sales (Note 3)
$
1,796
$
1,881
Costs of sales
1,441
1,512
Gross margin
355
369
Selling expenses
22
22
General and administrative expenses
120
101
Other operating costs, net (Note 13)
17
10
Operating income
196
236
Non-operating pension and other post-employment benefit costs (Note 6)
( 11
)
( 9
)
Interest income and other
16
12
Interest expense, net of capitalized interest
( 67
)
( 66
)
Earnings before income taxes
134
173
Income taxes (Note 14)
( 20
)
( 22
)
Net earnings
$
114
$
151
Earnings per share, basic and diluted (Note 4)
$
0.16
$
0.21
Weighted average shares outstanding (in thousands) (Note 4):
Basic
730,043
733,163
Diluted
730,558
733,546
See accompanying Notes to Consolidated Financial Statements .
1
WEYERHAEUSER COMPANY
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)
QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS
MARCH 2024
MARCH 2023
Net earnings
$
114
$
151
Other comprehensive (loss) income:
Foreign currency translation adjustments
( 9
)
—
Changes in unamortized actuarial loss, net of tax expense of $ 4 and $ 2
8
7
Total other comprehensive (loss) income
( 1
)
7
Total comprehensive income
$
113
$
158
See accompanying Notes to Consolidated Financial Statements .
2
WEYERHAEUSER COMPANY
CONSOLIDATED BALANCE SHEET
(UNAUD ITED)
DOLLAR AMOUNTS IN MILLIONS, EXCEPT PAR VALUE
MARCH 31,
2024
DECEMBER 31,
2023
ASSETS
Current assets:
Cash and cash equivalents
$
871
$
1,164
Receivables, net
405
354
Receivables for taxes
13
10
Inventories (Note 5)
630
566
Prepaid expenses and other current assets
192
219
Total current assets
2,111
2,313
Property and equipment, less accumulated depreciation of $ 3,935 and $ 3,901
2,283
2,269
Construction in progress
243
270
Timber and timberlands at cost, less depletion
11,481
11,528
Minerals and mineral rights, less depletion
198
200
Deferred tax assets
14
15
Other assets
426
388
Total assets
$
16,756
$
16,983
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt
$
210
$
—
Accounts payable
310
287
Accrued liabilities (Note 7)
424
501
Total current liabilities
944
788
Long-term debt, net
4,861
5,069
Deferred tax liabilities
84
81
Deferred pension and other post-employment benefits (Note 6)
460
461
Other liabilities
353
348
Total liabilities
6,702
6,747
Commitments and contingencies (Note 10)
Equity:
Common shares: $ 1.25 par value; authorized 1,360 million shares; issued and outstanding: 729,141 thousand shares at March 31, 2024 and 729,753 thousand shares at December 31, 2023
912
912
Other capital
7,566
7,608
Retained earnings
1,870
2,009
Accumulated other comprehensive loss (Note 11)
( 294
)
( 293
)
Total equity
10,054
10,236
Total liabilities and equity
$
16,756
$
16,983
See accompanying Notes to Consolidated Financial Statements .
3
WEYERHAEUSER COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS
MARCH 2024
MARCH 2023
Cash flows from operations:
Net earnings
$
114
$
151
Noncash charges (credits) to earnings:
Depreciation, depletion and amortization
125
126
Basis of real estate sold
31
33
Pension and other post-employment benefits (Note 6)
16
15
Share-based compensation expense (Note 12)
10
8
Other
1
3
Change in:
Receivables, net
( 53
)
( 83
)
Receivables and payables for taxes
( 3
)
14
Inventories
( 68
)
( 36
)
Prepaid expenses and other current assets
17
( 9
)
Accounts payable and accrued liabilities
( 51
)
( 87
)
Pension and post-employment benefit contributions and payments
( 4
)
( 6
)
Other
( 11
)
( 3
)
Net cash from operations
124
126
Cash flows from investing activities:
Capital expenditures for property and equipment
( 57
)
( 50
)
Capital expenditures for timberlands reforestation
( 22
)
( 21
)
Other
2
2
Net cash from investing activities
( 77
)
( 69
)
Cash flows from financing activities:
Cash dividends on common shares
( 248
)
( 799
)
Repurchases of common shares (Note 4)
( 50
)
( 34
)
Other
( 10
)
( 8
)
Net cash from financing activities
( 308
)
( 841
)
Net change in cash, cash equivalents and restricted cash
( 261
)
( 784
)
Cash, cash equivalents and restricted cash at beginning of period
1,164
1,581
Cash, cash equivalents and restricted cash at end of period
$
903
$
797
Cash paid during the period for:
Interest, net of amount capitalized of $ 2 and $ 1
$
57
$
57
Income taxes, net of refunds
$
23
$
6
See accompanying Notes to Consolidated Financial Statements .
4
WEYERHAEUSER COMPANY
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(UNAUDITED)
QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES
MARCH 2024
MARCH 2023
Common shares:
Balance at beginning of period
$
912
$
916
Issued for exercise of stock options and vested units
2
1
Repurchases of common shares (Note 4)
( 2
)
( 1
)
Balance at end of period
912
916
Other capital:
Balance at beginning of period
7,608
7,691
Issued for exercise of stock options
2
2
Repurchases of common shares (Note 4)
( 47
)
( 34
)
Share-based compensation
10
8
Other transactions, net
( 7
)
( 5
)
Balance at end of period
7,566
7,662
Retained earnings:
Balance at beginning of period
2,009
2,389
Net earnings
114
151
Dividends on common shares
( 253
)
( 802
)
Balance at end of period
1,870
1,738
Accumulated other comprehensive loss:
Balance at beginning of period
( 293
)
( 247
)
Other comprehensive (loss) income
( 1
)
7
Balance at end of period (Note 11)
( 294
)
( 240
)
Total equity:
Balance at end of period
$
10,054
$
10,076
Dividends paid per common share
$
0.34
$
1.09
See accompanying Notes to Consolidated Financial Statements .
5
INDEX FOR NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1:
BASIS OF PRESENTATION
7
NOTE 2:
BUSINESS SEGMENTS
7
NOTE 3:
REVENUE RECOGNITION
8
NOTE 4:
NET EARNINGS PER SHARE AND SHARE REPURCHASES
8
NOTE 5:
INVENTORIES
9
NOTE 6:
PENSION AND OTHER POST-EMPLOYMENT BENEFIT PLANS
10
NOTE 7:
ACCRUED LIABILITIES
10
NOTE 8:
LINE OF CREDIT
10
NOTE 9:
FAIR VALUE OF FINANCIAL INSTRUMENTS
11
NOTE 10:
LEGAL PROCEEDINGS, COMMITMENTS AND CONTINGENCIES
11
NOTE 11:
ACCUMULATED OTHER COMPREHENSIVE LOSS
12
NOTE 12:
SHARE-BASED COMPENSATION
12
NOTE 13:
OTHER OPERATING COSTS, NET
13
NOTE 14:
INCOME TAXES
13
NOTE 15:
RESTRICTED CASH
13
6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE QUARTERS ENDED MARCH 31, 2024 AND 2023
NOTE 1: BASIS O F PRESENTATION
Our consolidated financial statements provide an overall view of our results of operations, financial condition and cash flows. They include our accounts and the accounts of entities we control, including majority-owned domestic and foreign subsidiaries. They do not include our intercompany transactions and accounts, which are eliminated. Throughout these Notes to Consolidated Financial Statements, unless specified otherwise, references to “Weyerhaeuser,” “the company,” “we” and “our” refer to the consolidated company.
The accompanying unaudited Consolidated Financial Statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of our financial position, results of operations and cash flows for the interim periods presented. Except as otherwise disclosed in these Notes to Consolidated Financial Statements, such adjustments are of a normal, recurring nature. The Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission pertaining to interim financial statements. Certain information and footnote disclosures normally included in our annual Consolidated Financial Statements have been condensed or omitted. These quarterly Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2023 . Results of operations for interim periods should not necessarily be regarded as indicative of the results that may be expected for the full year.
NOTE 2: BUSIN ESS SEGMENTS
We are principally engaged in growing and harvesting timber; maximizing the value of our acreage through the sale of higher and better use (HBU) properties; monetizing the value of surface and subsurface assets through leases and royalties; and manufacturing, distributing and selling products made from trees. Our business segments are organized based primarily on products and services which include:
● Timberlands – Logs, timber, recreational leases and other products;
● 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 production and wind and solar) and
● Wood Products – Structural lumber, oriented strand board, engineered wood products and building materials distribution.
A reconciliation of our business segment information to the respective information in the Consolidated Statement of Operations is as follows:
QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS
MARCH 2024
MARCH 2023
Sales to unaffiliated customers:
Timberlands
$
387
$
462
Real Estate & ENR
107
101
Wood Products
1,302
1,318
1,796
1,881
Intersegment sales:
Timberlands
134
142
Total sales
1,930
2,023
Intersegment eliminations
( 134
)
( 142
)
Total
$
1,796
$
1,881
Net contribution (charge) to earnings:
Timberlands
$
80
$
120
Real Estate & ENR
60
53
Wood Products
128
95
268
268
Unallocated items (1)
( 67
)
( 29
)
Net contribution to earnings
201
239
Interest expense, net of capitalized interest
( 67
)
( 66
)
Earnings before income taxes
134
173
Income taxes
( 20
)
( 22
)
Net earnings
$
114
$
151
(1) 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 post-employment costs, elimination of intersegment profit in inventory and LIFO, foreign exchange transaction gains and losses, interest income and other.
7
NOTE 3: REVENU E RECOGNITION
A reconciliation of revenue recognized by our major products:
QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS
MARCH 2024
MARCH 2023
Net sales to unaffiliated customers:
Timberlands segment
Delivered logs:
West
Domestic sales
$
94
$
93
Export grade sales
82
136
Subtotal West
176
229
South
151
168
North
13
17
Subtotal delivered logs sales
340
414
Stumpage and pay-as-cut timber
11
16
Recreational and other lease revenue
19
18
Other (1)
17
14
Net sales attributable to Timberlands segment
387
462
Real Estate & ENR segment
Real estate
83
72
Energy and natural resources
24
29
Net sales attributable to Real Estate & ENR segment
107
101
Wood Products segment
Structural lumber
464
515
Oriented strand board
255
208
Engineered solid section
177
169
Engineered I-joists
99
87
Softwood plywood
41
41
Medium density fiberboard
39
38
Complementary building products
141
163
Other (2)
86
97
Net sales attributable to Wood Products segment
1,302
1,318
Total net sales
$
1,796
$
1,881
(1) Other Timberlands sales include sales of seeds and seedlings from our nursery operations as well as wood chips.
(2) Other Wood Products sales include wood chips, other byproducts and third-party residual log sales from our Canadian Forestlands operations.
NOTE 4: NET EARNINGS PER SHARE AND SHARE REPURCHASES
Our basic and diluted earnings per share were:
● $ 0.16 during first quarter 2024 and
● $ 0.21 during first quarter 2023.
8
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. Diluted earnings per share is net earnings divided by the sum of the weighted average number of our outstanding common shares and the effect of our outstanding dilutive potential common shares.
QUARTER ENDED
SHARES IN THOUSANDS
MARCH 2024
MARCH 2023
Weighted average common shares outstanding – basic
730,043
733,163
Dilutive potential common shares:
Stock options
144
137
Restricted stock units
122
27
Performance share units
249
219
Total effect of outstanding dilutive potential common shares
515
383
Weighted average common shares outstanding – dilutive
730,558
733,546
We use the treasury stock method to calculate the dilutive effect of our outstanding stock options, restricted stock units and performance share units.
Potential Shares Not Included in the Computation of Diluted Earnings per Share
The following shares were not included in the computation of diluted earnings per share because they were either antidilutive or the required performance or market conditions were not met. Some or all of these shares may be dilutive potential common shares in future periods.
QUARTER ENDED
SHARES IN THOUSANDS
MARCH 2024
MARCH 2023
Stock options
609
610
Performance share units
814
860
Share Repurchase Program
On September 22, 2021, we announced that our board of directors approved a new share repurchase program (the 2021 Repurchase Program) under which we are authorized to repurchase up to $ 1 billion of outstanding shares. 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 1,472,369 common shares for approximately $ 49 million (including transaction fees) under the 2021 Repurchase Program during first quarter 2024. As of March 31, 2024, we had remaining authorization of $ 202 million for future share repurchases. During first quarter 2023 , we repurchased 1,115,560 common shares for approximately $ 35 million (including transaction fees) under the 2021 Repurchase Program.
All common stock repurchases under the 2021 Repurchase Program were made in open-market transactions. We record share repurchases upon trade date as opposed to the settlement date when cash is disbursed. We record a liability for repurchases that have not yet been settled as of period end. There were no unsettled shares as of March 31, 2024 and 13,866 unsettled shares (approximately $ 1 million) as of December 31, 2023 .
NOTE 5: IN VENTORIES
Inventories include raw materials, work-in-process and finished goods, as well as materials and supplies.
DOLLAR AMOUNTS IN MILLIONS
MARCH 31,
2024
DECEMBER 31,
2023
LIFO inventories:
Logs
$
25
$
29
Lumber, plywood, oriented strand board and fiberboard
89
77
Other products
12
12
Moving average cost or FIFO inventories:
Logs
72
49
Lumber, plywood, oriented strand board, fiberboard and engineered wood products
134
115
Other products
144
134
Materials and supplies
154
150
Total
$
630
$
566
LIFO – the last-in, first-out method – applies to major inventory products held at our U.S. locations. The moving average cost method or FIFO – the first-in, first-out method – applies to the balance of our U.S. raw material and product inventories, all material and supply inventories and all foreign inventories.
9
NOTE 6: PENSION AND OTHER PO ST-EMPLOYMENT BENEFIT PLANS
The components of net periodic benefit cost are:
PENSION
QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS
MARCH 2024
MARCH 2023
Service cost
$
5
$
6
Interest cost
29
30
Expected return on plan assets
( 31
)
( 30
)
Amortization of actuarial loss
11
8
Total net periodic benefit cost – pension
$
14
$
14
OTHER POST-EMPLOYMENT BENEFITS
QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS
MARCH 2024
MARCH 2023
Interest cost
$
1
$
1
Amortization of actuarial loss
1
—
Total net periodic benefit cost – other post-employment benefits
$
2
$
1
For the periods presented, service cost is included in “Costs of sales,” “Selling expenses,” and “General and administrative expenses” with the remaining components included in “Non-operating pension and other post-employment benefit costs” in the Consolidated Statement of Operations .
Fair Value of Pension Plan Assets and Obligations
In our year-end reporting process, we estimate the fair value of pension plan assets based upon the information available at that time. 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 evaluate 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.
NOTE 7: ACCRU ED LIABILITIES
Accrued liabilities were comprised of the following:
DOLLAR AMOUNTS IN MILLIONS
MARCH 31,
2024
DECEMBER 31,
2023
Compensation and employee benefit costs
$
155
$
173
Current portion of lease liabilities
21
19
Customer rebates, volume discounts and deferred income
83
124
Interest
66
63
Taxes payable
35
31
Other
64
91
Total
$
424
$
501
NOTE 8: LINE OF CREDIT
In March 2023, we entered into a new $ 1.5 billion five-year senior unsecured revolving credit facility, which expires in March 2028 and replaced the existing facility which was set to expire in January 2025 . 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 sprea d. We had no outstanding borrowings on our credit facility as of March 31, 2024 and December 31, 2023 .
10
NOTE 9: FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value and carrying value of our long-term debt consisted of the following:
MARCH 31,
2024
DECEMBER 31,
2023
DOLLAR AMOUNTS IN MILLIONS
CARRYING
VALUE
FAIR VALUE
(LEVEL 2)
CARRYING
VALUE
FAIR VALUE
(LEVEL 2)
Long-term debt (including current maturities) and line of credit:
Fixed rate
$
4,822
$
4,775
$
4,820
$
4,853
Variable rate
249
250
249
250
Total debt
$
5,071
$
5,025
$
5,069
$
5,103
To estimate the fair value of fixed rate long-term debt, we used the market approach, which is based on quoted market prices we received for the same types and issues of our debt. We believe that our variable-rate long term debt and line of credit instruments have net carrying values that approximate their fair value with only insignificant differences. The inputs to the valuations of our long-term debt are based on market data obtained from independent sources or information derived principally from observable market data. The difference between the fair value and the carrying value represents the theoretical net premium or discount we would pay or receive to retire all debt at the measurement date.
Fair Value of Other Financial Instruments
We believe that our other financial instruments, including cash and cash equivalents, short-term investments, receivables and payables, have net carrying values that approximate their fair values with only insignificant differences. This is primarily due to the short-term nature of these instruments and the allowance for doubtful accounts.
NOTE 10: LEGAL PROCEEDINGS, C OMMITMENTS AND CONTINGENCIES
Legal Proceedings
We are party to various legal proceedings arising in the ordinary course of business. We are not currently a party to any legal proceeding that management believes could have a material adverse effect on our Consolidated Statement of Operations , Consolidated Balance Sheet or Consolidated Statement of Cash Flows .
Environmental Matters
Site Remediation
Under the federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) – commonly known as the “Superfund” – and similar state laws, we:
● are a party to various proceedings related to the cleanup of hazardous waste sites and
● 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, 2024, our total accrual for future estimated remediation costs on active Superfund sites and other sites for which we are potentially responsible was approximately $ 76 million. These amounts are recorded in "Accrued liabilities" and "Other liabilities" on our Consolidated Balance Sheet .
11
NOTE 11: ACCUMULATED OT HER COMPREHENSIVE LOSS
Changes in amounts included in our accumulated other comprehensive loss by component are:
QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS
MARCH 2024
MARCH 2023
Pension (1)
Balance at beginning of period
$
( 515
)
$
( 458
)
Other comprehensive income before reclassifications
1
1
Amounts reclassified from accumulated other comprehensive loss to earnings (2)
8
6
Total other comprehensive income
9
7
Balance at end of period
$
( 506
)
$
( 451
)
Other post-employment benefits (1)
Balance at beginning of period
$
24
$
20
Other comprehensive loss before reclassifications
( 2
)
—
Amounts reclassified from accumulated other comprehensive loss to earnings (2)
1
—
Total other comprehensive loss
( 1
)
—
Balance at end of period
$
23
$
20
Translation adjustments and other
Balance at beginning of period
$
198
$
191
Translation adjustments
( 9
)
—
Total other comprehensive loss
( 9
)
—
Balance at end of period
189
191
Accumulated other comprehensive loss, end of period
$
( 294
)
$
( 240
)
(1) Amounts presented are net of tax.
(2) Amounts of actuarial loss and prior service cost are components of net periodic benefit cost. See Note 6: Pension and Other Post-Employment Benefit Plans .
NOTE 12: SHARE-B ASED COMPENSATION
Share-based compensation activity during first quarter 2024 included the following:
SHARES IN THOUSANDS
GRANTED
VESTED
Restricted stock units (RSUs)
847
649
Performance share units (PSUs)
412
317
A total of 714 thousand shares of common stock were issued as a result of RSU and PSU vestings.
Restricted Stock Units
The weighted average fair value of the RSUs granted in 2024, calculated as an average of the high and low prices on grant date, was $ 33.12 . The vesting provisions for RSUs granted in 2024 were consistent with prior year grants.
Performance Share Units
The weighted average grant date fair value of PSUs granted in 2024 was $ 37.90 . The final number of shares granted in 2024 will vest between a range of 0 percent to 150 percent of each grant's target, depending upon actual company total shareholder return (TSR) compared against the TSR of an industry peer group. TSR assumes full reinvestment of dividends. PSUs granted in 2024 will vest at a maximum of 100 percent of target value in the event of negative absolute company TSR.
Weighted Average Assumptions Used in Estimating the Value of Performance Share Units Granted in 2024
PERFORMANCE SHARE UNITS
Performance period
2/09/2024 – 12/31/2026
Valuation date closing stock price
$ 33.28
Risk-free rate
4.19 % – 4.27 %
Expected volatility
21.50 % – 27.60 %
12
NOTE 13: OTHER OPERAT ING COSTS, NET
Other operating costs, net were comprised of the following:
QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS
MARCH 2024
MARCH 2023
Environmental remediation charges
$
2
$
1
Litigation expense, net
6
1
Research and development expenses
1
2
Other, net
8
6
Total other operating costs, net
$
17
$
10
NOTE 14: INCOME TAXES
As a real estate investment trust (REIT), we generally are not subject to federal corporate income taxes on REIT taxable income that is distributed to shareholders. We are required to pay corporate income taxes on earnings of our wholly-owned Taxable REIT Subsidiaries (TRSs), which include our Wood Products segment and a portion of our Timberlands and Real Estate & ENR segments.
The quarterly provision for income taxes is based on our current estimate of the annual effective tax rate and is adjusted for discrete taxable events that have occurred during the year. Our 2024 estimated annual effective tax rate, excluding discrete items, differs from the U.S. federal statutory tax rate of 21 percent primarily due to state and foreign income taxes and tax benefits associated with our nontaxable REIT earnings.
NOTE 15: RESTRICTED CASH
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported on our Consolidated Balance Sheet that sum to the total of the amounts shown in the Consolidated Statement of Cash Flows :
DOLLAR AMOUNTS IN MILLIONS
MARCH 31,
2024
MARCH 31,
2023
Cash and cash equivalents
$
871
$
797
Restricted cash included in other assets (1)
32
—
Total cash, cash equivalents and restricted cash
$
903
$
797
(1) Amounts included in restricted cash as of March 31, 2024 are comprised of proceeds held by a qualified intermediary that are intended to be reinvested in timber and timberlands through a like-kind exchange transaction.
13
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