|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
|
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED
or
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER:
(Exact name of registrant as specified in its charter)
|
|
|
|
|
(State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification Number) |
|
|
|
|
|
|
|
|
|
(Address of principal executive offices) |
|
(Zip Code) |
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
|
Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which registered |
|
|
|
|
|
|
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
|
|
☒ |
|
Accelerated filer |
☐ |
|
Non-accelerated filer |
☐ |
|
Smaller reporting company |
|
|
Emerging growth company |
|
|
|
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
As of April 25, 2022,
TABLE OF CONTENTS
|
PART I |
FINANCIAL INFORMATION |
|
|
ITEM 1. |
FINANCIAL STATEMENTS: |
|
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
ITEM 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A) |
|
|
ITEM 3. |
||
|
ITEM 4. |
||
|
|
|
|
|
PART II |
OTHER INFORMATION |
|
|
ITEM 1. |
||
|
ITEM 1A. |
||
|
ITEM 2. |
||
|
ITEM 3. |
DEFAULTS UPON SENIOR SECURITIES – NOT APPLICABLE |
|
|
ITEM 4. |
MINE SAFETY DISCLOSURES – NOT APPLICABLE |
|
|
ITEM 5. |
OTHER INFORMATION – NOT APPLICABLE |
|
|
ITEM 6. |
||
|
|
PART I – FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
WEYERHAEUSER COMPANY
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
|
|
|
QUARTER ENDED |
|
|||||
|
DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES |
|
MARCH 2022 |
|
|
MARCH 2021 |
|
||
|
Net sales (Note 3) |
|
$ |
|
|
|
$ |
|
|
|
Costs of sales |
|
|
|
|
|
|
|
|
|
Gross margin |
|
|
|
|
|
|
|
|
|
Selling expenses |
|
|
|
|
|
|
|
|
|
General and administrative expenses |
|
|
|
|
|
|
|
|
|
Other operating costs, net (Note 13) |
|
|
|
|
|
|
|
|
|
Operating income |
|
|
|
|
|
|
|
|
|
Non-operating pension and other post-employment benefit costs (Note 6) |
|
|
( |
) |
|
|
( |
) |
|
Interest income and other |
|
|
( |
) |
|
|
|
|
|
Interest expense, net of capitalized interest |
|
|
( |
) |
|
|
( |
) |
|
Loss on debt extinguishment (Note 8) |
|
|
( |
) |
|
|
|
|
|
Earnings before income taxes |
|
|
|
|
|
|
|
|
|
Income taxes (Note 14) |
|
|
( |
) |
|
|
( |
) |
|
Net earnings |
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share, basic and diluted (Note 4) |
|
$ |
|
|
|
$ |
|
|
|
Weighted average shares outstanding (in thousands) (Note 4): |
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
|
|
Diluted |
|
|
|
|
|
|
|
|
See accompanying Notes to Consolidated Financial Statements.
1
WEYERHAEUSER COMPANY
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)
|
|
|
QUARTER ENDED |
|
|||||
|
DOLLAR AMOUNTS IN MILLIONS |
|
MARCH 2022 |
|
|
MARCH 2021 |
|
||
|
Net earnings |
|
$ |
|
|
|
$ |
|
|
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments |
|
|
|
|
|
|
|
|
|
Changes in unamortized actuarial loss, net of tax expense of $ |
|
|
|
|
|
|
|
|
|
Changes in unamortized net prior service credit, net of tax (expense) benefit of ($ |
|
|
|
|
|
|
|
|
|
Total other comprehensive income |
|
|
|
|
|
|
|
|
|
Total comprehensive income |
|
$ |
|
|
|
$ |
|
|
See accompanying Notes to Consolidated Financial Statements.
2
WEYERHAEUSER COMPANY
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
|
DOLLAR AMOUNTS IN MILLIONS, EXCEPT PAR VALUE |
|
MARCH 31, 2022 |
|
|
DECEMBER 31, 2021 |
|
||
|
ASSETS |
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
|
|
|
$ |
|
|
|
Receivables, net |
|
|
|
|
|
|
|
|
|
Receivables for taxes |
|
|
|
|
|
|
|
|
|
Inventories (Note 5) |
|
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets |
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
|
|
|
|
|
|
|
Property and equipment, less accumulated depreciation of $ |
|
|
|
|
|
|
|
|
|
Construction in progress |
|
|
|
|
|
|
|
|
|
Timber and timberlands at cost, less depletion |
|
|
|
|
|
|
|
|
|
Minerals and mineral rights, less depletion |
|
|
|
|
|
|
|
|
|
Deferred tax assets |
|
|
|
|
|
|
|
|
|
Other assets |
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
|
|
|
$ |
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
|
|
|
$ |
|
|
|
Accrued liabilities (Note 7) |
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
|
|
|
|
|
|
|
Long-term debt, net (Note 8) |
|
|
|
|
|
|
|
|
|
Deferred tax liabilities |
|
|
|
|
|
|
|
|
|
Deferred pension and other post-employment benefits (Note 6) |
|
|
|
|
|
|
|
|
|
Other liabilities |
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
|
|
|
|
|
|
|
Commitments and contingencies (Note 10) |
|
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
|
|
|
|
Common shares: $ |
|
|
|
|
|
|
|
|
|
Other capital |
|
|
|
|
|
|
|
|
|
Retained earnings |
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive loss (Note 11) |
|
|
( |
) |
|
|
( |
) |
|
Total equity |
|
|
|
|
|
|
|
|
|
Total liabilities and equity |
|
$ |
|
|
|
$ |
|
|
See accompanying Notes to Consolidated Financial Statements.
3
WEYERHAEUSER COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
|
|
|
QUARTER ENDED |
|
|||||
|
DOLLAR AMOUNTS IN MILLIONS |
|
MARCH 2022 |
|
|
MARCH 2021 |
|
||
|
Cash flows from operations: |
|
|
|
|
|
|
|
|
|
Net earnings |
|
$ |
|
|
|
$ |
|
|
|
Noncash charges (credits) to earnings: |
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
|
|
|
|
|
|
|
|
Basis of real estate sold |
|
|
|
|
|
|
|
|
|
Deferred income taxes, net |
|
|
|
|
|
|
|
|
|
Pension and other post-employment benefits (Note 6) |
|
|
|
|
|
|
|
|
|
Share-based compensation expense (Note 12) |
|
|
|
|
|
|
|
|
|
Loss on debt extinguishment |
|
|
|
|
|
|
|
|
|
Change in: |
|
|
|
|
|
|
|
|
|
Receivables, net |
|
|
( |
) |
|
|
( |
) |
|
Receivables and payables for taxes |
|
|
|
|
|
|
|
|
|
Inventories |
|
|
( |
) |
|
|
( |
) |
|
Prepaid expenses and other current assets |
|
|
( |
) |
|
|
( |
) |
|
Accounts payable and accrued liabilities |
|
|
( |
) |
|
|
( |
) |
|
Pension and post-employment benefit contributions and payments |
|
|
( |
) |
|
|
( |
) |
|
Other |
|
|
( |
) |
|
|
( |
) |
|
Net cash from operations |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
Capital expenditures for property and equipment |
|
|
( |
) |
|
|
( |
) |
|
Capital expenditures for timberlands reforestation |
|
|
( |
) |
|
|
( |
) |
|
Acquisition of timberlands |
|
|
( |
) |
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
Net cash from investing activities |
|
|
( |
) |
|
|
( |
) |
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
Cash dividends on common shares |
|
|
( |
) |
|
|
( |
) |
|
Net proceeds from issuance of long-term debt (Note 8) |
|
|
|
|
|
|
|
|
|
Payments on long-term debt (Note 8) |
|
|
( |
) |
|
|
|
|
|
Proceeds from exercise of stock options |
|
|
|
|
|
|
|
|
|
Repurchases of common shares (Note 4) |
|
|
( |
) |
|
|
|
|
|
Other |
|
|
( |
) |
|
|
( |
) |
|
Net cash from financing activities |
|
|
( |
) |
|
|
( |
) |
|
Net change in cash, cash equivalents and restricted cash |
|
|
( |
) |
|
|
|
|
|
Cash, cash equivalents and restricted cash at beginning of period |
|
|
|
|
|
|
|
|
|
Cash, cash equivalents and restricted cash at end of period |
|
$ |
|
|
|
$ |
|
|
|
Cash paid (received) during the period for: |
|
|
|
|
|
|
|
|
|
Interest, net of amount capitalized of $ |
|
$ |
|
|
|
$ |
|
|
|
Income taxes, net of refunds |
|
$ |
|
|
|
$ |
|
|
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 2022 |
|
|
MARCH 2021 |
|
||
|
Common shares: |
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
|
$ |
|
|
|
$ |
|
|
|
Issued for exercise of stock options and vested units |
|
|
|
|
|
|
|
|
|
Repurchases of common shares (Note 4) |
|
|
( |
) |
|
|
|
|
|
Balance at end of period |
|
|
|
|
|
|
|
|
|
Other capital: |
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
|
|
|
|
|
|
|
|
|
Issued for exercise of stock options |
|
|
|
|
|
|
|
|
|
Repurchases of common shares (Note 4) |
|
|
( |
) |
|
|
|
|
|
Share-based compensation |
|
|
|
|
|
|
|
|
|
Other transactions, net |
|
|
( |
) |
|
|
( |
) |
|
Balance at end of period |
|
|
|
|
|
|
|
|
|
Retained earnings: |
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
|
|
|
|
|
|
|
|
|
Net earnings |
|
|
|
|
|
|
|
|
|
Dividends on common shares |
|
|
( |
) |
|
|
( |
) |
|
Balance at end of period |
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive loss: |
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
|
|
( |
) |
|
|
( |
) |
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
Balance at end of period (Note 11) |
|
|
( |
) |
|
|
( |
) |
|
Total equity: |
|
|
|
|
|
|
|
|
|
Balance at end of period |
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid per common share |
|
$ |
|
|
|
$ |
|
|
See accompanying Notes to Consolidated Financial Statements.
5
INDEX FOR NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 1: |
||
|
|
|
|
|
NOTE 2: |
||
|
|
|
|
|
NOTE 3: |
||
|
|
|
|
|
NOTE 4: |
||
|
|
|
|
|
NOTE 5: |
||
|
|
|
|
|
NOTE 6: |
||
|
|
|
|
|
NOTE 7: |
||
|
|
|
|
|
NOTE 8: |
||
|
|
|
|
|
NOTE 9: |
||
|
|
|
|
|
NOTE 10: |
||
|
|
|
|
|
NOTE 11: |
||
|
|
|
|
|
NOTE 12: |
||
|
|
|
|
|
NOTE 13: |
||
|
|
|
|
|
NOTE 14: |
||
|
NOTE 15: |
||
|
NOTE 16: |
||
|
|
|
|
6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE QUARTERS ENDED MARCH 31, 2022 AND 2021
NOTE 1: BASIS OF 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,” “we,” “the company” 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, 2021. 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: BUSINESS SEGMENTS
We are principally engaged in growing and harvesting timber; manufacturing, distributing and selling products made from trees; maximizing the value of every acre we own through the sale of higher and better use (HBU) properties; and monetizing the value of surface and subsurface assets through leases and royalties. Our business segments are categorized 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, and wind and solar resources) 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 2022 |
|
|
MARCH 2021 |
|
||
|
Sales to unaffiliated customers: |
|
|
|
|
|
|
|
|
|
Timberlands |
|
$ |
|
|
|
$ |
|
|
|
Real Estate & ENR |
|
|
|
|
|
|
|
|
|
Wood Products |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intersegment sales: |
|
|
|
|
|
|
|
|
|
Timberlands |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total sales |
|
|
|
|
|
|
|
|
|
Intersegment eliminations |
|
|
( |
) |
|
|
( |
) |
|
Total |
|
$ |
|
|
|
$ |
|
|
|
Net contribution (charge) to earnings: |
|
|
|
|
|
|
|
|
|
Timberlands |
|
$ |
|
|
|
$ |
|
|
|
Real Estate & ENR |
|
|
|
|
|
|
|
|
|
Wood Products |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unallocated items(1) |
|
|
( |
) |
|
|
( |
) |
|
Net contribution to earnings |
|
|
|
|
|
|
|
|
|
Interest expense, net of capitalized interest |
|
|
( |
) |
|
|
( |
) |
|
Loss on debt extinguishment |
|
|
( |
) |
|
|
|
|
|
Earnings before income taxes |
|
|
|
|
|
|
|
|
|
Income taxes |
|
|
( |
) |
|
|
( |
) |
|
Net earnings |
|
$ |
|
|
|
$ |
|
|
|
(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 as well as legacy obligations. |
7
NOTE 3: REVENUE RECOGNITION
A reconciliation of revenue recognized by our major products:
|
|
|
QUARTER ENDED |
|
|||||
|
DOLLAR AMOUNTS IN MILLIONS |
|
MARCH 2022 |
|
|
MARCH 2021 |
|
||
|
Net sales to unaffiliated customers: |
|
|
|
|
|
|
|
|
|
Timberlands segment |
|
|
|
|
|
|
|
|
|
Delivered logs: |
|
|
|
|
|
|
|
|
|
West |
|
|
|
|
|
|
|
|
|
Domestic sales |
|
$ |
|
|
|
$ |
|
|
|
Export grade sales |
|
|
|
|
|
|
|
|
|
Subtotal West |
|
|
|
|
|
|
|
|
|
South |
|
|
|
|
|
|
|
|
|
North |
|
|
|
|
|
|
|
|
|
Subtotal delivered logs sales |
|
|
|
|
|
|
|
|
|
Stumpage and pay-as-cut timber |
|
|
|
|
|
|
|
|
|
Recreational and other lease revenue |
|
|
|
|
|
|
|
|
|
Other(1) |
|
|
|
|
|
|
|
|
|
Net sales attributable to Timberlands segment |
|
|
|
|
|
|
|
|
|
Real Estate & ENR segment |
|
|
|
|
|
|
|
|
|
Real estate |
|
|
|
|
|
|
|
|
|
Energy and natural resources |
|
|
|
|
|
|
|
|
|
Net sales attributable to Real Estate & ENR segment |
|
|
|
|
|
|
|
|
|
Wood Products segment |
|
|
|
|
|
|
|
|
|
Structural lumber |
|
|
|
|
|
|
|
|
|
Oriented strand board |
|
|
|
|
|
|
|
|
|
Engineered solid section |
|
|
|
|
|
|
|
|
|
Engineered I-joists |
|
|
|
|
|
|
|
|
|
Softwood plywood |
|
|
|
|
|
|
|
|
|
Medium density fiberboard |
|
|
|
|
|
|
|
|
|
Complementary building products |
|
|
|
|
|
|
|
|
|
Other(2) |
|
|
|
|
|
|
|
|
|
Net sales attributable to Wood Products segment |
|
|
|
|
|
|
|
|
|
Total net sales |
|
$ |
|
|
|
$ |
|
|
|
(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:
|
● |
$ |
|
● |
$ |
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.
8
|
|
|
QUARTER ENDED |
|
|||||
|
SHARES IN THOUSANDS |
|
MARCH 2022 |
|
|
MARCH 2021 |
|
||
|
Weighted average common shares outstanding – basic |
|
|
|
|
|
|
|
|
|
Dilutive potential common shares: |
|
|
|
|
|
|
|
|
|
Stock options |
|
|
|
|
|
|
|
|
|
Restricted stock units |
|
|
|
|
|
|
|
|
|
Performance share units |
|
|
|
|
|
|
|
|
|
Total effect of outstanding dilutive potential common shares |
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding – dilutive |
|
|
|
|
|
|
|
|
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 2022 |
|
|
MARCH 2021 |
|
||
|
Stock options |
|
|
|
|
|
|
|
|
|
Performance share units |
|
|
|
|
|
|
|
|
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 $
During first quarter 2022, we repurchased
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
NOTE 5: INVENTORIES
Inventories include raw materials, work-in-process, finished goods, as well as materials and supplies.
|
DOLLAR AMOUNTS IN MILLIONS |
|
MARCH 31, 2022 |
|
|
DECEMBER 31, 2021 |
|
||
|
LIFO inventories: |
|
|
|
|
|
|
|
|
|
Logs |
|
$ |
|
|
|
$ |
|
|
|
Lumber, plywood, panels and fiberboard |
|
|
|
|
|
|
|
|
|
Other products |
|
|
|
|
|
|
|
|
|
Moving average cost or FIFO inventories: |
|
|
|
|
|
|
|
|
|
Logs |
|
|
|
|
|
|
|
|
|
Lumber, plywood, panels, fiberboard and engineered wood products |
|
|
|
|
|
|
|
|
|
Other products |
|
|
|
|
|
|
|
|
|
Materials and supplies |
|
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
|
$ |
|
|
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 POST-EMPLOYMENT BENEFIT PLANS
The components of net periodic benefit cost are:
|
|
|
PENSION |
|
|||||
|
|
|
QUARTER ENDED |
|
|||||
|
DOLLAR AMOUNTS IN MILLIONS |
|
MARCH 2022 |
|
|
MARCH 2021 |
|
||
|
Service cost |
|
$ |
|
|
|
$ |
|
|
|
Interest cost |
|
|
|
|
|
|
|
|
|
Expected return on plan assets |
|
|
( |
) |
|
|
( |
) |
|
Amortization of actuarial loss |
|
|
|
|
|
|
|
|
|
Amortization of prior service cost |
|
|
|
|
|
|
|
|
|
Total net periodic benefit cost – pension |
|
$ |
|
|
|
$ |
|
|
|
|
|
OTHER POST-EMPLOYMENT BENEFITS |
|
|||||
|
|
|
QUARTER ENDED |
|
|||||
|
DOLLAR AMOUNTS IN MILLIONS |
|
MARCH 2022 |
|
|
MARCH 2021 |
|
||
|
Interest cost |
|
$ |
|
|
|
$ |
|
|
|
Amortization of actuarial loss |
|
|
|
|
|
|
|
|
|
Amortization of prior service credit |
|
|
|
|
|
|
( |
) |
|
Total net periodic benefit cost – other post-employment benefits |
|
$ |
|
|
|
$ |
|
|
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 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.
NOTE 7: ACCRUED LIABILITIES
Accrued liabilities were comprised of the following:
|
DOLLAR AMOUNTS IN MILLIONS |
|
MARCH 31, 2022 |
|
|
DECEMBER 31, 2021 |
|
||
|
Compensation and employee benefit costs |
|
$ |
|
|
|
$ |
|
|
|
Current portion of lease liabilities |
|
|
|
|
|
|
|
|
|
Customer rebates, volume discounts and deferred income |
|
|
|
|
|
|
|
|
|
Interest |
|
|
|
|
|
|
|
|
|
Taxes payable |
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
|
$ |
|
|
NOTE 8: LONG-TERM DEBT AND LINE OF CREDIT
In March 2022, we completed a series of transactions that lowered our weighted average interest rate and extended our weighted average maturity by issuing $
In January 2020, we refinanced and extended our $
10
NOTE 9: FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value and carrying value of our long-term debt consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
DOLLAR AMOUNTS IN MILLIONS |
|
MARCH 31, 2022 |
|
|
DECEMBER 31, 2021 |
|
||
|
Long-term fixed rate debt (including current maturities): |
|
|
|
|
|
|
|
|
|
Carrying value |
|
$ |
|
|
|
$ |
|
|
|
Fair value (level 2) |
|
$ |
|
|
|
$ |
|
|
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 line of credit has a net carrying value that approximates its fair value within an insignificant difference. 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, COMMITMENTS 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, 2022, our total accrual for future estimated remediation costs on active Superfund sites and other sites for which we are potentially responsible was approximately $
11
NOTE 11: ACCUMULATED OTHER COMPREHENSIVE LOSS
Changes in amounts included in our accumulated other comprehensive loss by component are:
|
|
|
QUARTER ENDED |
|
|||||
|
DOLLAR AMOUNTS IN MILLIONS |
|
MARCH 2022 |
|
|
MARCH 2021 |
|
||
|
Pension(1) |
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
|
$ |
( |
) |
|
$ |
( |
) |
|
Other comprehensive income (loss) before reclassifications |
|
|
( |
) |
|
|
( |
) |
|
Amounts reclassified from accumulated other comprehensive loss to earnings(2) |
|
|
|
|
|
|
|
|
|
Total other comprehensive income |
|
|
|
|
|
|
|
|
|
Balance at end of period |
|
$ |
( |
) |
|
$ |
( |
) |
|
Other post-employment benefits(1) |
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
|
$ |
( |
) |
|
$ |
( |
) |
|
Other comprehensive income (loss) before reclassifications |
|
|
|
|
|
|
|
|
|
Amounts reclassified from accumulated other comprehensive loss to earnings(2) |
|
|
|
|
|
|
|
|
|
Total other comprehensive income |
|
|
|
|
|
|
|
|
|
Balance at end of period |
|
$ |
|
|
|
$ |
( |
) |
|
Translation adjustments and other |
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
|
$ |
|
|
|
$ |
|
|
|
Translation adjustments |
|
|
|
|
|
|
|
|
|
Total other comprehensive income |
|
|
|
|
|
|
|
|
|
Balance at end of period |
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive loss, end of period |
|
$ |
( |
) |
|
$ |
( |
) |
|
(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). See Note 6: Pension and Other Post-Employment Benefit Plans. |
NOTE 12: SHARE-BASED COMPENSATION
Share-based compensation activity during first quarter 2022 included the following:
|
SHARES IN THOUSANDS |
|
GRANTED |
|
|
VESTED |
|
||
|
Restricted stock units (RSUs) |
|
|
|
|
|
|
|
|
|
Performance share units (PSUs) |
|
|
|
|
|
|
|
|
A total of
Restricted Stock Units
The weighted average fair value of the RSUs granted in 2022 was $
Performance Share Units
The weighted average grant date fair value of PSUs granted in 2022 was $
Weighted Average Assumptions Used in Estimating the Value of Performance Share Units Granted in 2022
|
|
|
PERFORMANCE SHARE UNITS |
|
|
Performance period |
|
|
|
|
Valuation date average stock price(1) |
|
$ |
|
|
Expected dividends |
|
|
|
|
Risk-free rate |
|
|
|
|
Expected volatility |
|
|
|
|
(1) |
Calculated as an average of the high and low prices on grant date. |
12
NOTE 13: OTHER OPERATING COSTS, NET
Other operating costs, net were comprised of the following:
|
|
|
QUARTER ENDED |
|
|||||
|
DOLLAR AMOUNTS IN MILLIONS |
|
MARCH 2022 |
|
|
MARCH 2021 |
|
||
|
Foreign exchange losses (gains), net |
|
$ |
( |
) |
|
$ |
|
|
|
Litigation expense, net |
|
|
|
|
|
|
|
|
|
Research and development expenses |
|
|
|
|
|
|
|
|
|
Other, net |
|
|
|
|
|
|
|
|
|
Total other operating costs, net |
|
$ |
|
|
|
$ |
|
|
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 includes our Wood Products segment earnings and portions of our Timberlands and Real Estate & ENR segments' earnings.
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 2022 estimated annual effective tax rate, excluding discrete items, differs from the U.S. federal statutory tax rate of
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, 2022 |
|
|
December 31, 2021 |
|
||
|
Cash and cash equivalents |
|
$ |
|
|
|
$ |
|
|
|
Restricted cash included in other assets(1) |
|
|
|
|
|
|
|
|
|
Total cash, cash equivalents and restricted cash |
|
$ |
|
|
|
$ |
|
|
(1) Amounts included in restricted cash as of December 31, 2021 were comprised of proceeds held by a qualified intermediary that were intended to be reinvested in timber and timberlands through a like-kind exchange transaction. In first quarter 2022, the proceeds were released as a like-kind property was not identified.
NOTE 16: TIMBERLAND ACQUISITION
On April 14, 2022, we announced an agreement to purchase
13
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
NOTE ABOUT FORWARD-LOOKING STATEMENTS
This report contains statements concerning our future results and performance that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include, without limitation, statements relating to: our expected future financial and operating performance; our plans, strategies, intentions and expectations; estimated taxes and tax provision; our capital structure and the sufficiency of our liquidity position to meet future cash requirements; compliance with our debt agreements; contingent liabilities, and the sufficiency of litigation and other contingent liability reserves and related accruals including, but not limited to, estimates of future environmental remediation costs; expected capital expenditures; expected timing of closing of a timberlands acquisition; market and general economic conditions, including related influencing factors such as the trajectory of U.S. housing activity, repair and remodel activity, impacts from COVID-related restrictions, inflation trends, and interest rates; assumptions used in valuing incentive compensation and related expense; and our expectations relating to returns on invested pension plan assets and expected benefit payments.
Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often involve use of words such as “anticipate,” “believe,” “committed,” "continue,” “estimate,” “expect,” “foreseeable,” “future,” “maintain,” “may,” “plan,” “potential,” “will,” and “would,” or similar words or terminology. They may use the positive, negative or another variation of those and similar words. These forward-looking statements are based on our current expectations and assumptions and are not guarantees of future events or performance. The realization of our expectations and the accuracy of our assumptions are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. There is no guarantee that any of the events anticipated by our forward-looking statements will occur. If any of the events occur, there is no guarantee what effect it will have on our operations, cash flows, or financial condition. We undertake no obligation to update our forward-looking statements after the date of this report. The factors listed below, as well as other factors not described herein because they are not currently known to us or we currently judge them to be immaterial, may cause our actual results to differ significantly from our forward-looking statements:
|
● |
the effect of general economic conditions, including employment rates, interest rate levels, inflation, housing starts, general availability of financing for home mortgages and the relative strength of the U.S. dollar; |
|
● |
the effect of COVID-19 and other viral or disease outbreaks, including but not limited to any related regulatory restrictions or requirements, and their potential effects on our business, results of operations, cash flows, financial condition and future prospects; |
|
● |
market demand for the company's products, including market demand for our timberland properties with higher and better uses, which is related to, among other factors, the strength of the various U.S. business segments and U.S. and international economic conditions; |
|
● |
changes in currency exchange rates, particularly the relative value of the U.S. dollar to the Japanese yen, the Chinese yuan, and the Canadian dollar, and the relative value of the euro to the yen; |
|
● |
restrictions on international trade and tariffs imposed on imports or exports; |
|
● |
the availability and cost of shipping and transportation; |
|
● |
economic activity in Asia, especially Japan and China; |
|
● |
performance of our manufacturing operations, including maintenance and capital requirements; |
|
● |
potential disruptions in our manufacturing operations; |
|
● |
the level of competition from domestic and foreign producers; |
|
● |
the successful execution of our internal plans and strategic initiatives, including restructuring and cost reduction initiatives; |
|
● |
our ability to hire and retain capable employees; |
|
● |
the successful and timely execution and integration of our strategic acquisitions, including our ability to realize expected benefits and synergies, and the successful and timely execution of our strategic divestitures, each of which is subject to a number of risks and conditions beyond our control including, but not limited to, timing and required regulatory approvals or the occurrence of any event, change or other circumstances that could give rise to a termination of any acquisition or divestiture transaction under the terms of the governing transaction agreements; |
|
● |
raw material availability and prices; |
|
● |
the effect of weather; |
|
● |
changes in global or regional climate conditions and governmental response to such changes; |
|
● |
the risk of loss from fires, floods, windstorms, hurricanes, pest infestation and other natural disasters; |
|
● |
energy prices; |
|
● |
transportation and labor availability and costs; |
|
● |
federal tax policies; |
|
● |
the effect of forestry, land use, environmental and other governmental regulations; |
|
● |
legal proceedings; |
|
● |
performance of pension fund investments and related derivatives; |
|
● |
the effect of timing of employee retirements as it relates to the cost of pension benefits and changes in the market price of our common stock on charges for share-based compensation; |
|
● |
the accuracy of our estimates of costs and expenses related to contingent liabilities and the accuracy of our estimates of charges related to casualty losses; |
|
● |
changes in accounting principles; and |
|
● |
other risks and uncertainties described in this report under Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) and in our 2021 Annual Report on Form 10-K, as well as those set forth from time to time in our other public statements, reports, registration statements, prospectuses, information statements and other filings with the SEC. |
It is not possible to predict or identify all risks and uncertainties that might affect the accuracy of our forward-looking statements and, consequently, our descriptions of such risks and uncertainties should not be considered exhaustive. There is no guarantee that any of the events anticipated by these forward-looking statements will occur, and if any of the events do occur, there is no guarantee what effect they will have on the company's business, results of operations, cash flows, financial condition and future prospects.
Forward-looking statements speak only as of the date they are made, and we undertake no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events, or otherwise.
14
RESULTS OF OPERATIONS
In reviewing our results of operations, it is important to understand these terms:
|
● |
Sales realizations for Timberlands and Wood Products refer to net selling prices. This includes selling price plus freight, minus normal sales deductions. Real Estate transactions are presented at the contract sales price before commissions and closing costs, net of any credits. |
|
● |
Net contribution (charge) to earnings does not include interest expense, loss on debt extinguishment or income taxes. |
ECONOMIC AND MARKET CONDITIONS AFFECTING OUR OPERATIONS
Looking ahead, our market conditions and the strength of the broader U.S. economy will continue to be influenced by the trajectory of U.S. housing activity, repair and remodel activity, impacts from COVID-related restrictions, inflation trends and interest rates. The demand for sawlogs within our Timberlands segment is directly affected by domestic production of wood-based building products. The strength of the U.S. housing market, especially new residential construction, strongly affects demand in our Wood Products segment, as does repair and remodeling activity. Seasonal weather patterns impact the level of construction activity in the U.S., which in turn affects demand for our logs and wood products. Our Timberlands segment, specifically the Western region, is also affected by export demand and trade policy. Japanese housing starts are a key driver of export log demand in Japan. The demand for pulpwood from our Timberlands segment is directly affected by the production of pulp, paper and OSB as well as the demand for biofuels, such as pellets made from pulpwood. The Timberlands segment is also influenced by the availability of harvestable timber. In general, Western log markets are highly tensioned while Southern log markets have more available supply. However, additional mill capacity being added in the U.S. South has led to tightening of markets in certain geographies.
On a seasonally adjusted annual basis, as reported by the U.S. Census Bureau, housing starts for first quarter 2022 averaged 1.75 million units, a 5 percent increase from fourth quarter 2021. Single family starts averaged 1.2 million units, a 2.5 percent increase from fourth quarter 2021. Multi-family starts averaged 557 thousand units in first quarter 2022, which was a 10.7 percent increase from fourth quarter 2021. Sales of newly built, single family homes averaged a seasonally adjusted annual rate of 814 thousand units for first quarter 2022. This is an increase of 6.6 percent from the previous quarter.
Repair and remodeling expenditures increased by 5.2 percent from fourth quarter 2021 to first quarter 2022 according to the Census Bureau Advance Retail Spending report. Do-it-yourself activity remains at or above pre-pandemic historical levels while professionally contracted activities continue to expand.
In U.S. wood product markets, demand was strong during most of first quarter 2022 as dealer inventories remained lean, which contributed to increased prices for lumber and panels. The Random Lengths Framing Lumber Composite price averaged $1,248/MBF and the OSB Composite averaged $1,215/MSF in first quarter 2022.
In Western log markets, Douglas fir sawlog prices increased by 18 percent in first quarter 2022 compared with fourth quarter 2021 as reported by RISI Log Lines. The strength in Western log prices was supported by multiple factors including strong demand as mills capitalized on high lumber pricing. In the South, sawlog prices increased by 6 percent from fourth quarter 2021 and 13 percent from first quarter 2021 as reported by TimberMart-South mainly attributable to the increase in lumber prices.
Exchange rates, available supply from other countries and trade policy affect our export businesses. During first quarter 2022, continued strength in end use demand and disruptions of other global sources of supply supported sustained demand for export logs. China export activity and pricing were supported by constrained log and lumber imports from other geographies. In Japan, total housing starts increased 4.3 percent year to date through February compared to the same period in 2021, while the key Post and Beam segment saw a 1.5 percent increase. Decreased lumber imports from Europe to Japan have continued to be favorable to our Japanese log export business.
Governments and businesses across the globe are taking action on climate change and are making significant commitments towards 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 offsets to reduce environmental impacts. We believe we are uniquely positioned to help entities achieve these commitments through natural climate solutions, including forest carbon sequestration and carbon capture and storage activities.
CONSOLIDATED RESULTS
How We Did First Quarter 2022
|
|
|
QUARTER ENDED |
|
|
AMOUNT OF CHANGE |
|
||||||
|
DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES |
|
MARCH 2022 |
|
|
MARCH 2021 |
|
|
2022 VS. 2021 |
|
|||
|
Net sales |
|
$ |
3,112 |
|
|
$ |
2,506 |
|
|
$ |
606 |
|
|
Costs of sales |
|
$ |
1,647 |
|
|
$ |
1,430 |
|
|
$ |
217 |
|
|
Operating income |
|
$ |
1,344 |
|
|
$ |
956 |
|
|
$ |
388 |
|
|
Net earnings |
|
$ |
771 |
|
|
$ |
681 |
|
|
$ |
90 |
|
|
Earnings per share, basic and diluted |
|
$ |
1.03 |
|
|
$ |
0.91 |
|
|
$ |
0.12 |
|
15
Comparing First Quarter 2022 with First Quarter 2021
Net sales
Net sales increased $606 million – 24 percent – primarily due to a $498 million increase in Wood Products sales to unaffiliated customers attributable to increased sales realizations across all product lines, as well as an $86 million increase in Timberlands sales to unaffiliated customers attributable to increased sales realizations and sales volumes in the Western and Southern regions.
Costs of sales
Costs of sales increased $217 million – 15 percent – primarily due to increased complementary building product sales, increased cost of commodity products, and higher log and fiber costs within our Wood Products segment and increased freight costs and third-party log purchases within our Timberlands segment.
Operating income
Operating income increased $388 million – 41 percent – primarily due to a $389 million increase in consolidated gross margin (see discussion of components above).
Net earnings
Net earnings increased $90 million – 13 percent – primarily due to the $388 million increase in operating income, as discussed above.
This increase was partially offset by a $276 million pretax charge ($207 million after-tax) related to the early extinguishment of debt (refer to Note 8: Long-Term Debt and Line of Credit), as well as a $20 million increase in income tax expense (refer to Income Taxes).
TIMBERLANDS
How We Did First Quarter 2022
|
|
|
QUARTER ENDED |
|
|
AMOUNT OF CHANGE |
|
||||||
|
DOLLAR AMOUNTS IN MILLIONS |
|
MARCH 2022 |
|
|
MARCH 2021 |
|
|
2022 VS. 2021 |
|
|||
|
Net sales to unaffiliated customers: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Delivered logs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
West |
|
$ |
259 |
|
|
$ |
201 |
|
|
$ |
58 |
|
|
South |
|
|
154 |
|
|
|
131 |
|
|
|
23 |
|
|
North |
|
|
15 |
|
|
|
16 |
|
|
|
(1 |
) |
|
Subtotal delivered logs sales |
|
|
428 |
|
|
|
348 |
|
|
|
80 |
|
|
Stumpage and pay-as-cut timber |
|
|
9 |
|
|
|
6 |
|
|
|
3 |
|
|
Recreational and other lease revenue |
|
|
17 |
|
|
|
16 |
|
|
|
1 |
|
|
Other(1) |
|
|
11 |
|
|
|
9 |
|
|
|
2 |
|
|
Subtotal net sales to unaffiliated customers |
|
|
465 |
|
|
|
379 |
|
|
|
86 |
|
|
Intersegment sales |
|
|
161 |
|
|
|
134 |
|
|
|
27 |
|
|
Total sales |
|
$ |
626 |
|
|
$ |
513 |
|
|
$ |
113 |
|
|
Costs of sales |
|
$ |
423 |
|
|
$ |
383 |
|
|
$ |
40 |
|
|
Operating income and Net contribution to earnings |
|
$ |
182 |
|
|
$ |
108 |
|
|
$ |
74 |
|
|
(1) |
Other Timberlands sales include sales of seeds and seedlings from our nursery operations as well as wood chips. |
Comparing First Quarter 2022 with First Quarter 2021
Net sales to unaffiliated customers
Net sales to unaffiliated customers increased $86 million – 23 percent – primarily due to a $58 million increase in Western log sales attributable to a 23 percent increase in sales realizations and a 4 percent increase in sales volumes, as well as a $23 million increase in Southern log sales attributable to a 9 percent increase in sales volumes and an 8 percent increase in sales realizations.
Intersegment sales
Intersegment sales increased $27 million – 20 percent – primarily due to a 20 percent increase in sales realizations.
Costs of sales
16
Costs of sales increased $40 million – 10 percent – primarily due to increased freight costs and third-party log purchases, as well as increased sales volumes, as discussed above.
Operating income and Net contribution to earnings
Operating income and net contribution to earnings increased $74 million – 69 percent – primarily due to the change in the components of gross margin, as discussed above.
Third-Party Log Sales Volumes and Fee Harvest Volumes
|
|
|
QUARTER ENDED |
|
|
AMOUNT OF CHANGE |
|
||||||
|
VOLUMES IN THOUSANDS |
|
MARCH 2022 |
|
|
MARCH 2021 |
|
|
2022 VS. 2021 |
|
|||
|
Third-party log sales – tons: |
|
|
|
|
|
|
|
|
|
|
|
|
|
West(1) |
|
|
1,604 |
|
|
|
1,539 |
|
|
|
65 |
|
|
South |
|
|
4,135 |
|
|
|
3,782 |
|
|
|
353 |
|
|
North |
|
|
210 |
|
|
|
261 |
|
|
|
(51 |
) |
|
Total |
|
|
5,949 |
|
|
|
5,582 |
|
|
|
367 |
|
|
Fee harvest volumes – tons: |
|
|
|
|
|
|
|
|
|
|
|
|
|
West(1) |
|
|
2,240 |
|
|
|
2,101 |
|
|
|
139 |
|
|
South |
|
|
5,842 |
|
|
|
5,376 |
|
|
|
466 |
|
|
North |
|
|
278 |
|
|
|
337 |
|
|
|
(59 |
) |
|
Total |
|
|
8,360 |
|
|
|
7,814 |
|
|
|
546 |
|
|
(1) |
Western logs are primarily transacted in thousand board feet (MBF) but are converted to ton equivalents for external reporting purposes. |
REAL ESTATE, ENERGY AND NATURAL RESOURCES
How We Did First Quarter 2022
|
|
|
QUARTER ENDED |
|
|
AMOUNT OF CHANGE |
|
||||||
|
DOLLAR AMOUNTS IN MILLIONS |
|
MARCH 2022 |
|
|
MARCH 2021 |
|
|
2022 VS. 2021 |
|
|||
|
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate |
|
$ |
97 |
|
|
$ |
84 |
|
|
$ |
13 |
|
|
Energy and natural resources |
|
|
31 |
|
|
|
22 |
|
|
|
9 |
|
|
Total |
|
$ |
128 |
|
|
$ |
106 |
|
|
$ |
22 |
|
|
Costs of sales |
|
$ |
41 |
|
|
$ |
34 |
|
|
$ |
7 |
|
|
Operating income and Net contribution to earnings |
|
$ |
81 |
|
|
$ |
66 |
|
|
$ |
15 |
|
The volume of real estate sales is a function of many factors, including the general state of the economy, demand in local real estate markets, the ability of buyers to obtain financing, the number of competing properties listed for sale, the seasonal nature of sales (particularly in the northern states), the plans of adjacent landowners, our expectation of future price appreciation, the timing of harvesting activities, and the availability of government and not-for-profit funding. In any period, the average sales price per acre will vary based on the location and physical characteristics of parcels sold.
Comparing First Quarter 2022 with First Quarter 2021
Net sales
Net sales increased $22 million – 21 percent – primarily due to increases in the amount of acres sold and energy and natural resources sales.
Costs of sales
Costs of sales increased $7 million – 21 percent – primarily due to an increase in the amount of acres sold.
Operating income and Net contribution to earnings
Operating income and net contribution to earnings increased $15 million – 23 percent – primarily due to the change in the components of gross margin, as discussed above.
17
REAL ESTATE SALES STATISTICS
|
|
|
QUARTER ENDED |
|
|
AMOUNT OF CHANGE |
|
||||||
|
|
|
MARCH 2022 |
|
|
MARCH 2021 |
|
|
2022 VS. 2021 |
|
|||
|
Acres sold |
|
|
24,126 |
|
|
|
19,455 |
|
|
|
4,671 |
|
|
Average price per acre |
|
$ |
3,785 |
|
|
$ |
3,803 |
|
|
$ |
(18 |
) |
WOOD PRODUCTS
How We Did First Quarter 2022
|
|
|
QUARTER ENDED |
|
|
AMOUNT OF CHANGE |
|
||||||
|
DOLLAR AMOUNTS IN MILLIONS |
|
MARCH 2022 |
|
|
MARCH 2021 |
|
|
2022 VS. 2021 |
|
|||
|
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Structural lumber |
|
$ |
1,206 |
|
|
$ |
990 |
|
|
$ |
216 |
|
|
Oriented strand board |
|
|
564 |
|
|
|
438 |
|
|
|
126 |
|
|
Engineered solid section |
|
|
196 |
|
|
|
142 |
|
|
|
54 |
|
|
Engineered I-joists |
|
|
137 |
|
|
|
83 |
|
|
|
54 |
|
|
Softwood plywood |
|
|
58 |
|
|
|
56 |
|
|
|
2 |
|
|
Medium density fiberboard |
|
|
48 |
|
|
|
48 |
|
|
|
— |
|
|
Complementary building products |
|
|
215 |
|
|
|
171 |
|
|
|
44 |
|
|
Other products produced(1) |
|
|
95 |
|
|
|
93 |
|
|
|
2 |
|
|
Total |
|
$ |
2,519 |
|
|
$ |
2,021 |
|
|
$ |
498 |
|
|
Costs of sales |
|
$ |
1,276 |
|
|
$ |
1,124 |
|
|
$ |
152 |
|
|
Operating income and Net contribution to earnings |
|
$ |
1,182 |
|
|
$ |
840 |
|
|
$ |
342 |
|
|
(1) |
Other products produced sales include wood chips, other byproducts and third-party residual log sales from our Canadian Forestlands operations. |
Comparing First Quarter 2022 with First Quarter 2021
Net sales
Net sales increased $498 million – 25 percent – due to:
|
● |
a $216 million increase in structural lumber sales attributable to a 21 percent increase in sales realizations, as well as a 1 percent increase in sales volumes; |
|
● |
a $126 million increase in oriented strand board sales attributable to a 28 percent increase in sales realizations; |
|
● |
a $54 million increase in engineered solid section sales attributable to a 50 percent increase in sales realizations, partially offset by an 8 percent decrease in sales volumes; |
|
● |
a $54 million increase in engineered I-joists sales attributable to a 67 percent increase in sales realizations, partially offset by a 2 percent decrease in sales volumes, and |
|
● |
a $44 million increase in complementary building products sales attributable to increased sales realizations. |
Costs of sales
Costs of sales increased $152 million – 14 percent – primarily due to increased complementary building product sales, increased cost of commodity products, and higher log and fiber costs.
Operating income and Net contribution to earnings
Operating income and net contribution to earnings increased $342 million – 41 percent – primarily due to the change in the components of gross margin, as discussed above.
18
Third-Party Sales Volumes
|
|
|
QUARTER ENDED |
|
|
AMOUNT OF CHANGE |
|
||||||
|
VOLUMES IN MILLIONS(1) |
|
MARCH 2022 |
|
|
MARCH 2021 |
|
|
2022 VS. 2021 |
|
|||
|
Structural lumber – board feet |
|
|
1,157 |
|
|
|
1,145 |
|
|
|
12 |
|
|
Oriented strand board – square feet (3/8”) |
|
|
717 |
|
|
|
714 |
|
|
|
3 |
|
|
Engineered solid section – cubic feet |
|
|
5.7 |
|
|
|
6.2 |
|
|
|
(0.5 |
) |
|
Engineered I-joists – lineal feet |
|
|
46 |
|
|
|
47 |
|
|
|
(1 |
) |
|
Softwood plywood – square feet (3/8”) |
|
|
75 |
|
|
|
94 |
|
|
|
(19 |
) |
|
Medium density fiberboard – square feet (3/4”) |
|
|
44 |
|
|
|
57 |
|
|
|
(13 |
) |
|
(1) |
Sales volumes include sales of internally produced products and products purchased for resale primarily through our distribution business. |
PRODUCTION AND OUTSIDE PURCHASE VOLUMES
Outside purchase volumes are primarily purchased for resale through our distribution business. Production volumes are produced for sale through our own sales organizations and through our distribution business. Production of oriented strand board and engineered solid section are also used to manufacture engineered I-joists.
|
|
|
QUARTER ENDED |
|
|
AMOUNT OF CHANGE |
|
||||||
|
VOLUMES IN MILLIONS |
|
MARCH 2022 |
|
|
MARCH 2021 |
|
|
2022 VS. 2021 |
|
|||
|
Structural lumber – board feet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Production |
|
|
1,203 |
|
|
|
1,211 |
|
|
|
(8 |
) |
|
Outside purchase |
|
|
42 |
|
|
|
55 |
|
|
|
(13 |
) |
|
Total |
|
|
1,245 |
|
|
|
1,266 |
|
|
|
(21 |
) |
|
Oriented strand board – square feet (3/8”): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Production |
|
|
739 |
|
|
|
742 |
|
|
|
(3 |
) |
|
Outside purchase |
|
|
70 |
|
|
|
68 |
|
|
|
2 |
|
|
Total |
|
|
809 |
|
|
|
810 |
|
|
|
(1 |
) |
|
Engineered solid section – cubic feet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Production |
|
|
5.7 |
|
|
|
6.0 |
|
|
|
(0.3 |
) |
|
Outside purchase |
|
|
0.2 |
|
|
|
0.3 |
|
|
|
(0.1 |
) |
|
Total |
|
|
5.9 |
|
|
|
6.3 |
|
|
|
(0.4 |
) |
|
Engineered I-joists – lineal feet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Production |
|
|
44 |
|
|
|
44 |
|
|
|
— |
|
|
Outside purchase |
|
|
2 |
|
|
|
3 |
|
|
|
(1 |
) |
|
Total |
|
|
46 |
|
|
|
47 |
|
|
|
(1 |
) |
|
Softwood plywood – square feet (3/8”): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Production |
|
|
66 |
|
|
|
80 |
|
|
|
(14 |
) |
|
Outside purchase |
|
|
10 |
|
|
|
14 |
|
|
|
(4 |
) |
|
Total |
|
|
76 |
|
|
|
94 |
|
|
|
(18 |
) |
|
Medium density fiberboard – square feet (3/4"): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Production |
|
|
44 |
|
|
|
56 |
|
|
|
(12 |
) |
|
Total |
|
|
44 |
|
|
|
56 |
|
|
|
(12 |
) |
19
UNALLOCATED ITEMS
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 as well as legacy obligations.
Net Charge to Earnings – Unallocated Items
|
|
|
QUARTER ENDED |
|
|
AMOUNT OF CHANGE |
|
||||||
|
DOLLAR AMOUNTS IN MILLIONS |
|
MARCH 2022 |
|
|
MARCH 2021 |
|
|
2022 VS. 2021 |
|
|||
|
Unallocated corporate function and variable compensation expense |
|
$ |
(31 |
) |
|
$ |
(25 |
) |
|
$ |
(6 |
) |
|
Liability classified share-based compensation |
|
|
1 |
|
|
|
(1 |
) |
|
|
2 |
|
|
Foreign exchange loss |
|
|
— |
|
|
|
(2 |
) |
|
|
2 |
|
|
Elimination of intersegment profit in inventory and LIFO |
|
|
(59 |
) |
|
|
(17 |
) |
|
|
(42 |
) |
|
Other |
|
|
(12 |
) |
|
|
(13 |
) |
|
|
1 |
|
|
Operating loss |
|
|
(101 |
) |
|
|
(58 |
) |
|
|
(43 |
) |
|
Non-operating pension and other post-employment benefit costs |
|
|
(15 |
) |
|
|
(8 |
) |
|
|
(7 |
) |
|
Interest income and other |
|
|
(1 |
) |
|
|
1 |
|
|
|
(2 |
) |
|
Net charge to earnings |
|
$ |
(117 |
) |
|
$ |
(65 |
) |
|
$ |
(52 |
) |
Comparing First Quarter 2022 with First Quarter 2021
Net charge to earnings increased $52 million – 80 percent – primarily due to a $42 million increase in elimination of intersegment profit in inventory and LIFO.
INTEREST EXPENSE
Our interest expense, net of capitalized interest, was:
|
● |
$72 million for first quarter 2022 and |
|
● |
$79 million for first quarter 2021. |
Interest expense decreased by $7 million compared to first quarter 2021 primarily due to a decrease in the average outstanding debt and weighted average interest rate in first quarter 2022.
Refer to Note 8: Long-Term Debt and Line of Credit for further information.
INCOME TAXES
Our provision for income taxes was:
|
● |
a $209 million expense for first quarter 2022 and |
|
● |
a $189 million expense for first quarter 2021. |
Our provision for income taxes is primarily driven by earnings generated by our TRSs. Income tax expense increased by $20 million compared to first quarter 2021 primarily due to an increase in our TRS earnings in first quarter 2022, partially offset by a tax benefit of approximately $69 million resulting from the $276 million pretax loss on debt extinguishment recorded in first quarter 2022.
Refer to Note 14: Income Taxes and Note 8: Long-Term Debt and Line of Credit for further information.
LIQUIDITY AND CAPITAL RESOURCES
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, 2022, we had over $1.2 billion in cash and cash equivalents and $1.5 billion of availability on our line of credit, which expires in January 2025. We believe we have sufficient liquidity to meet our cash requirements for the foreseeable future.
CASH FROM OPERATIONS
Consolidated net cash from operations was:
|
● |
$957 million for first quarter 2022 and |
|
● |
$698 million for first quarter 2021. |
20
Net cash from operations increased $259 million, primarily due to increased cash inflows from our business operations. This change was partially offset by a $19 million increase in cash paid for income taxes.
CASH FROM INVESTING ACTIVITIES
Consolidated net cash from investing activities was:
|
● |
$(87) million for first quarter 2022 and |
|
● |
$(53) million for first quarter 2021. |
Net cash from investing activities decreased $34 million, primarily due to:
|
● |
a $17 million increase in cash paid for capital expenditures and |
|
● |
an $18 million increase in cash paid for acquisition of timberlands. |
Summary of Capital Spending by Business Segment
|
|
|
QUARTER ENDED |
|
|||||
|
DOLLAR AMOUNTS IN MILLIONS |
|
MARCH 2022 |
|
|
MARCH 2021 |
|
||
|
Timberlands |
|
$ |
30 |
|
|
$ |
28 |
|
|
Wood Products |
|
|
39 |
|
|
|
25 |
|
|
Unallocated Items |
|
|
1 |
|
|
|
— |
|
|
Total |
|
$ |
70 |
|
|
$ |
53 |
|
We anticipate our capital expenditures for 2022 to be approximately $440 million. The amount we spend on capital expenditures could change.
CASH FROM FINANCING ACTIVITIES
Consolidated net cash from financing activities was:
|
● |
$(1,664) million for first quarter 2022 and |
|
● |
$(124) million for first quarter 2021. |
Net cash from financing activities decreased $1,540 million, primarily due to:
|
● |
a $1,091 million increase in cash used for payments of dividends; |
|
● |
a $322 million increase in net cash used for payments on long-term debt and |
|
● |
a $118 million increase in cash used for repurchases of common stock. |
Line of Credit
We had no outstanding borrowings on our $1.5 billion five-year senior unsecured revolving credit facility as of March 31, 2022 or December 31, 2021. This credit facility expires in January 2025.
Our revolving credit agreement utilizes the London Inter-bank Offered Rate (LIBOR) as a basis for one of the interest rate options available to the company to apply to outstanding borrowings. Due to the cessation of USD LIBOR we plan to transition our revolving credit facility to an alternate reference rate in 2022. We have included provisions in our revolving credit agreement that specifically contemplate the transition from LIBOR to a replacement benchmark rate.
Refer to Note 8: Long-Term Debt and Line of Credit for further information.
Long-Term Debt
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. We issued $450 million of 3.375 percent notes due in March 2033 and $450 million of 4.000 percent notes due in March 2052. The net proceeds after deducting the discount, underwriting fees and issuance costs were $444 million and $437 million, respectively. The net proceeds were used to retire $592 million of our 7.375 percent notes due in March 2032, $161 million of our 8.500 percent notes due in January 2025, $73 million of our 7.125 percent notes due in July 2023, $65 million of our 7.950 percent notes due in March 2025, and $40 million of our 7.850 percent notes due in July 2026. We paid holders an aggregate $1.2 billion in cash reflecting principal, premium to par and tender premium.
Refer to Note 8: Long-Term Debt and Line of Credit for further information.
Debt Covenants
As of March 31, 2022, Weyerhaeuser Company was in compliance with its debt covenants. There have been no significant changes to the debt covenants presented in our 2021 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:
|
● |
$12 million for first quarter 2022 and |
21
|
● |
$17 million for first quarter 2021. |
Our average stock price was $39.65 and $34.05 for first quarter 2022 and 2021, respectively.
Dividend Payments
We paid cash dividends on common shares of:
|
● |
$1,218 million for first quarter 2022 and |
|
● |
$127 million for first quarter 2021. |
The increase in dividends paid is primarily due to a supplemental dividend of $1.45 per share based on 2021 financial results for a total of $1,084 million paid in the first quarter of 2022.
Share Repurchases
We repurchased 3,197,675 shares for approximately $121 million (including transaction fees) during first quarter 2022 under the 2021 Repurchase Program. We did not repurchase shares in first quarter 2021. There were 78,380 unsettled shares (approximately $3 million) as of March 31, 2022 and no unsettled shares as of December 31, 2021. Refer to Note 4: Net Earnings Per Share and Share Repurchases for further information.
PERFORMANCE MEASURES
Adjusted EBITDA by Segment
We use Adjusted EBITDA as a key performance measure to evaluate the performance of the consolidated company and our business segments. This measure should not be considered in isolation from, and is not intended to represent an alternative to, our results reported in accordance with U.S. generally accepted accounting principles (U.S. GAAP). However, we believe Adjusted EBITDA provides meaningful supplemental information for investors about our operating performance, better facilitates period to period comparisons and is widely used by analysts, lenders, rating agencies and other interested parties. Our definition of Adjusted EBITDA may be different from similarly titled measures reported by other companies. Adjusted EBITDA, as we define it, is operating income adjusted for depreciation, depletion, amortization, basis of real estate sold and special items.
|
|
|
QUARTER ENDED |
|
|
AMOUNT OF CHANGE |
|
||||||
|
DOLLAR AMOUNTS IN MILLIONS |
|
MARCH 2022 |
|
|
MARCH 2021 |
|
|
2022 VS. 2021 |
|
|||
|
Adjusted EBITDA by Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Timberlands |
|
$ |
247 |
|
|
$ |
172 |
|
|
$ |
75 |
|
|
Real Estate & ENR |
|
|
116 |
|
|
|
96 |
|
|
|
20 |
|
|
Wood Products |
|
|
1,233 |
|
|
|
889 |
|
|
|
344 |
|
|
|
|
|
1,596 |
|
|
|
1,157 |
|
|
|
439 |
|
|
Unallocated Items |
|
|
(99 |
) |
|
|
(56 |
) |
|
|
(43 |
) |
|
Adjusted EBITDA |
|
$ |
1,497 |
|
|
$ |
1,101 |
|
|
$ |
396 |
|
We reconcile Adjusted EBITDA to net earnings for the consolidated company and to operating income (loss) for the business segments, as those are the most directly comparable U.S. GAAP measures for each.
The table below reconciles Adjusted EBITDA for the quarter ended March 31, 2022:
|
DOLLAR AMOUNTS IN MILLIONS |
|
Timberlands |
|
|
Real Estate & ENR |
|
|
Wood Products |
|
|
Unallocated Items |
|
|
Total |
|
|||||
|
Adjusted EBITDA by Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
771 |
|
|
Interest expense, net of capitalized interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72 |
|
|
Loss on debt extinguishment(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
276 |
|
|
Income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
209 |
|
|
Net contribution (charge) to earnings |
|
$ |
182 |
|
|
$ |
81 |
|
|
$ |
1,182 |
|
|
$ |
(117 |
) |
|
$ |
1,328 |
|
|
Non-operating pension and other post-employment benefit costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
15 |
|
|
|
15 |
|
|
Interest income and other |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
1 |
|
|
Operating income (loss) |
|
|
182 |
|
|
|
81 |
|
|
|
1,182 |
|
|
|
(101 |
) |
|
|
1,344 |
|
|
Depreciation, depletion and amortization |
|
|
65 |
|
|
|
4 |
|
|
|
51 |
|
|
|
2 |
|
|
|
122 |
|
|
Basis of real estate sold |
|
|
— |
|
|
|
31 |
|
|
|
— |
|
|
|
— |
|
|
|
31 |
|
|
Adjusted EBITDA |
|
$ |
247 |
|
|
$ |
116 |
|
|
$ |
1,233 |
|
|
$ |
(99 |
) |
|
$ |
1,497 |
|
|
(1) |
Loss on debt extinguishment is a special item consisting of a pretax charge of $276 million related to early debt retirement. |
22
The table below reconciles Adjusted EBITDA for the quarter ended March 31, 2021:
|
DOLLAR AMOUNTS IN MILLIONS |
|
Timberlands |
|
|
Real Estate & ENR |
|
|
Wood Products |
|
|
Unallocated Items |
|
|
Total |
|
|||||
|
Adjusted EBITDA by Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
681 |
|
|
Interest expense, net of capitalized interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
79 |
|
|
Income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
189 |
|
|
Net contribution (charge) to earnings |
|
$ |
108 |
|
|
$ |
66 |
|
|
$ |
840 |
|
|
$ |
(65 |
) |
|
$ |
949 |
|
|
Non-operating pension and other post-employment benefit costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
8 |
|
|
|
8 |
|
|
Interest income and other |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
|
|
(1 |
) |
|
Operating income (loss) |
|
|
108 |
|
|
|
66 |
|
|
|
840 |
|
|
|
(58 |
) |
|
|
956 |
|
|
Depreciation, depletion and amortization |
|
|
64 |
|
|
|
3 |
|
|
|
49 |
|
|
|
2 |
|
|
|
118 |
|
|
Basis of real estate sold |
|
|
— |
|
|
|
27 |
|
|
|
— |
|
|
|
— |
|
|
|
27 |
|
|
Adjusted EBITDA |
|
$ |
172 |
|
|
$ |
96 |
|
|
$ |
889 |
|
|
$ |
(56 |
) |
|
$ |
1,101 |
|
Net Earnings and Net Earnings per Diluted Share Before Special Items
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. These measures should not be considered in isolation from, and are not intended to represent an alternative to, our results reported in accordance with U.S. GAAP. However, we believe the measures provide meaningful supplemental information for investors about our operating performance, better facilitate period to period comparisons and are widely used by analysts, lenders, rating agencies and other interested parties.
Net Earnings Before Special Items
|
|
|
QUARTER ENDED |
|
|||||
|
DOLLAR AMOUNTS IN MILLIONS |
|
MARCH 2022 |
|
|
MARCH 2021 |
|
||
|
Net earnings |
|
$ |
771 |
|
|
$ |
681 |
|
|
Loss on debt extinguishment |
|
|
207 |
|
|
|
— |
|
|
Net earnings before special items |
|
$ |
978 |
|
|
$ |
681 |
|
Net Earnings per Diluted Share Before Special Items
|
|
|
QUARTER ENDED |
|
|||||
|
|
|
MARCH 2022 |
|
|
MARCH 2021 |
|
||
|
Net earnings per diluted share |
|
$ |
1.03 |
|
|
$ |
0.91 |
|
|
Loss on debt extinguishment |
|
|
0.28 |
|
|
|
— |
|
|
Net earnings per diluted share before special items |
|
$ |
1.31 |
|
|
$ |
0.91 |
|
CRITICAL ACCOUNTING POLICIES
There have been no significant changes during first quarter 2022 to the critical accounting policies presented in our 2021 Annual Report on Form 10-K.
23
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
LONG-TERM INDEBTEDNESS OBLIGATIONS
The following summary of our long-term indebtedness obligations includes:
|
● |
scheduled principal repayments for the next five years and after; |
|
● |
weighted average interest rates for debt maturing in each of the next five years and after and |
|
● |
estimated fair values of outstanding obligations. |
We estimate the fair value of our debt instruments using quoted market prices we received for the same types and issues of our debt or on the discounted value of the future cash flows using market yields for the same type and comparable issues of debt. Changes in market rates of interest affect the fair value of our fixed-rate debt.
Summary of Long-Term Indebtedness Principal Obligations as of March 31, 2022
|
DOLLAR AMOUNTS IN MILLIONS |
|
2022 |
|
|
2023 |
|
|
2024 |
|
|
2025 |
|
|
2026 |
|
|
THEREAFTER |
|
|
TOTAL(1) |
|
|
FAIR VALUE |
|
||||||||||
|
Fixed-rate debt |
|
$ |
— |
|
|
$ |
978 |
|
|
$ |
— |
|
|
$ |
210 |
|
|
$ |
272 |
|
|
$ |
3,633 |
|
|
$ |
5,093 |
|
|
$ |
5,538 |
|
||
|
Average interest rate |
|
|
— |
% |
|
|
5.44 |
% |
|
|
— |
% |
|
|
8.31 |
% |
|
|
7.65 |
% |
|
|
5.00 |
% |
|
|
5.36 |
% |
|
N/A |
|
|||
|
(1) |
Excludes $40 million of unamortized discounts, capitalized debt expense and business combination fair value adjustments. |
Item 4. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Disclosure controls are controls and other procedures that are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, to allow timely decisions regarding required disclosure. The company’s principal executive officer and principal financial officer have concluded that the company’s disclosure controls and procedures were effective as of March 31, 2022, based on an evaluation of the company’s disclosure controls and procedures as of that date.
CHANGES IN INTERNAL CONTROLS
No changes occurred in the company’s internal control over financial reporting during first quarter 2022 that have materially affected, or are reasonably likely to materially affect, the company’s internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Refer to Note 10: Legal Proceedings, Commitments and Contingencies. SEC regulations require us to disclose certain information about proceedings arising under federal, state or local environmental provisions if we reasonably believe that such proceedings may result in monetary sanctions above a stated threshold. In accordance with these regulations, the company uses a threshold of $1 million for purposes of determining whether disclosure of any such proceedings is required pursuant to this item.
Item 1A. RISK FACTORS
There have been no material changes with respect to the risk factors disclosed in our 2021 Annual Report on Form 10-K.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
The following table provides information with respect to purchases of common stock made by the company during first quarter 2022:
|
COMMON SHARE REPURCHASES DURING FIRST QUARTER 2022 |
|
TOTAL NUMBER OF SHARES PURCHASED |
|
|
AVERAGE PRICE PAID PER SHARE |
|
|
TOTAL NUMBER OF SHARES PURCHASED AS PART OF PUBLICLY ANNOUNCED PROGRAMS |
|
|
APPROXIMATE DOLLAR VALUE OF SHARES THAT MAY YET BE PURCHASED UNDER THE PROGRAMS |
|
||||
|
January 1 – January 31 |
|
|
1,320,787 |
|
|
$ |
37.87 |
|
|
|
1,320,787 |
|
|
$ |
876,697,873 |
|
|
February 1 – February 28 |
|
|
221,913 |
|
|
$ |
37.31 |
|
|
|
221,913 |
|
|
$ |
868,422,515 |
|
|
March 1 – March 31 |
|
|
1,654,975 |
|
|
$ |
37.97 |
|
|
|
1,654,975 |
|
|
$ |
805,603,171 |
|
|
Total |
|
|
3,197,675 |
|
|
$ |
37.87 |
|
|
|
3,197,675 |
|
|
$ |
805,603,171 |
|
On September 22, 2021, we announced that our board had 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 2019 Repurchase Program.
24
During first quarter 2022, we repurchased 3,197,675 common shares for approximately $121 million (including transaction fees) under the 2021 Repurchase Program in open-market transactions. Transaction fees incurred for repurchases are not counted as use of funds authorized for repurchases under the 2021 Repurchase Program. As of March 31, 2022, we had remaining authorization of $806 million for future stock repurchases.
25
Item 6. EXHIBITS
|
|
|
|
10.1 |
Form of Weyerhaeuser Company 2013 Long-Term Incentive Plan Performance Share Unit Award Terms and Conditions for Plan Year 2022 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on January 24, 2022 – Commission File Number 1-4825) |
|
|
|
|
10.2 |
Form of Weyerhaeuser Company 2013 Long-Term Incentive Plan Restricted Stock Unit Award Terms and Conditions for Plan Years 2022 (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on January 24, 2022 – Commission File Number 1-4825) |
|
|
|
|
|
|
|
|
|
|
|
|
|
101.INS |
XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
|
|
|
|
101.SCH |
Inline XBRL Taxonomy Extension Schema Document |
|
|
|
|
101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
|
|
101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
|
|
|
101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document |
|
|
|
|
101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
|
|
|
104 |
The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, has been formatted in Inline XBRL. |
26
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
WEYERHAEUSER COMPANY |
|
|
|
(Registrant) |
|
|
|
|
|
|
Date: April 29, 2022 |
By: |
/s/ David M. Wold |
|
|
|
David M. Wold |
|
|
|
Vice President and Chief Accounting Officer |
|
|
|
(Principal Accounting Officer and Duly Authorized Officer) |
27