SEATTLE, PRNewswire — Weyerhaeuser Company has reported third-quarter net earnings of $99 million, or 13 cents per diluted share, on net sales of $1.7 billion. This compares with net earnings of $255 million, or 34 cents per diluted share, on net sales of $1.9 billion for the same period last year.
Excluding a net after-tax benefit of $40 million for special items, primarily relating to a product remediation insurance recovery, the company reported third-quarter net earnings of $59 million, or eight cents per diluted share. This compares with net earnings before special items of $214 million for the same period last year and $123 million for the second quarter of 2019.
Adjusted EBITDA for the third quarter of 2019 was $308 million compared with $505 million for the same period last year and $343 million for the second quarter of 2019.
“In the third quarter, we again delivered strong operating performance despite challenging market conditions,” said Devin W. Stockfish, president and chief executive officer. “We also announced the pending sale of 555,000 acres in Michigan, which will further optimize our timberlands portfolio. Looking forward, we continue to expect that U.S. housing activity will follow a modest growth trajectory. We remain intently focused on achieving operational excellence in every aspect of our business and fully capitalizing on every available market opportunity to drive value for our shareholders.”
Q3 2019 Performance – In the West, average sales realizations for domestic and export logs declined and domestic sales volumes were seasonally lower. Log and haul costs increased as Western harvest activity shifted to higher elevation units. In the South, average sales realizations decreased slightly compared with the second quarter due to mix, and higher fee harvest volumes were partially offset by slightly higher forestry spending.
Q4 2019 Outlook – Weyerhaeuser expects fourth-quarter earnings will be comparable with the third quarter and Adjusted EBITDA will be slightly lower. In the South, the company anticipates lower fee harvest volumes and slightly lower average log sales realizations. In the West, the company expects seasonally lower road and unit logging costs and modestly higher average domestic sales realizations, partially offset by lower log sales volumes.
In September 2019, the company announced an agreement to sell its 555,000 acres of Michigan timberlands. The transaction is subject to customary closing conditions and is expected to close in the fourth quarter of 2019.
Q3 2019 Performance – Earnings and Adjusted EBITDA decreased due to lower real estate sales. The number of acres sold declined and the average price per acre increased due to geographic mix.
Q4 2019 Outlook – Weyerhaeuser anticipates fourth-quarter earnings and Adjusted EBITDA will be lower than the third quarter. The company continues to expect full-year 2019 Adjusted EBITDA for the segment will be approximately $270 million.
Q3 2019 Performance – Seasonally higher sales volumes for most products were more than offset by higher unit manufacturing costs, primarily due to scheduled downtime in engineered wood products and modest hurricane-related downtime in the company’s Southern lumber operations.
Average sales realizations for oriented strand board and lumber were comparable with the second-quarter average, reflecting the company’s regional mix. Although the published North Central benchmark price for oriented strand board improved during the third quarter, published pricing for other regions trended lower. Similarly, third-quarter price improvement for Southern yellow pine lumber trailed the benchmark Framing Lumber Composite.
Third-quarter special items consist of a $68 million pretax benefit from product remediation insurance proceeds.
Q4 2019 Outlook – Weyerhaeuser anticipates fourth-quarter earnings before special items and Adjusted EBITDA for Wood Products will be lower than the third quarter, but higher than the fourth quarter of 2018, before any improvement in average sales realizations. The company expects seasonally lower sales volumes across most products, higher Western log costs, and modest improvement in other operating costs.