Weyerhaeuser Company has reported first quarter net earnings of $150 million, or 20 cents per diluted share, on net sales of $1.7 billion. This compares with a net loss of $289 million, or 39 cents per diluted share, on net sales of $1.6 billion for the same period last year. The company operates a plywood mill in Emerson and a tree nursery in the Calhoun community.
Excluding an after-tax benefit of $12 million for special items, the company reported first quarter net earnings of $138 million, or 18 cents per diluted share. This compares with net earnings before special items of $80 million for the same period last year and $23 million for the fourth quarter of 2019.
Adjusted EBITDA for the first quarter of 2020 was $413 million compared with $365 million for the same period last year and $260 million for the fourth quarter of 2019.
“I am proud of our first quarter performance, as each business delivered strong operating results despite rapidly changing market conditions associated with the COVID-19 pandemic,” said Devin W. Stockfish, president and chief executive officer. “I want to thank our employees for their dedication to safety, operational excellence and serving our customers through this uncertain and challenging environment.”
“In late March, we took steps to enhance financial flexibility and position Weyerhaeuser’s businesses for changing market dynamics,” Stockfish said.
“During the second quarter, customer market conditions have deteriorated across our businesses, consistent with the broader macroeconomic environment. As a result, we are taking further actions, including temporarily suspending the quarterly dividend, to preserve liquidity and financial flexibility. Weyerhaeuser remains committed to a balanced capital allocation philosophy that includes returning cash to shareholders through a sustainable dividend. The board will regularly evaluate opportunities to reinitiate an appropriate quarterly cash dividend as soon as practicable based on the company’s cash flow, liquidity, leverage, customer demand, market conditions, and the broader macroeconomic environment.”
In the South, fee harvest volumes declined due to wet weather and lower stumpage sales. Average log sales realizations decreased slightly, partially offset by lower forestry costs.
Weyerhaeuser expects second quarter earnings and Adjusted EBITDA will be significantly lower than first quarter 2020. In the West, the company anticipates lower realizations, comparable domestic log sales volumes, and seasonally higher road and forestry costs, partially offset by higher sales volumes for China export logs.
Weyerhaeuser expects second quarter earnings and Adjusted EBITDA for Wood Products will be significantly lower than first quarter 2020 and second quarter 2019. The company anticipates significantly lower sales volumes across all product lines. To date, second quarter benchmark pricing for lumber and oriented strand board is lower than the first quarter average.
In late March, market demand for wood products began to decline due to the economic impact of COVID-19. In response to deteriorating market conditions, Weyerhaeuser announced on March 30 that it was adjusting production volumes across its wood products manufacturing facilities to align with customer demand. These adjustments include a combination of temporary mill curtailments and reduced shift postures.
For the month of April, the company reduced operating capacity by 20 percent for lumber and 15 percent for oriented strand board. Weyerhaeuser anticipates extending these lumber and oriented strand board capacity reductions at similar levels in May and will continue to adjust as market conditions evolve.
In engineered wood products, the company reduced operating capacity across its product lines by 15 to 25 percent for the month of April. In the month of May, Weyerhaeuser expects to reduce engineered wood products operating capacity by an additional 10 percent, resulting in a 25 to 35 percent overall reduction in operating capacity for the month.