What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-10-25 compared with 2024-07-26 · 169 added, 108 removed, 397 unchanged (41% of the section changed)

6 unchanged sentences

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

our cash dividend framework, including our target percentage return to shareholders of Adjusted Funds Available for Distribution, including expected supplemental cash dividends and future share repurchases;

compliance with covenants in our debt agreements;

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expected returns on pension plan assets;

market and general economic conditions, including related influencing factors such as the trajectory of U.S.

housing activity, repair and remodel activity, inflation trends and interest rates;

expected adjustments to our lumber production in third quarter 2024;

our expectations about our future opportunities in emerging carbon credit and carbon capture and storage markets;

assumptions used in valuing incentive compensation and related expense and pending timberland acquisition transactions.

expected market and general economic conditions, including related influencing factors such as the trajectory of U.S.

housing construction activity, repair and remodel activity, inflation trends and interest rates;

our expected lumber production operating rates in fourth quarter 2024;

our expectations about our future opportunities in emerging carbon credit and carbon capture and storage markets and assumptions used in valuing incentive compensation and related expense.

Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts.

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

Over the first half of the year, home sales and building activity moderated in part due to continued elevated mortgage interest rates, reduced affordability and general macroeconomic conditions.

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

Specifically, multi-family construction has been hampered by a large supply of recently completed projects as well as higher interest rates and other factors constraining the underwriting of proposed projects.

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

Census Bureau, housing starts for second quarter 2024 averaged 1.35 million units, a 4.2 percent decrease from first quarter 2024.

Single-family starts averaged 1.0 million units in second quarter 2024, a 5.2 percent decrease from first quarter 2024.

Multi-family starts averaged 342 thousand units in second quarter 2024, which was a 1.0 percent decrease from first quarter 2024.

Census Bureau, housing starts for third quarter 2024 averaged 1.3 million units, a 1.1 percent decrease from second quarter 2024.

Single-family starts averaged 1.0 million units in third quarter 2024, a 4.1 percent decrease from second quarter 2024.

Multi-family starts averaged 363 thousand units in third quarter 2024, which was a 7.9 percent increase from second quarter 2024.

Single-family construction is the primary driver for our business as compared to multi-family due to the amount of wood products used.

Sales of newly built, single-family homes averaged a seasonally adjusted annual rate of 656 thousand units for second quarter 2024, a decrease of 1.1 percent from first quarter 2024, with slower activity primarily due to high mortgage rates.

Sales of newly built, single-family homes averaged a seasonally adjusted annual rate of 724 thousand units for third quarter 2024, an increase of 4.5 percent from second quarter 2024, supported by builder mortgage rate buydowns and other incentives.

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

housing construction market supported by strong demographics in the key home buying age cohorts, a decade of under building and historically low housing inventory.

Repair and remodeling expenditures increased by 1.1 percent from first quarter 2024 to second quarter 2024 according to the Census Bureau Advance Retail Spending report.

Repair and remodeling expenditures increased by 1.8 percent from second quarter 2024 to third quarter 2024 according to the Census Bureau Advance Retail Spending report.

While there continues to be steady demand due to growing home equity and the lock-in effect of having lower mortgage rates compared to current rates, many homeowners have become more cautious in discretionary spending on large projects.

Additionally, some repair and remodeling activity was accelerated during the pandemic which has had an impact on the level of spending.

Additionally, some repair and remodeling activity was accelerated during the pandemic which has had some impact on the level of spending.

This softness has been reflected in both the do-it-yourself (DIY) and professionally built segments.

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housing stock, with a median age of 42 years.

wood product markets, demand for lumber and OSB was influenced by cautious buyer sentiment during the second quarter of 2024.

As the quarter progressed, demand was mixed as continued strength in single-family housing starts was offset by weaker multi-family construction and repair and remodel activity.

The Random Lengths Framing Lumber Composite price averaged $384/MBF and the OSB Composite averaged $487/MSF in second quarter 2024.

Over the course of the second quarter, composite prices for lumber decreased from $422/MBF to $366/MBF and composite prices for OSB decreased from $603/MSF to $352/MSF.

Lumber markets have been particularly challenged due to an imbalance of supply and demand, which has resulted in a sustained, weak pricing environment.

In light of these conditions, Weyerhaeuser expects to reduce its lumber production by 5 to 10 percent in third quarter 2024.

This reduction is inclusive of the company's decision to indefinitely curtail its lumber mill in New Bern, North Carolina.

The company will continue to assess its operating rates in light of current market conditions on a go-forward basis.

In Western log markets, Douglas fir sawlog prices decreased 4.9 percent in second quarter 2024 compared with first quarter 2024, as reported by Fastmarkets RISI Log Lines based on Weyerhaeuser’s sales mix.

wood product markets, demand for lumber and OSB was influenced by continued cautious buyer sentiment at the outset of third quarter 2024.

As the quarter progressed, demand was mixed as continued strength in single-family housing starts was offset by weaker multi-family construction and restrained repair and remodel activity.

The Random Lengths Framing Lumber Composite price averaged $383/MBF and the OSB Composite averaged $346/MSF in third quarter 2024.

Over the course of the third quarter, composite prices for lumber increased from $366/MBF to $396/MBF and composite prices for OSB decreased from $352/MSF to $344/MSF.

Increased curtailments, in addition to an increase in duties on Canadian lumber imports, contributed to the moderate recovery in lumber prices.

In light of these conditions, we reduced our operating rates in third quarter 2024, resulting in a 10.1 percent decrease in lumber production from second quarter 2024 to third quarter 2024, which includes the previously announced indefinite curtailment of our lumber mill in New Bern, North Carolina.

We expect to return to more normalized operating rates in fourth quarter 2024.

In Western log markets, Douglas fir sawlog prices decreased 3.7 percent in third quarter 2024 compared with second quarter 2024, as reported by Fastmarkets RISI Log Lines based on Weyerhaeuser’s sales mix.

Overall, domestic log demand and prices faced downward pressure through the quarter, as mills continued to adjust to a soft lumber market and worked through elevated log inventories.

In the South, delivered sawlog prices decreased 1.0 percent in second quarter 2024 compared to first quarter 2024 and declined 1.7 percent from second quarter 2023 as reported by TimberMart-South.

While there continued to be demand for logs across the region and markets generally had ample log supply, a number of mills faced elevated inventories and were adjusting operations due to lower lumber prices.

In the South, delivered sawlog prices increased 1.0 percent in third quarter 2024 compared to second quarter 2024 and declined 0.4 percent from third quarter 2023, as reported by TimberMart-South.

While there continued to be demand for logs across the region, sawlog markets were generally soft given ample supply and in response to mills carrying elevated log inventories and adjusting operations in a soft lumber market.

Mill adjustments during the quarter included a series of curtailments and permanent closures.

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

During second quarter 2024, end use demand in export markets moderated.

In Japan, total housing starts decreased 4.0 percent year to date through May compared to the same period in 2023, while the key Post and Beam segment saw a 4.4 percent decrease.

Lumber imports to Japan from Europe were reduced due to supply chain costs, which provided some support for log sales.

During third quarter 2024, end use demand in export markets moderated.

In Japan, total housing starts decreased 4.0 percent year to date through August compared to the same period in 2023, while the key Post and Beam segment saw a 5.0 percent decrease.

Lumber imports to Japan from Europe increased, which placed some pressure on log sales.

China’s weaker end-use demand for logs and lumber led to a decrease in pricing for logs from the West.

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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, increased from 6.8 percent at the end of first quarter 2024 to 6.9 percent at the end of second quarter 2024, according to economic data from Freddie Mac.

30-year mortgage rates, which are correlated with long-term interest rates, decreased from 6.9 percent in second quarter 2024 to 6.1 percent in third quarter 2024, according to economic data from Freddie Mac.

Many builders have been able to offset higher mortgage rates through discounts, mortgage rate buydowns and modifying product offerings such as home sizes and finishes.

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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 at an annual rate of 3.0 percent as of June 2024, 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, operational excellence initiatives and procurement practices, not all of the costs associated with inflation can be fully mitigated or passed on to the consumer.

The Consumer Price Index increased at an annual rate of 2.4 percent as of September 2024 compared to 3.0 percent in June 2024.

This rate 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, operational excellence initiatives and procurement practices, not all 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 4.1 percent in June 2024 has increased moderately above historically low levels and increased 0.3 percent from the end of first quarter 2024.

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.

The unemployment rate remained flat at 4.1 percent from second quarter 2024 to third quarter 2024.

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

Achieving these commitments will require governments and companies to take major steps to modify operations, invest in low-carbon activities and purchase credits to reduce environmental impacts.

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CONSOLIDATED RESULTS

How We Did Second Quarter 2024 and Year-to-Date 2024

How We Did Third Quarter 2024 and Year-to-Date 2024

QUARTER ENDED

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DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES

SEPTEMBER 2024

SEPTEMBER 2023

SEPTEMBER 2024

SEPTEMBER 2023

Costs of sales

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Earnings per share, basic and diluted

Comparing Second Quarter 2024 with Second Quarter 2023

Net sales decreased $58 million – 3 percent – primarily due to a $79 million decrease in Wood Products net sales to unaffiliated customers attributable to decreased sales realizations and sales volumes across most product lines, partially offset by a $29 million increase in Real Estate, Energy and Natural Resources net sales attributable to an increase in acres sold.

Comparing Third Quarter 2024 with Third Quarter 2023

Net sales decreased $341 million – 17 percent – primarily due to:

• a $302 million decrease in Wood Products net sales to unaffiliated customers, attributable to decreased sales realizations and sales volumes across most product lines;

• a $23 million decrease in Timberlands net sales to unaffiliated customers attributable to decreased sales volumes and sales realizations and

• a $16 million decrease in Real Estate, Energy and Natural Resources net sales to unaffiliated customers attributable to a decrease in acres sold, as well as a decrease in average price per acre sold.

Costs of sales

Costs of sales increased $7 million – less than 1 percent – primarily due to an increase in acres sold in our Real Estate, Energy and Natural Resources segment, partially offset by decreased sales volumes across most product lines in our Wood Products segment.

Costs of sales decreased $89 million – 6 percent – primarily due to decreased sales volumes across most product lines in our Wood Products segment, as well as a decrease in acres sold in our Real Estate, Energy and Natural Resources segment.

Operating income

Operating income decreased $49 million – 15 percent – primarily due to a $65 million decrease in consolidated gross margin (see discussion of components above), partially offset by a $25 million product remediation recovery recorded in second quarter 2024 (refer to Note 13:

Other Operating (Income) Costs, Net ).

Net earnings decreased $57 million – 25 percent – primarily due to the $49 million decrease in operating income, as discussed above, as well as an $8 million increase in income tax expense (refer to Income Taxes ).

Operating income decreased $275 million – 78 percent – primarily due to a $252 million decrease in consolidated gross margin (see discussion of components above), as well as a $10 million noncash impairment charge related to the indefinite curtailment of our New Bern lumber mill recorded in third quarter 2024 (refer to Note 13:

Other Operating Costs, Net ).

Net earnings decreased $211 million – 88 percent – primarily due to the $275 million decrease in operating income, as discussed above, partially offset by a $69 million decrease in income tax expense (refer to Income Taxes ).

Comparing Year-to-Date 2024 with Year-to-Date 2023

Net sales decreased $143 million – 4 percent – primarily due to a $95 million decrease in Wood Products net sales to unaffiliated customers attributable to decreased sales realizations across most product lines, as well as an $83 million decrease in Timberlands net sales to unaffiliated customers attributable to decreased sales volumes and sales realizations.

Net sales decreased $484 million – 8 percent – primarily due to a $397 million decrease in Wood Products net sales to unaffiliated customers attributable to decreased sales realizations and sales volumes across most product lines, as well as a $106 million decrease in Timberlands net sales to unaffiliated customers attributable to decreased sales volumes and sales realizations.

These decreases were partially offset by a $19 million increase in Real Estate, Energy and Natural Resources net sales to unaffiliated customers attributable to an increase in acres sold, partially offset by a decrease in average price per acre sold.

Costs of sales

Costs of sales decreased $64 million – 2 percent – primarily due to decreased sales volumes for oriented strand board and structural lumber in our Wood Products segment.

Costs of sales decreased $153 million – 3 percent – primarily due to decreased sales volumes across most product lines in Wood Products, as well as decreased sales volumes in our Timberlands segment, partially offset by an increase in acres sold in Real Estate, Energy and Natural Resources.

Operating income

Operating income decreased $89 million – 16 percent – primarily due to a $79 million decrease in gross margin (see discussion of components above).

Net earnings decreased $94 million – 25 percent – primarily due to the $89 million decrease in operating income, as discussed above.

How We Did Second Quarter 2024 and Year-to-Date 2024

Operating income decreased $364 million – 40 percent – primarily due to a $331 million decrease in consolidated gross margin (see discussion of components above), as well as a $10 million noncash impairment charge related to the indefinite curtailment of our New Bern lumber mill recorded in third quarter 2024.

These decreases were partially offset by a $25 million product remediation recovery recorded in second quarter 2024 (refer to Note 13:

Other Operating Costs, Net ).

Net earnings decreased $305 million – 49 percent – primarily due to the $364 million decrease in operating income, as discussed above, partially offset by a $63 million decrease in income tax expense (refer to Income Taxes ).

How We Did Third Quarter 2024 and Year-to-Date 2024

QUARTER ENDED

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DOLLAR AMOUNTS IN MILLIONS

SEPTEMBER 2024

SEPTEMBER 2023

SEPTEMBER 2024

SEPTEMBER 2023

Net sales to unaffiliated customers:

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

Comparing Second Quarter 2024 with Second Quarter 2023

Comparing Third Quarter 2024 with Third Quarter 2023

Net sales to unaffiliated customers

Net sales to unaffiliated customers decreased $8 million – 2 percent – primarily due to a $9 million decrease in Southern log sales attributable to a 4 percent decrease in sales volumes and a 2 percent decrease in sales realizations.

Net sales to unaffiliated customers decreased $23 million – 6 percent – primarily due to an $18 million decrease in Western log sales attributable to a 7 percent decrease in sales volumes and a 4 percent decrease in sales realizations, as well as a $6 million decrease in Southern log sales attributable to a 3 percent decrease in sales volumes.

Intersegment sales

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Costs of sales

Costs of sales increased $11 million – 3 percent – primarily due to increased Western logging, hauling and freight costs.

Net contribution to earnings

Net contribution to earnings decreased $23 million – 22 percent – primarily due to the change in the components of gross margin, as discussed above.

Costs of sales decreased $7 million – 2 percent – primarily due to decreased sales volumes.

Operating income and Net contribution to earnings

Operating income and net contribution to earnings decreased $21 million – 27 percent – primarily due to the change in the components of gross margin, as discussed above.

Comparing Year-to-Date 2024 with Year-to-Date 2023

Net sales to unaffiliated customers

Net sales to unaffiliated customers decreased $83 million – 9 percent – primarily due to a $54 million decrease in Western log sales attributable to a 6 percent decrease in sales volumes and sales realizations, as well as a $26 million decrease in Southern log sales attributable to a 6 percent decrease in sales volumes and a 3 percent decrease in sales realizations.

Net sales to unaffiliated customers decreased $106 million – 8 percent – primarily due to a $72 million decrease in Western log sales attributable to a 7 percent decrease in sales volumes and a 6 percent decrease in sales realizations, as well as a $32 million decrease in Southern log sales attributable to a 5 percent decrease in sales volumes and a 2 percent decrease in sales realizations.

Intersegment sales

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Costs of sales

Costs of sales decreased $35 million – 4 percent – primarily due to decreased Western third-party log purchases and decreased Southern sales volumes, partially offset by increased Western logging and hauling costs.

Costs of sales decreased $42 million – 3 percent – primarily due to decreased sales volumes.

Net contribution to earnings

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VOLUMES IN THOUSANDS

SEPTEMBER 2024

SEPTEMBER 2023

SEPTEMBER 2024

SEPTEMBER 2023

Third-party log sales – tons:

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REAL ESTATE, ENERGY A ND NATURAL RESOURCES

How We Did Second Quarter 2024 and Year-to-Date 2024

How We Did Third Quarter 2024 and Year-to-Date 2024

QUARTER ENDED

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DOLLAR AMOUNTS IN MILLIONS

SEPTEMBER 2024

SEPTEMBER 2023

SEPTEMBER 2024

SEPTEMBER 2023

Energy and natural resources

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

Comparing Second Quarter 2024 with Second Quarter 2023

Net sales increased $29 million – 36 percent – primarily due to an increase in acres sold, partially offset by a decrease in average price per acre sold.

Comparing Third Quarter 2024 with Third Quarter 2023

Net sales decreased $16 million – 15 percent – primarily due to a decrease in acres sold, as well as a decrease in average price per acre sold.

Costs of sales

Costs of sales increased $25 million – 119 percent – primarily due to an increase in acres sold.

Costs of sales decreased $12 million – 28 percent – primarily due to a decrease in acres sold.

Operating income and Net contribution to earnings

Operating income and net contribution to earnings increased $7 million – 13 percent – primarily due to the change in the components of gross margin, as discussed above.

Operating income and net contribution to earnings decreased $5 million – 9 percent – primarily due to the change in the components of gross margin, as discussed above.

Comparing Year-to-Date 2024 with Year-to-Date 2023

Net sales increased $35 million – 19 percent – primarily due to an increase in acres sold, partially offset by a decrease in average price per acre sold and a decrease in royalty income from our Energy and Natural Resources business.

Net sales increased $19 million – 7 percent – primarily due to an increase in acres sold, partially offset by a decrease in average price per acre sold.

Costs of sales

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YEAR-TO-DATE ENDED

SEPTEMBER 2024

SEPTEMBER 2023

SEPTEMBER 2024

SEPTEMBER 2023

Average price per acre

WOOD PRODUCTS

How We Did Second Quarter 2024 and Year-to-Date 2024

How We Did Third Quarter 2024 and Year-to-Date 2024

QUARTER ENDED

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DOLLAR AMOUNTS IN MILLIONS

SEPTEMBER 2024

SEPTEMBER 2023

SEPTEMBER 2024

SEPTEMBER 2023

Structural lumber

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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 Second Quarter 2024 with Second Quarter 2023

Comparing Third Quarter 2024 with Third Quarter 2023

Net sales decreased $302 million – 20 percent – primarily due to:

● a $74 million decrease in structural lumber sales attributable to a 13 percent decrease in sales realizations;

● a $28 million decrease in complementary building products sales attributable to decreased sales realizations and sales volumes across most products;

● a $24 million decrease in engineered solid section sales attributable to a 9 percent decrease in sales realizations and

● a $19 million decrease in engineered I-joist sales attributable to a 9 percent decrease in sales realizations, as well as a 7 percent decrease in sales volumes.

These decreases were partially offset by a $73 million increase in oriented strand board sales attributable to a 36 percent increase in sales realizations.

● a $119 million decrease in structural lumber sales attributable to a 16 percent decrease in sales realizations, as well as a 6 percent decrease in sales volumes;

● a $78 million decrease in oriented strand board sales attributable to a 27 percent decrease in sales realizations;

● a $41 million decrease in engineered solid section sales attributable to a 13 percent decrease in sales volumes, as well as a 6 percent decrease in sales realizations;

● a $27 million decrease in engineered I-joists sales attributable to a 14 percent decrease in sales volumes, as well as an 8 percent decrease in sales realizations;

● a $26 million decrease in complementary building products sales attributable to decreased sales volumes across most products and

● a $9 million decrease in other products produced primarily attributable to decreased sales realizations for wood chips.

Costs of sales

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Operating income and Net contribution to earnings

Operating income and net contribution to earnings decreased $22 million – 10 percent – primarily due to the change in the components of gross margin, as discussed above, partially offset by a $25 million product remediation recovery recorded in second quarter 2024 (refer to Note 13:

Other Operating (Income) Costs, Net ).

Operating income and net contribution to earnings decreased $250 million – 90 percent – primarily due to the change in the components of gross margin, as discussed above, as well as a $10 million noncash impairment charge related to the indefinite curtailment of our New Bern lumber mill recorded in third quarter 2024 (refer to Note:

Other Operating Costs, Net ).

Comparing Year-to-Date 2024 with Year-to-Date 2023

Net sales decreased $397 million – 9 percent – primarily due to:

● a $125 million decrease in structural lumber sales attributable to a 9 percent decrease in sales realizations, as well as a 3 percent decrease in sales volumes;

● a $50 million decrease in complementary building products sales attributable to decreased sales realizations and sales volumes across most products;

● a $16 million decrease in engineered solid section sales attributable to a 10 percent decrease in sales realizations, partially offset by a 7 percent increase in sales volumes and

● a $16 million decrease in other products produced primarily attributable to decreased sales realizations for wood chips.

● a $244 million decrease in structural lumber sales attributable to an 11 percent decrease in sales realizations, as well as a 4 percent decrease in sales volumes;

● a $76 million decrease in complementary building products sales attributable to decreased sales volumes across most products;

● a $57 million decrease in engineered solid section sales attributable to a 9 percent decrease in sales realizations;

● a $34 million decrease in engineered I-joists sales attributable to an 11 percent decrease in sales realizations;

● a $25 million decrease in other products produced attributable to decreased sales realizations for wood chips and

● a $6 million decrease in softwood plywood sales attributable to a 3 percent decrease in sales realizations, as well as a 2 percent decrease in sales volumes.

These decreases were partially offset by a $42 million increase in oriented strand board sales attributable to a 10 percent increase in sales realizations, partially offset by a 4 percent decrease in sales volumes.

Costs of sales

Costs of sales decreased $85 million – 4 percent – primarily due to decreased sales volumes for oriented strand board and structural lumber, as discussed above, as well as decreased raw material costs across most product lines.

Costs of sales decreased $148 million – 4 percent – primarily due to decreased sales volumes across most product lines.

Operating income and Net contribution to earnings

Operating income and net contribution to earnings increased $11 million – 4 percent – primarily due to a $25 million product remediation recovery recorded in second quarter 2024 (refer to Note 13:

Other Operating (Income) Costs, Net ), partially offset by the change in the components of gross margin, as discussed above.

Operating income and net contribution to earnings decreased $239 million – 41 percent – primarily due to the change in the components of gross margin, as discussed above, as well as a $10 million noncash impairment charge related to the indefinite curtailment of our New Bern lumber mill recorded in third quarter 2024, partially offset by a $25 million product remediation recovery recorded in second quarter 2024 (refer to Note:

Other Operating Costs, Net ).

Third-Party Sales Volumes

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VOLUMES IN MILLIONS (1)

SEPTEMBER 2024

SEPTEMBER 2023

SEPTEMBER 2024

SEPTEMBER 2023

Structural lumber – board feet

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Medium density fiberboard – square feet (3/4”)

(1) Sales volumes include sales of internally produced products and products purchased for resale primarily through our distribution business.

(1) Sales volumes include internally produced products and products purchased for resale primarily through our distribution business.

PRODUCTION AND OUTSIDE PURCHASE VOLUMES

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VOLUMES IN MILLIONS

SEPTEMBER 2024

SEPTEMBER 2023

SEPTEMBER 2024

SEPTEMBER 2023

Structural lumber – board feet:

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DOLLAR AMOUNTS IN MILLIONS

SEPTEMBER 2024

SEPTEMBER 2023

SEPTEMBER 2024

SEPTEMBER 2023

Unallocated corporate function and variable compensation expense

Liability classified share-based compensation

Foreign exchange gain (loss)

Foreign exchange gain

Elimination of intersegment profit in inventory and LIFO

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Net charge to earnings

Comparing Second Quarter 2024 with Second Quarter 2023

Net charge to earnings increased $14 million – 29 percent – primarily due to:

● a $6 million decrease in interest income and other, primarily attributable to a decrease in our cash and short-term investment accounts;

● a $5 million increase in unallocated corporate function and variable compensation expense and

● a $2 million decrease in foreign exchange gain.

Comparing Third Quarter 2024 with Third Quarter 2023

Net charge to earnings increased $7 million – 15 percent – primarily due to a $10 million decrease in interest income and other, attributable to a decrease in our cash and short-term investment accounts, and a $4 million increase in liability classified share-based compensation.

These changes were partially offset by a $9 million decrease in elimination of intersegment profit in inventory and LIFO.

Comparing Year-to-Date 2024 with Year-to-Date 2023

Net charge to earnings increased $52 million – 67 percent – primarily due to a $16 million increase in unallocated corporate function and variable compensation expense and a $12 million increase in elimination of intersegment profit in inventory and LIFO.

Net charge to earnings increased $59 million – 48 percent – primarily due to a $15 million increase in unallocated corporate function and variable compensation expense and a $12 million decrease in interest income and other, primarily attributable to a decrease in our cash and short-term investment accounts.

INTEREST EXPENSE

Our interest expense, net of capitalized interest, was:

● $67 million for second quarter 2024 and $134 million year-to-date 2024;

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

Interest expense decreased by $3 million compared to second quarter 2023 and decreased by $2 million compared to year-to-date 2023 primarily due to a series of debt issuances and retirements during 2023 that decreased our average outstanding debt.

● $69 million for third quarter 2024 and $203 million year-to-date 2024;

● $72 million for third quarter 2023 and $208 million year-to-date 2023.

Interest expense decreased by $3 million compared to third quarter 2023 and decreased by $5 million compared to year-to-date 2023 primarily due to a series of debt issuances and retirements during 2023 that decreased our average outstanding debt.

Refer to Note 8:

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Our provision for income taxes was:

● a $33 million expense for second quarter 2024 and $53 million year-to-date 2024;

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

● a $15 million benefit for third quarter 2024 and a $38 million expense year-to-date 2024;

● a $54 million expense for third quarter 2023 and a $101 million expense year-to-date 2023.

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

Income tax expense increased by $6 million compared to year-to-date 2023 primarily due to a $25 million product remediation recovery received during second quarter 2024.

Income tax expense decreased by $63 million compared to year-to-date 2023 primarily due to a decrease in our TRS earnings in 2024, as well as a decrease in our estimated annual effective tax rate.

Refer to Note 14:

Other Operating (Income) Costs, Net and Note 14:

Income Taxes for further information.

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We are committed to maintaining an appropriate capital structure that provides financial 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 June 30, 2024, we had $997 million in cash and cash equivalents and $1.5 billion of availability on our line of credit, which expires in March 2028.

As of September 30, 2024, we had $877 million in cash and cash equivalents 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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● $1,145 million for year-to-date 2023.

Net cash from operations decreased $66 million primarily due to decreased cash flows from our business operations, as well as a $20 million increase in cash paid for income taxes.

Net cash from operations decreased $355 million primarily due to decreased cash flows from our business operations, as well as an $11 million increase in cash paid for income taxes.

CASH FROM INVESTING ACTIVITIES

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DOLLAR AMOUNTS IN MILLIONS

SEPTEMBER 2024

SEPTEMBER 2023

Wood Products

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● $(571) million for year-to-date 2023.

Net cash from financing activities decreased $213 million primarily due to a $743 million decrease in net proceeds from issuance of long-term debt, partially offset by a $544 million decrease in cash used for payments of dividends.

Net cash from financing activities decreased $103 million primarily due to a $743 million decrease in net proceeds from issuance of long-term debt, partially offset by a $537 million decrease in cash used for payments of dividends, as well as a $118 million decrease in cash used for payments of long-term debt.

Line of Credit

We had no outstanding borrowings on our $1.5 billion five-year senior unsecured revolving credit facility as of June 30, 2024 or December 31, 2023.

We had no outstanding borrowings on our $1.5 billion five-year senior unsecured revolving credit facility as of September 30, 2024 or December 31, 2023.

This credit facility expires in March 2028.

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We have $210 million of long-term debt, with a weighted average interest rate of 8.314 percent, scheduled to mature during first quarter 2025.

In July 2023, we repaid $118 million of our 7.125 percent 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.

3 unchanged sentences

Debt Covenants

As of June 30, 2024, Weyerhaeuser Company was in compliance with its debt covenants.

As of September 30, 2024, Weyerhaeuser Company was in compliance with its debt covenants.

There have been no significant changes to the debt covenants presented in our 2023 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.

4 unchanged sentences

The decrease in dividends paid is primarily due to a supplemental dividend of $0.14 per share based on 2023 financial results for a total of $102 million paid in first quarter 2024 in comparison 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.

We plan to supplement our base dividend each year with an additional return of cash, in the form of a supplemental cash dividend and/or share repurchase, to achieve our targeted annual payout of total cash to shareholders of 75 to 80 percent of Adjusted Funds Available for Distribution (Adjusted FAD).

Under our cash return framework, we plan to supplement our base dividend with an additional return of variable cash, as appropriate, in the form of a supplemental cash dividend and/or share repurchase to achieve a targeted total return to shareholders of 75 to 80 percent of annual Adjusted Funds Available for Distribution (Adjusted FAD).

For further information on Adjusted FAD see Performance and Liquidity Measures .

Share Repurchases

We repurchased 1,669,145 common shares for approximately $50 million (including transaction fees) during second quarter 2024 and 3,141,514 common shares for approximately $99 million (including transaction fees) during year-to-date 2024 under the 2021 Repurchase Program.

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

There were 15,765 unsettled shares (approximately $1 million) as of June 30, 2024 and 13,866 unsettled shares (approximately $1 million) as of December 31, 2023.

We repurchased 820,706 common shares for approximately $26 million (including transaction fees) during third quarter 2024 and 3,962,220 common shares for approximately $125 million (including transaction fees) during year-to-date 2024 under the 2021 Repurchase Program.

During third quarter 2023, we repurchased 757,510 common shares for approximately $25 million (including transaction fees) and 3,562,944 common shares for approximately $110 million (including transaction fees) during year-to-date 2023 under the 2021 Repurchase Program.

There were 11,564 unsettled shares (less than $1 million) as of September 30, 2024 and 13,866 unsettled shares (approximately $1 million) as of December 31, 2023.

Refer to Note 4:

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DOLLAR AMOUNTS IN MILLIONS

SEPTEMBER 2024

SEPTEMBER 2023

SEPTEMBER 2024

SEPTEMBER 2023

Adjusted EBITDA by Segment:

5 unchanged sentences

GAAP measures for each.

The table below reconciles Adjusted EBITDA for the quarter ended June 30, 2024:

The table below reconciles Adjusted EBITDA for the quarter ended September 30, 2024:

DOLLAR AMOUNTS IN MILLIONS

10 unchanged sentences

Adjusted EBITDA

(1) Operating income (loss) for Wood Products includes a pretax special item consisting of a $25 million product remediation recovery.

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

(1) Operating income (loss) for Wood Products includes a pretax special item consisting of a $10 million noncash impairment charge related to the indefinite curtailment of our New Bern lumber mill.

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

DOLLAR AMOUNTS IN MILLIONS

8 unchanged sentences

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, 2024:

The table below reconciles Adjusted EBITDA for the year-to-date period ended September 30, 2024:

DOLLAR AMOUNTS IN MILLIONS

10 unchanged sentences

Adjusted EBITDA

(1) Operating income (loss) for Wood Products includes a pretax special item consisting of a $25 million product remediation recovery.

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

(1) Operating income (loss) for Wood Products includes pretax special items consisting of a $25 million product remediation recovery and a $10 million noncash impairment charge related to the indefinite curtailment of our New Bern lumber mill.

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

DOLLAR AMOUNTS IN MILLIONS

21 unchanged sentences

DOLLAR AMOUNTS IN MILLIONS

SEPTEMBER 2024

SEPTEMBER 2023

SEPTEMBER 2024

SEPTEMBER 2023

Net cash from operations

3 unchanged sentences

Net cash from financing activities

Net Earnings and Net Earnings per Diluted Share Before Special Items

Net Earnings and Net Earnings per Diluted Share Before Special Items (Income Tax Affected)

We use net earnings before special items and net earnings per diluted share before special items as key performance measures to evaluate the performance of the consolidated company.

5 unchanged sentences

DOLLAR AMOUNTS IN MILLIONS

SEPTEMBER 2024

SEPTEMBER 2023

SEPTEMBER 2024

SEPTEMBER 2023

Environmental remediation charge

Product remediation recovery

Restructuring, impairments and other charges

Net earnings before special items

2 unchanged sentences

YEAR-TO-DATE ENDED

SEPTEMBER 2024

SEPTEMBER 2023

SEPTEMBER 2024

SEPTEMBER 2023

Net earnings per diluted share

1 unchanged sentence

Product remediation recovery

Restructuring, impairments and other charges

Net earnings per diluted share before special items

9 unchanged sentences

Changes in market rates of interest affect the fair value of our fixed-rate debt.

Summary of Long-Term Debt Obligations as of June 30, 2024

Summary of Long-Term Debt Obligations as of September 30, 2024

DOLLAR AMOUNTS IN MILLIONS

3 unchanged sentences

(1) Excludes $41 million of unamortized discounts and capitalized debt expense.

(2) As of June 30, 2024, the interest rate for our variable-rate debt was 7.29 percent, excluding estimated patronage refunds.

(2) As of September 30, 2024, the interest rate for our variable-rate debt was 6.80 percent, excluding estimated patronage refunds.

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 2. Management’s Discussion and Analysis