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).
☐
Yes
As of July 24, 2023,
TABLE OF CONTENTS
|
PART I |
FINANCIAL INFORMATION |
|
|
ITEM 1. |
FINANCIAL STATEMENTS: |
|
|
|
1 |
|
|
|
2 |
|
|
|
3 |
|
|
|
4 |
|
|
|
5 |
|
|
|
6 |
|
|
|
7 |
|
|
ITEM 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A) |
14 |
|
ITEM 3. |
26 |
|
|
ITEM 4. |
27 |
|
|
|
|
|
|
PART II |
OTHER INFORMATION |
|
|
ITEM 1. |
27 |
|
|
ITEM 1A. |
27 |
|
|
ITEM 2. |
27 |
|
|
ITEM 3. |
DEFAULTS UPON SENIOR SECURITIES – NOT APPLICABLE |
|
|
ITEM 4. |
MINE SAFETY DISCLOSURES – NOT APPLICABLE |
|
|
ITEM 5. |
27 |
|
|
ITEM 6. |
29 |
|
|
|
30 |
PART I – FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
WEYERHAEUSER COMPANY
CONSOLIDATED STATEM ENT OF OPERATIONS
(UNAUDITED)
|
|
|
QUARTER ENDED |
|
|
YEAR-TO-DATE ENDED |
|
||||||||||
|
DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES |
|
JUNE 2023 |
|
|
JUNE 2022 |
|
|
JUNE 2023 |
|
|
JUNE 2022 |
|
||||
|
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 |
|
|
YEAR-TO-DATE ENDED |
|
||||||||||
|
DOLLAR AMOUNTS IN MILLIONS |
|
JUNE 2023 |
|
|
JUNE 2022 |
|
|
JUNE 2023 |
|
|
JUNE 2022 |
|
||||
|
Net earnings |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
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
(UNAUD ITED)
|
DOLLAR AMOUNTS IN MILLIONS, EXCEPT PAR VALUE |
|
JUNE 30,
|
|
|
DECEMBER 31,
|
|
||
|
ASSETS |
|
|
|
|
|
|
||
|
Current assets: |
|
|
|
|
|
|
||
|
Cash and cash equivalents |
|
$ |
|
|
|
$ |
|
|
|
Short-term investments (Note 9) |
|
|
|
|
|
|
|
|
|
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: |
|
|
|
|
|
|
||
|
Current maturities of long-term debt (Note 8) |
|
$ |
|
|
|
$ |
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
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)
|
|
|
YEAR-TO-DATE ENDED |
|
|||||
|
DOLLAR AMOUNTS IN MILLIONS |
|
JUNE 2023 |
|
|
JUNE 2022 |
|
||
|
Cash flows from operations: |
|
|
|
|
|
|
||
|
Net earnings |
|
$ |
|
|
|
$ |
|
|
|
Noncash charges (credits) to earnings: |
|
|
|
|
|
|
||
|
Depreciation, depletion and amortization |
|
|
|
|
|
|
|
|
|
Basis of real estate sold |
|
|
|
|
|
|
|
|
|
Pension and other post-employment benefits (Note 6) |
|
|
|
|
|
|
|
|
|
Share-based compensation expense (Note 12) |
|
|
|
|
|
|
|
|
|
Loss on debt extinguishment (Note 8) |
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
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 (Note 15) |
|
|
(
|
) |
|
|
(
|
) |
|
Purchase of short-term investments |
|
|
(
|
) |
|
|
|
|
|
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) |
|
|
|
|
|
|
(
|
) |
|
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 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 |
|
|
YEAR-TO-DATE ENDED |
|
||||||||||
|
DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES |
|
JUNE 2023 |
|
|
JUNE 2022 |
|
|
JUNE 2023 |
|
|
JUNE 2022 |
|
||||
|
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: |
7 |
|
|
|
|
|
|
NOTE 2: |
7 |
|
|
|
|
|
|
NOTE 3: |
8 |
|
|
|
|
|
|
NOTE 4: |
8 |
|
|
|
|
|
|
NOTE 5: |
9 |
|
|
|
|
|
|
NOTE 6: |
10 |
|
|
|
|
|
|
NOTE 7: |
10 |
|
|
|
|
|
|
NOTE 8: |
10 |
|
|
|
|
|
|
NOTE 9: |
11 |
|
|
|
|
|
|
NOTE 10: |
11 |
|
|
|
|
|
|
NOTE 11: |
12 |
|
|
|
|
|
|
NOTE 12: |
12 |
|
|
|
|
|
|
NOTE 13: |
13 |
|
|
|
|
|
|
NOTE 14: |
13 |
|
|
|
|
|
|
NOTE 15: |
13 |
6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE QUARTERS AND YEAR-TO-DATE PERIODS ENDED JUNE 30, 2023 AND 2022
NOTE 1: BASIS O F PRESENTATION
Our consolidated financial statements provide an overall view of our results of operations, financial condition and cash flows. They include our accounts and the accounts of entities we control, including majority-owned domestic and foreign subsidiaries. They do not include our intercompany transactions and accounts, which are eliminated. Throughout these Notes to Consolidated Financial Statements, unless specified otherwise, references to “Weyerhaeuser,” “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, 2022 . Results of operations for interim periods should not necessarily be regarded as indicative of the results that may be expected for the full year.
NOTE 2: BUSIN ESS SEGMENTS
We are principally engaged in growing and harvesting timber; manufacturing, distributing and selling products made from trees; maximizing the value of our acreage 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 organized based primarily on products and services which include:
A reconciliation of our business segment information to the respective information in the Consolidated Statement of Operations is as follows:
|
|
|
QUARTER ENDED |
|
|
YEAR-TO-DATE ENDED |
|
||||||||||
|
DOLLAR AMOUNTS IN MILLIONS |
|
JUNE 2023 |
|
|
JUNE 2022 |
|
|
JUNE 2023 |
|
|
JUNE 2022 |
|
||||
|
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 |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
7
NOTE 3: REVENU E RECOGNITION
A reconciliation of revenue recognized by our major products:
|
|
|
QUARTER ENDED |
|
|
YEAR-TO-DATE ENDED |
|
||||||||||
|
DOLLAR AMOUNTS IN MILLIONS |
|
JUNE 2023 |
|
|
JUNE 2022 |
|
|
JUNE 2023 |
|
|
JUNE 2022 |
|
||||
|
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 |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Our basic and diluted earnings per share were:
8
Basic earnings per share is net earnings divided by the weighted average number of our outstanding common shares, including stock equivalent units where there is no circumstance under which those shares would not be issued.
|
|
|
QUARTER ENDED |
|
|
YEAR-TO-DATE ENDED |
|
||||||||||
|
SHARES IN THOUSANDS |
|
JUNE 2023 |
|
|
JUNE 2022 |
|
|
JUNE 2023 |
|
|
JUNE 2022 |
|
||||
|
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 |
|
|
YEAR-TO-DATE ENDED |
|
||||||||||
|
SHARES IN THOUSANDS |
|
JUNE 2023 |
|
|
JUNE 2022 |
|
|
JUNE 2023 |
|
|
JUNE 2022 |
|
||||
|
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 $
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: IN VENTORIES
Inventories include raw materials, work-in-process and finished goods, as well as materials and supplies.
|
DOLLAR AMOUNTS IN MILLIONS |
|
JUNE 30,
|
|
|
DECEMBER 31,
|
|
||
|
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 PO ST-EMPLOYMENT BENEFIT PLANS
The components of net periodic benefit cost are:
|
|
|
PENSION |
|
|||||||||||||
|
|
|
QUARTER ENDED |
|
|
YEAR-TO-DATE ENDED |
|
||||||||||
|
DOLLAR AMOUNTS IN MILLIONS |
|
JUNE 2023 |
|
|
JUNE 2022 |
|
|
JUNE 2023 |
|
|
JUNE 2022 |
|
||||
|
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 |
|
|
YEAR-TO-DATE ENDED |
|
||||||||||
|
DOLLAR AMOUNTS IN MILLIONS |
|
JUNE 2023 |
|
|
JUNE 2022 |
|
|
JUNE 2023 |
|
|
JUNE 2022 |
|
||||
|
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 second quarter of each year to incorporate final net asset values reflected in financial statements received after we have filed our Annual Report on Form 10-K.
NOTE 7: ACCRU ED LIABILITIES
Accrued liabilities were comprised of the following:
|
DOLLAR AMOUNTS IN MILLIONS |
|
JUNE 30,
|
|
|
DECEMBER 31,
|
|
||
|
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 July 2023, we repaid $
In May 2023, we completed an offering of debt securities by issuing $
10
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 March 2023, we entered into a new $
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 |
|
JUNE 30,
|
|
|
DECEMBER 31,
|
|
||
|
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.
As of June 30, 2023, we had $
NOTE 10: LEGAL PROCEEDINGS, C OMMITMENTS AND CONTINGENCIES
Legal Proceedings
We are party to various legal proceedings arising in the ordinary course of business. We are not currently a party to any legal proceeding that management believes could have a material adverse effect on our Consolidated Statement of Operations , Consolidated Balance Sheet or Consolidated Statement of Cash Flows .
Environmental Matters
Site Remediation
Under the federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) – commonly known as the “Superfund” – and similar state laws, we:
As of June 30, 2023, 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 OT HER COMPREHENSIVE LOSS
Changes in amounts included in our accumulated other comprehensive loss by component are:
|
|
|
QUARTER ENDED |
|
|
YEAR-TO-DATE ENDED |
|
||||||||||
|
DOLLAR AMOUNTS IN MILLIONS |
|
JUNE 2023 |
|
|
JUNE 2022 |
|
|
JUNE 2023 |
|
|
JUNE 2022 |
|
||||
|
Pension (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Balance at beginning of period |
|
$ |
(
|
) |
|
$ |
(
|
) |
|
$ |
(
|
) |
|
$ |
(
|
) |
|
Other comprehensive (loss) income 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 (loss) |
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
(
|
) |
|
Balance at end of period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive loss, end of period |
|
$ |
(
|
) |
|
$ |
(
|
) |
|
$ |
(
|
) |
|
$ |
(
|
) |
Share-based compensation activity during year-to-date 2023 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 2023 was
$
Performance Share Units
The weighted average grant date fair value of PSUs granted in 2023 was
$
Weighted Average Assumptions Used in Estimating the Value of Performance Share Units Granted in 2023
|
|
|
PERFORMANCE SHARE UNITS |
|
Performance period |
|
|
|
Valuation date average stock price (1) |
|
$
|
|
Expected dividends |
|
|
|
Risk-free rate |
|
|
|
Expected volatility |
|
|
12
NOTE 13: OTHER OPERAT ING COSTS, NET
Other operating costs, net were comprised of the following:
|
|
|
QUARTER ENDED |
|
|
YEAR-TO-DATE ENDED |
|
||||||||||
|
DOLLAR AMOUNTS IN MILLIONS |
|
JUNE 2023 |
|
|
JUNE 2022 |
|
|
JUNE 2023 |
|
|
JUNE 2022 |
|
||||
|
Environmental remediation charges |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Foreign exchange 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 2023 estimated annual effective tax rate, excluding discrete items, differs from the U.S. federal statutory tax rate of
NOTE 15: TIMBERLAND ACQUISITIONS
On July 19, 2023, we completed the purchase of
On May 18, 2022, we completed the purchase of
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; our capital structure and the sufficiency of our liquidity position to meet future cash requirements; compliance with covenants in our debt agreements; our expectations concerning our contingent liabilities and the sufficiency of related reserves and accruals including, but not limited to, cost estimates of future litigation and environmental remediation; expected capital expenditures; 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; our expectations about our future opportunities in emerging carbon offset 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. 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:
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.
14
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.
RESULTS OF OPERATIONS
In reviewing our results of operations, it is important to understand these terms:
ECONOMIC AND MARKET CONDITIONS AFFECTING OUR OPERATIONS
Our market conditions and the strength of the broader U.S. economy are, and will continue to be, influenced by the trajectory of activity in the U.S. housing and repair and remodel segments, 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, particularly 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 oriented strand board (OSB) as well as the demand for biofuels, such as wood-burning pellets made from pulpwood. Our Timberlands segment is also influenced by the availability of harvestable timber. In general, Western log markets are highly tensioned by available supply, 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. Our Real Estate, Energy and Natural Resources segment is affected by a variety of factors, including the general state of the economy, local real estate market conditions, the level of construction activity in the U.S. and evolution of emerging renewable energy and carbon-related markets.
Over the past year, home sales and building activity slowed due in part to higher mortgage interest rates, reduced affordability and general macroeconomic conditions. During second quarter 2023, market conditions improved in response to a stabilization in mortgage rates and increased homebuilder sentiment. On a seasonally adjusted annual basis, as reported by the U.S. Census Bureau, housing starts for second quarter 2023 averaged 1.45 million units, a 4.5 percent increase from first quarter 2023. Single-family starts averaged 929 thousand units, an 11.4 percent increase from first quarter 2023. Multi-family starts averaged 518 thousand units in second quarter 2023, which was a 6.1 percent decrease from first quarter 2023. Sales of newly built, single-family homes averaged a seasonally adjusted annual rate of 694 thousand units for second quarter 2023, an increase of 8.8 percent from the prior quarter. Over the medium to long-term, we expect a favorable U.S. housing construction market supported by strong demographics in the key homebuying age cohorts, a decade of underbuilding and a historically low housing inventory.
Repair and remodeling expenditures decreased by 1.9 percent from first quarter 2023 to second quarter 2023 according to the Census Bureau Advance Retail Spending report. Do-it-yourself activity has been returning to more normalized levels while professionally contracted activities have benefited from larger projects and increases in home equity levels. Over the longer term, we expect this sector to return to pre-pandemic growth trends with healthy household balance sheets, elevated home equity and an aging U.S. housing stock, with a median age of 43 years.
In U.S. wood product markets, demand in early second quarter 2023 continued to be affected by softening in the housing market and ongoing macroeconomic uncertainty. As the quarter progressed, improvements in the housing market, combined with supply concerns resulting from a series of temporary and permanent mill curtailments and wildfires in Canada, led to moderately tighter markets. The Random Lengths Framing Lumber Composite price averaged $409/MBF and the OSB Composite averaged $360/MSF in second quarter 2023. Over the course of the second quarter, prices increased from $417/MBF to $438/MBF for lumber and from $297/MSF to $432/MSF for OSB.
In Western log markets, Douglas fir sawlog prices rose by 0.4 percent in second quarter 2023 compared with first quarter 2023, as reported by RISI Log Lines based on Weyerhaeuser’s sales mix. Overall, domestic prices in the West stayed consistent, with lower lumber prices offset by continued constraints in log supply. In the South, delivered sawlog prices remained flat in second quarter 2023 compared to first quarter 2023 and declined 1.5 percent from second quarter 2022 as reported by TimberMart-South, as log and haul capacity constraints eased somewhat.
Currency exchange rates, available supply from other countries and trade policy affect our export businesses. During second quarter 2023, end use demand softened in export markets, partially offset by continued disruptions in global log and lumber supply. In Japan, total housing starts decreased 1.6 percent year to date through May compared to the same period in 2022, while the key Post and Beam segment saw a 5.9 percent decrease. An increase in lumber imports to Japan from Europe placed downward pressure on market conditions. China demand has improved from low levels late in 2022 but remains subdued due to general economic conditions and increased supply of logs from New Zealand.
Interest rates affect our business primarily through their impact on mortgage rates and housing affordability, their general impact on the economy, and their influence on our capital management activities. Actions by the U.S. 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 6.3 percent at the end of first quarter 2023 to 6.7 percent at the end of second quarter 2023. While mortgage rates remain elevated, home buyers have responded favorably to even small reductions. Builders have also been able to offset higher mortgage rates through discounts, loan subsidies and modifying product offerings such as home sizes and finishes. Higher rates have also locked-in many existing homeowners from selling, reducing inventories of existing homes for sale which has led to increased demand for available new homes.
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 3.0 percent year over year in June 2023, 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, our operational excellence initiatives and our procurement practices, not all of the 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 3.6 percent in June 2023 remained near historically low levels and increased 0.1 percent from the end of first quarter 2023. Labor force participation has increased to 62.6 percent in June 2023, from 62.2 percent in June 2022, approaching pre-Pandemic levels of 63 percent.
15
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. 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, carbon capture and storage and renewable energy activities.
CONSOLIDATED RESULTS
How We Did Second Quarter 2023 and Year-to-Date 2023
|
|
|
QUARTER ENDED |
|
|
AMOUNT OF
|
|
|
YEAR-TO-DATE ENDED |
|
|
AMOUNT OF
|
|
||||||||||||
|
DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES |
|
JUNE 2023 |
|
|
JUNE 2022 |
|
|
2023 VS.
|
|
|
JUNE 2023 |
|
|
JUNE 2022 |
|
|
2023 VS.
|
|
||||||
|
Net sales |
|
$ |
1,997 |
|
|
$ |
2,973 |
|
|
$ |
(976 |
) |
|
$ |
3,878 |
|
|
$ |
6,085 |
|
|
$ |
(2,207 |
) |
|
Costs of sales |
|
$ |
1,528 |
|
|
$ |
1,789 |
|
|
$ |
(261 |
) |
|
$ |
3,040 |
|
|
$ |
3,436 |
|
|
$ |
(396 |
) |
|
Operating income |
|
$ |
319 |
|
|
$ |
1,047 |
|
|
$ |
(728 |
) |
|
$ |
555 |
|
|
$ |
2,391 |
|
|
$ |
(1,836 |
) |
|
Net earnings |
|
$ |
230 |
|
|
$ |
788 |
|
|
$ |
(558 |
) |
|
$ |
381 |
|
|
$ |
1,559 |
|
|
$ |
(1,178 |
) |
|
Earnings per share, basic and diluted |
|
$ |
0.31 |
|
|
$ |
1.06 |
|
|
$ |
(0.75 |
) |
|
$ |
0.52 |
|
|
$ |
2.09 |
|
|
$ |
(1.57 |
) |
Comparing Second Quarter 2023 with Second Quarter 2022
Net sales
Net sales decreased $976 million – 33 percent – primarily due to an $841 million decrease in Wood Products sales to unaffiliated customers attributable to decreased sales volumes and sales realizations across most product lines, as well as a $98 million decrease in Timberlands net sales to unaffiliated customers primarily attributable to decreased sales realizations and sales volumes in the Western region.
Costs of sales
Costs of sales decreased $261 million – 15 percent – primarily due to decreased sales volumes and raw material costs across most product lines and decreased freight costs within our Wood Products segment, as well as decreased export log freight costs and third-party log purchases within our Timberlands segment.
Operating income
Operating income decreased $728 million – 70 percent – primarily due to a $715 million decrease in consolidated gross margin, as discussed above.
Net earnings
Net earnings decreased $558 million – 71 percent – primarily due to the $728 million decrease in operating income, as discussed above.
This decrease in operating income was partially offset by a $159 million decrease in income tax expense (refer to Income Taxes ).
Comparing Year-to-Date 2023 with Year-to-Date 2022
Net sales
Net sales decreased $2,207 million – 36 percent – primarily due to a $2,042 million decrease in Wood Products sales to unaffiliated customers attributable to decreased sales realizations and sales volumes across most product lines, as well as a $101 million decrease in Timberlands sales to unaffiliated customers attributable to decreased sales realizations in the Western region, partially offset by increased sales volumes in the Southern region and increased stumpage sales.
Costs of sales
Costs of sales decreased $396 million – 12 percent – primarily due to decreased sales volumes and raw material costs across most product lines within our Wood Products segment, as well as decreased freight costs.
Operating income
Operating income decreased $1,836 million – 77 percent – primarily due to a $1,811 million decrease in consolidated gross margin, as discussed above.
Net earnings
Net earnings decreased $1,178 million – 76 percent – primarily due to the $1,836 million decrease in operating income, as discussed above.
This decrease was partially offset by a $346 million decrease in income tax expense (refer to Income Taxes ), as well as a $276 million pretax charge ($207 million after-tax) related to the early extinguishment of debt in first quarter 2022 (refer to Note 8: Long-Term Debt and Line of Credit ).
16
TIMBER LANDS
How We Did Second Quarter 2023 and Year-to-Date 2023
|
|
|
QUARTER ENDED |
|
|
AMOUNT OF
|
|
|
YEAR-TO-DATE ENDED |
|
|
AMOUNT OF
|
|
||||||||||||
|
DOLLAR AMOUNTS IN MILLIONS |
|
JUNE 2023 |
|
|
JUNE 2022 |
|
|
2023 VS.
|
|
|
JUNE 2023 |
|
|
JUNE 2022 |
|
|
2023 VS.
|
|
||||||
|
Net sales to unaffiliated customers: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Delivered logs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
West |
|
$ |
206 |
|
|
$ |
308 |
|
|
$ |
(102 |
) |
|
$ |
435 |
|
|
$ |
567 |
|
|
$ |
(132 |
) |
|
South |
|
|
162 |
|
|
|
160 |
|
|
|
2 |
|
|
|
330 |
|
|
|
314 |
|
|
|
16 |
|
|
North |
|
|
7 |
|
|
|
10 |
|
|
|
(3 |
) |
|
|
24 |
|
|
|
25 |
|
|
|
(1 |
) |
|
Subtotal delivered logs sales |
|
|
375 |
|
|
|
478 |
|
|
|
(103 |
) |
|
|
789 |
|
|
|
906 |
|
|
|
(117 |
) |
|
Stumpage and pay-as-cut timber |
|
|
15 |
|
|
|
11 |
|
|
|
4 |
|
|
|
31 |
|
|
|
20 |
|
|
|
11 |
|
|
Recreational and other lease revenue |
|
|
17 |
|
|
|
16 |
|
|
|
1 |
|
|
|
35 |
|
|
|
33 |
|
|
|
2 |
|
|
Other (1) |
|
|
10 |
|
|
|
10 |
|
|
|
— |
|
|
|
24 |
|
|
|
21 |
|
|
|
3 |
|
|
Subtotal net sales to unaffiliated customers |
|
|
417 |
|
|
|
515 |
|
|
|
(98 |
) |
|
|
879 |
|
|
|
980 |
|
|
|
(101 |
) |
|
Intersegment sales |
|
|
150 |
|
|
|
156 |
|
|
|
(6 |
) |
|
|
292 |
|
|
|
317 |
|
|
|
(25 |
) |
|
Total sales |
|
$ |
567 |
|
|
$ |
671 |
|
|
$ |
(104 |
) |
|
$ |
1,171 |
|
|
$ |
1,297 |
|
|
$ |
(126 |
) |
|
Costs of sales |
|
$ |
439 |
|
|
$ |
495 |
|
|
$ |
(56 |
) |
|
$ |
900 |
|
|
$ |
918 |
|
|
$ |
(18 |
) |
|
Operating income and Net contribution to earnings |
|
$ |
104 |
|
|
$ |
153 |
|
|
$ |
(49 |
) |
|
$ |
224 |
|
|
$ |
335 |
|
|
$ |
(111 |
) |
Comparing Second Quarter 2023 with Second Quarter 2022
Net sales to unaffiliated customers
Net sales to unaffiliated customers decreased $98 million – 19 percent – primarily due to a $102 million decrease in Western log sales attributable to a 29 percent decrease in sales realizations and a 7 percent decrease in sales volumes, partially offset by a $4 million increase in stumpage and pay-as-cut timber sales.
Intersegment sales
Intersegment sales decreased $6 million – 4 percent – primarily due to a 9 percent decrease in sales realizations, partially offset by a 6 percent increase in sales volumes.
Costs of sales
Costs of sales decreased $56 million – 11 percent – primarily due to decreased Western third-party log purchases and export log freight costs.
Operating income and Net contribution to earnings
Operating income and net contribution to earnings decreased $49 million – 32 percent – primarily due to the change in the components of gross margin, as discussed above.
Comparing Year-to-Date 2023 with Year-to-Date 2022
Net sales to unaffiliated customers
Net sales to unaffiliated customers decreased $101 million – 10 percent – primarily due to a $132 million decrease in Western log sales attributable to a 22 percent decrease in sales realizations, partially offset by a $16 million increase in Southern log sales, attributable to a 5 percent increase in sales volumes, and an $11 million increase in stumpage and pay-as-cut timber sales.
Intersegment sales
Intersegment sales decreased $25 million – 8 percent – primarily due to a 9 percent decrease in sales realizations, partially offset by a 2 percent increase in sales volumes.
Costs of sales
Costs of sales decreased $18 million – 2 percent – primarily due to decreased Western third-party log purchases, partially offset by increased logging and hauling costs as well as increased Southern log sales volumes.
Operating income and Net contribution to earnings
Operating income and net contribution to earnings decreased $111 million – 33 percent – primarily due to the change in the components of gross margin, as discussed above.
17
Third-Party Log Sales Volumes and Fee Harvest Volumes
|
|
|
QUARTER ENDED |
|
|
AMOUNT OF
|
|
|
YEAR-TO-DATE ENDED |
|
|
AMOUNT OF
|
|
||||||||||||
|
VOLUMES IN THOUSANDS |
|
JUNE 2023 |
|
|
JUNE 2022 |
|
|
2023 VS.
|
|
|
JUNE 2023 |
|
|
JUNE 2022 |
|
|
2023 VS.
|
|
||||||
|
Third-party log sales – tons: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
West (1) |
|
|
1,661 |
|
|
|
1,778 |
|
|
|
(117 |
) |
|
|
3,335 |
|
|
|
3,382 |
|
|
|
(47 |
) |
|
South |
|
|
4,341 |
|
|
|
4,167 |
|
|
|
174 |
|
|
|
8,727 |
|
|
|
8,302 |
|
|
|
425 |
|
|
North |
|
|
98 |
|
|
|
118 |
|
|
|
(20 |
) |
|
|
302 |
|
|
|
328 |
|
|
|
(26 |
) |
|
Total |
|
|
6,100 |
|
|
|
6,063 |
|
|
|
37 |
|
|
|
12,364 |
|
|
|
12,012 |
|
|
|
352 |
|
|
Fee harvest volumes – tons: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
West (1) |
|
|
2,292 |
|
|
|
2,085 |
|
|
|
207 |
|
|
|
4,537 |
|
|
|
4,325 |
|
|
|
212 |
|
|
South |
|
|
6,430 |
|
|
|
6,159 |
|
|
|
271 |
|
|
|
12,862 |
|
|
|
12,001 |
|
|
|
861 |
|
|
North |
|
|
175 |
|
|
|
180 |
|
|
|
(5 |
) |
|
|
460 |
|
|
|
458 |
|
|
|
2 |
|
|
Total |
|
|
8,897 |
|
|
|
8,424 |
|
|
|
473 |
|
|
|
17,859 |
|
|
|
16,784 |
|
|
|
1,075 |
|
REAL ESTATE, ENERGY A ND NATURAL RESOURCES
How We Did Second Quarter 2023 and Year-to-Date 2023
|
|
|
QUARTER ENDED |
|
|
AMOUNT OF
|
|
|
YEAR-TO-DATE ENDED |
|
|
AMOUNT OF
|
|
||||||||||||
|
DOLLAR AMOUNTS IN MILLIONS |
|
JUNE 2023 |
|
|
JUNE 2022 |
|
|
2023 VS.
|
|
|
JUNE 2023 |
|
|
JUNE 2022 |
|
|
2023 VS.
|
|
||||||
|
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Real estate |
|
$ |
47 |
|
|
$ |
90 |
|
|
$ |
(43 |
) |
|
$ |
119 |
|
|
$ |
187 |
|
|
$ |
(68 |
) |
|
Energy and natural resources |
|
|
33 |
|
|
|
27 |
|
|
|
6 |
|
|
|
62 |
|
|
|
58 |
|
|
|
4 |
|
|
Total |
|
$ |
80 |
|
|
$ |
117 |
|
|
$ |
(37 |
) |
|
$ |
181 |
|
|
$ |
245 |
|
|
$ |
(64 |
) |
|
Costs of sales |
|
$ |
21 |
|
|
$ |
45 |
|
|
$ |
(24 |
) |
|
$ |
62 |
|
|
$ |
86 |
|
|
$ |
(24 |
) |
|
Operating income and Net contribution to earnings |
|
$ |
52 |
|
|
$ |
65 |
|
|
$ |
(13 |
) |
|
$ |
105 |
|
|
$ |
146 |
|
|
$ |
(41 |
) |
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, 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 Second Quarter 2023 with Second Quarter 2022
Net sales
Net sales decreased $37 million – 32 percent – primarily due to a decrease in acres sold, partially offset by an increase in the average price per acre sold.
Costs of sales
Costs of sales decreased $24 million – 53 percent – primarily due to a decrease in acres sold, as well as a decrease in basis per acre sold.
Operating income and Net contribution to earnings
Operating income and net contribution to earnings decreased $13 million – 20 percent – primarily due to the change in the components of gross margin, as discussed above.
Comparing Year-to-Date 2023 with Year-to-Date 2022
Net sales
Net sales decreased $64 million – 26 percent – primarily due to a decrease in acres sold, partially offset by an increase in the average price per acre sold.
18
Costs of sales
Cost of sales decreased $24 million – 28 percent – primarily due to a decrease in acres sold, partially offset by an increase in basis per acre sold.
Operating income and Net contribution to earnings
Operating income and net contribution to earnings decreased $41 million – 28 percent – primarily due to the change in the components of gross margin, as discussed above.
REAL ESTATE SALES STATISTICS
|
|
|
QUARTER ENDED |
|
|
AMOUNT OF
|
|
|
YEAR-TO-DATE ENDED |
|
|
AMOUNT OF
|
|
||||||||||||
|
|
|
JUNE 2023 |
|
|
JUNE 2022 |
|
|
2023 VS.
|
|
|
JUNE 2023 |
|
|
JUNE 2022 |
|
|
2023 VS.
|
|
||||||
|
Acres sold |
|
|
9,281 |
|
|
|
26,906 |
|
|
|
(17,625 |
) |
|
|
30,034 |
|
|
|
51,032 |
|
|
|
(20,998 |
) |
|
Average price per acre |
|
$ |
4,790 |
|
|
$ |
3,215 |
|
|
$ |
1,575 |
|
|
$ |
3,720 |
|
|
$ |
3,484 |
|
|
$ |
236 |
|
WOOD PRODUCTS
How We Did Second Quarter 2023 and Year-to-Date 2023
|
|
|
QUARTER ENDED |
|
|
AMOUNT OF
|
|
|
YEAR-TO-DATE ENDED |
|
|
AMOUNT OF
|
|
||||||||||||
|
DOLLAR AMOUNTS IN MILLIONS |
|
JUNE 2023 |
|
|
JUNE 2022 |
|
|
2023 VS.
|
|
|
JUNE 2023 |
|
|
JUNE 2022 |
|
|
2023 VS.
|
|
||||||
|
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Structural lumber |
|
$ |
573 |
|
|
$ |
998 |
|
|
$ |
(425 |
) |
|
$ |
1,088 |
|
|
$ |
2,204 |
|
|
$ |
(1,116 |
) |
|
Oriented strand board |
|
|
215 |
|
|
|
497 |
|
|
|
(282 |
) |
|
|
423 |
|
|
|
1,061 |
|
|
|
(638 |
) |
|
Engineered solid section |
|
|
215 |
|
|
|
247 |
|
|
|
(32 |
) |
|
|
384 |
|
|
|
443 |
|
|
|
(59 |
) |
|
Engineered I-joists |
|
|
126 |
|
|
|
168 |
|
|
|
(42 |
) |
|
|
213 |
|
|
|
305 |
|
|
|
(92 |
) |
|
Softwood plywood |
|
|
44 |
|
|
|
53 |
|
|
|
(9 |
) |
|
|
85 |
|
|
|
111 |
|
|
|
(26 |
) |
|
Medium density fiberboard |
|
|
42 |
|
|
|
53 |
|
|
|
(11 |
) |
|
|
80 |
|
|
|
101 |
|
|
|
(21 |
) |
|
Complementary building products |
|
|
204 |
|
|
|
239 |
|
|
|
(35 |
) |
|
|
367 |
|
|
|
454 |
|
|
|
(87 |
) |
|
Other products produced (1) |
|
|
81 |
|
|
|
86 |
|
|
|
(5 |
) |
|
|
178 |
|
|
|
181 |
|
|
|
(3 |
) |
|
Total |
|
$ |
1,500 |
|
|
$ |
2,341 |
|
|
$ |
(841 |
) |
|
$ |
2,818 |
|
|
$ |
4,860 |
|
|
$ |
(2,042 |
) |
|
Costs of sales |
|
$ |
1,218 |
|
|
$ |
1,414 |
|
|
$ |
(196 |
) |
|
$ |
2,377 |
|
|
$ |
2,690 |
|
|
$ |
(313 |
) |
|
Operating income and Net contribution to earnings |
|
$ |
218 |
|
|
$ |
863 |
|
|
$ |
(645 |
) |
|
$ |
313 |
|
|
$ |
2,045 |
|
|
$ |
(1,732 |
) |
Comparing Second Quarter 2023 with Second Quarter 2022
Net sales
Net sales decreased $841 million – 36 percent – due to:
19
Costs of sales
Costs of sales decreased $196 million – 14 percent – primarily due to decreased sales volumes and raw material costs across most product lines, as well as decreased freight costs.
Operating income and Net contribution to earnings
Operating income and net contribution to earnings decreased $645 million – 75 percent – primarily due to the change in the components of gross margin, as discussed above.
Comparing Year-to-Date 2023 with Year-to-Date 2022
Net sales
Net sales decreased $2,042 million – 42 percent – due to:
Costs of sales
Costs of sales decreased $313 million – 12 percent – primarily due to decreased sales volumes and raw material costs across most product lines, as well as decreased freight costs.
Operating income and Net contribution to earnings
Operating income and net contribution to earnings decreased $1,732 million – 85 percent – primarily due to the change in the components of gross margin, as discussed above.
Third-Party Sales Volumes
|
|
|
QUARTER ENDED |
|
|
AMOUNT OF
|
|
|
YEAR-TO-DATE ENDED |
|
|
AMOUNT OF
|
|
||||||||||||
|
VOLUMES IN MILLIONS (1) |
|
JUNE 2023 |
|
|
JUNE 2022 |
|
|
2023 VS.
|
|
|
JUNE 2023 |
|
|
JUNE 2022 |
|
|
2023 VS.
|
|
||||||
|
Structural lumber – board feet |
|
|
1,196 |
|
|
|
1,289 |
|
|
|
(93 |
) |
|
|
2,340 |
|
|
|
2,446 |
|
|
|
(106 |
) |
|
Oriented strand board – square feet (3/8”) |
|
|
720 |
|
|
|
735 |
|
|
|
(15 |
) |
|
|
1,493 |
|
|
|
1,452 |
|
|
|
41 |
|
|
Engineered solid section – cubic feet |
|
|
6.0 |
|
|
|
6.4 |
|
|
|
(0.4 |
) |
|
|
10.7 |
|
|
|
12.1 |
|
|
|
(1.4 |
) |
|
Engineered I-joists – lineal feet |
|
|
44 |
|
|
|
49 |
|
|
|
(5 |
) |
|
|
71 |
|
|
|
95 |
|
|
|
(24 |
) |
|
Softwood plywood – square feet (3/8”) |
|
|
94 |
|
|
|
70 |
|
|
|
24 |
|
|
|
177 |
|
|
|
145 |
|
|
|
32 |
|
|
Medium density fiberboard – square feet (3/4”) |
|
|
31 |
|
|
|
45 |
|
|
|
(14 |
) |
|
|
60 |
|
|
|
89 |
|
|
|
(29 |
) |
20
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
|
|
|
YEAR-TO-DATE ENDED |
|
|
AMOUNT OF
|
|
||||||||||||
|
VOLUMES IN MILLIONS |
|
JUNE 2023 |
|
|
JUNE 2022 |
|
|
2023 VS.
|
|
|
JUNE 2023 |
|
|
JUNE 2022 |
|
|
2023 VS.
|
|
||||||
|
Structural lumber – board feet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Production |
|
|
1,164 |
|
|
|
1,232 |
|
|
|
(68 |
) |
|
|
2,307 |
|
|
|
2,435 |
|
|
|
(128 |
) |
|
Outside purchase |
|
|
36 |
|
|
|
43 |
|
|
|
(7 |
) |
|
|
75 |
|
|
|
85 |
|
|
|
(10 |
) |
|
Total |
|
|
1,200 |
|
|
|
1,275 |
|
|
|
(75 |
) |
|
|
2,382 |
|
|
|
2,520 |
|
|
|
(138 |
) |
|
Oriented strand board – square feet (3/8”): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Production |
|
|
727 |
|
|
|
758 |
|
|
|
(31 |
) |
|
|
1,488 |
|
|
|
1,497 |
|
|
|
(9 |
) |
|
Outside purchase |
|
|
19 |
|
|
|
66 |
|
|
|
(47 |
) |
|
|
36 |
|
|
|
136 |
|
|
|
(100 |
) |
|
Total |
|
|
746 |
|
|
|
824 |
|
|
|
(78 |
) |
|
|
1,524 |
|
|
|
1,633 |
|
|
|
(109 |
) |
|
Engineered solid section – cubic feet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Production |
|
|
5.9 |
|
|
|
6.4 |
|
|
|
(0.5 |
) |
|
|
10.5 |
|
|
|
12.1 |
|
|
|
(1.6 |
) |
|
Outside purchase |
|
|
4.0 |
|
|
|
0.3 |
|
|
|
3.7 |
|
|
|
6.0 |
|
|
|
0.5 |
|
|
|
5.5 |
|
|
Total |
|
|
9.9 |
|
|
|
6.7 |
|
|
|
3.2 |
|
|
|
16.5 |
|
|
|
12.6 |
|
|
|
3.9 |
|
|
Engineered I-joists – lineal feet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Production |
|
|
38 |
|
|
|
50 |
|
|
|
(12 |
) |
|
|
63 |
|
|
|
94 |
|
|
|
(31 |
) |
|
Outside purchase |
|
|
— |
|
|
|
3 |
|
|
|
(3 |
) |
|
|
1 |
|
|
|
5 |
|
|
|
(4 |
) |
|
Total |
|
|
38 |
|
|
|
53 |
|
|
|
(15 |
) |
|
|
64 |
|
|
|
99 |
|
|
|
(35 |
) |
|
Softwood plywood – square feet (3/8”): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Production |
|
|
84 |
|
|
|
67 |
|
|
|
17 |
|
|
|
158 |
|
|
|
133 |
|
|
|
25 |
|
|
Outside purchase |
|
|
11 |
|
|
|
8 |
|
|
|
3 |
|
|
|
23 |
|
|
|
18 |
|
|
|
5 |
|
|
Total |
|
|
95 |
|
|
|
75 |
|
|
|
20 |
|
|
|
181 |
|
|
|
151 |
|
|
|
30 |
|
|
Medium density fiberboard – square feet (3/4"): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Production |
|
|
33 |
|
|
|
48 |
|
|
|
(15 |
) |
|
|
67 |
|
|
|
92 |
|
|
|
(25 |
) |
|
Total |
|
|
33 |
|
|
|
48 |
|
|
|
(15 |
) |
|
|
67 |
|
|
|
92 |
|
|
|
(25 |
) |
21
UNALLOCAT ED 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
|
|
|
YEAR-TO-DATE ENDED |
|
|
AMOUNT OF
|
|
||||||||||||
|
DOLLAR AMOUNTS IN MILLIONS |
|
JUNE 2023 |
|
|
JUNE 2022 |
|
|
2023 VS.
|
|
|
JUNE 2023 |
|
|
JUNE 2022 |
|
|
2023 VS.
|
|
||||||
|
Unallocated corporate function and variable compensation expense |
|
$ |
(32 |
) |
|
$ |
(36 |
) |
|
$ |
4 |
|
|
$ |
(59 |
) |
|
$ |
(67 |
) |
|
$ |
8 |
|
|
Liability classified share-based compensation |
|
|
(2 |
) |
|
|
2 |
|
|
|
(4 |
) |
|
|
(2 |
) |
|
|
3 |
|
|
|
(5 |
) |
|
Foreign exchange gain (loss) |
|
|
2 |
|
|
|
3 |
|
|
|
(1 |
) |
|
|
1 |
|
|
|
3 |
|
|
|
(2 |
) |
|
Elimination of intersegment profit in inventory and LIFO |
|
|
3 |
|
|
|
18 |
|
|
|
(15 |
) |
|
|
12 |
|
|
|
(41 |
) |
|
|
53 |
|
|
Other |
|
|
(26 |
) |
|
|
(21 |
) |
|
|
(5 |
) |
|
|
(39 |
) |
|
|
(33 |
) |
|
|
(6 |
) |
|
Operating loss |
|
|
(55 |
) |
|
|
(34 |
) |
|
|
(21 |
) |
|
|
(87 |
) |
|
|
(135 |
) |
|
|
48 |
|
|
Non-operating pension and other post-employment benefit costs |
|
|
(12 |
) |
|
|
(11 |
) |
|
|
(1 |
) |
|
|
(21 |
) |
|
|
(26 |
) |
|
|
5 |
|
|
Interest income and other |
|
|
18 |
|
|
|
1 |
|
|
|
17 |
|
|
|
30 |
|
|
|
— |
|
|
|
30 |
|
|
Net charge to earnings |
|
$ |
(49 |
) |
|
$ |
(44 |
) |
|
$ |
(5 |
) |
|
$ |
(78 |
) |
|
$ |
(161 |
) |
|
$ |
83 |
|
Comparing Second Quarter 2023 with Second Quarter 2022
Net charge to earnings increased $5 million – 11 percent – primarily due to:
These changes were partially offset by a $17 million increase in interest income and other due to an increase in the interest rate on our cash and short-term investment accounts.
Comparing Year-to-Date 2023 with Year-to-Date 2022
Net charge to earnings decreased $83 million – 52 percent – primarily due to a $53 million decrease in elimination of intersegment profit in inventory and LIFO, as well as a $30 million increase in interest income and other due to an increase in the interest rate on our cash and short-term investment accounts.
INTEREST EXPENSE
Our interest expense, net of capitalized interest, was:
Interest expense increased by $5 million compared to second quarter 2022 primarily due to an increase in weighted average outstanding debt in second quarter 2023. Year-to-date 2023 interest expense was comparable to year-to-date 2022 primarily due to the May 2023 issuance of debt securities that increased our weighted average outstanding debt, offset by a series of transactions performed in March 2022 that lowered our weighted average interest rate and extended our weighted average maturity.
Refer to Note 8: Long-Term Debt and Line of Credit for further information.
INCOME TAXES
Our provision for income taxes was:
Our provision for income taxes is primarily driven by earnings generated by our TRSs. Income tax expense decreased by $346 million compared to year-to-date 2022 primarily due to a decrease in our TRS earnings in 2023, as well as a decrease in our estimated annual effective tax rate.
Refer to Note 14: Income Taxes for further information.
22
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 June 30, 2023, we had approximately $1.1 billion in cash and cash equivalents, $665 million in short-term investments 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.
CASH FROM OPERATIONS
Consolidated net cash from operations was:
Net cash from operations decreased $1,481 million primarily due to decreased cash inflows from our business operations. This change was partially offset by a $336 million decrease in cash paid for income taxes.
CASH FROM INVESTING ACTIVITIES
Consolidated net cash from investing activities was:
Net cash from investing activities decreased $385 million primarily due to a $664 million increase in cash paid for short-term investments. This change was partially offset by a $281 million decrease in cash paid for acquisition of timberlands.
Summary of Capital Spending by Business Segment
|
|
|
YEAR-TO-DATE ENDED |
|
|||||
|
DOLLAR AMOUNTS IN MILLIONS |
|
JUNE 2023 |
|
|
JUNE 2022 |
|
||
|
Timberlands |
|
$ |
48 |
|
|
$ |
53 |
|
|
Wood Products |
|
|
99 |
|
|
|
95 |
|
|
Unallocated Items |
|
|
5 |
|
|
|
3 |
|
|
Total |
|
$ |
152 |
|
|
$ |
151 |
|
We anticipate our capital expenditures for 2023 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:
Net cash from financing activities increased $1,648 million, primarily due to:
These changes were partially offset by a $138 million decrease in net proceeds from issuance of long-term debt.
Line of Credit
In March 2023, we entered into a new $1.5 billion five-year senior unsecured revolving credit facility, which expires in March 2028 and replaced the existing facility which was set to expire in January 2025. Borrowings will bear interest at a floating rate based on either the adjusted term SOFR plus a spread or a mutually agreed upon base rate plus a spread. We had no outstanding borrowings on our $1.5 billion five-year senior unsecured revolving credit facility as of June 30, 2023 or December 31, 2022.
Refer to Note 8: Long-Term Debt and Line of Credit for further information.
Long-Term Debt
In July 2023, we repaid $118 million of our 7.125% notes at maturity. We have $860 million of long-term debt scheduled to mature during fourth quarter 2023.
In May 2023, we completed an offering of debt securities by issuing $750 million of 4.750 percent notes due in May 2026. The net proceeds after deducting the discount, underwriting fees and issuance costs were $743 million. Of these total net proceeds, $664 million was invested in short-term debt securities which are classified as held-to-maturity.
23
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 June 30, 2023, Weyerhaeuser Company was in compliance with its debt covenants. There have been no significant changes to the debt covenants presented in our 2022 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.
Dividend Payments
We paid cash dividends on common shares of:
The decrease in dividends paid is primarily due 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 in comparison to a supplemental dividend of $1.45 per share based on 2021 financial results for a total of $1,084 million paid in first quarter 2022.
Share Repurchases
We repurchased 1,689,874 common shares for approximately $50 million (including transaction fees) during second quarter 2023 and 2,805,434 common shares for approximately $85 million (including transaction fees) during year-to-date 2023 under the 2021 Repurchase Program. During second quarter 2022, we repurchased 3,784,787 common shares for approximately $138 million (including transaction fees) and we repurchased 6,982,462 common shares for approximately $259 million (including transaction fees) during year-to-date 2022 under the 2021 Repurchase Program. There were no unsettled shares as of June 30, 2023 and 223,548 unsettled shares (approximately $7 million) as of December 31, 2022. 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
|
|
|
YEAR-TO-DATE ENDED |
|
|
AMOUNT OF
|
|
||||||||||||
|
DOLLAR AMOUNTS IN MILLIONS |
|
JUNE 2023 |
|
|
JUNE 2022 |
|
|
2023 VS.
|
|
|
JUNE 2023 |
|
|
JUNE 2022 |
|
|
2023 VS.
|
|
||||||
|
Adjusted EBITDA by Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Timberlands |
|
$ |
172 |
|
|
$ |
219 |
|
|
$ |
(47 |
) |
|
$ |
360 |
|
|
$ |
466 |
|
|
$ |
(106 |
) |
|
Real Estate & ENR |
|
|
70 |
|
|
|
107 |
|
|
|
(37 |
) |
|
|
159 |
|
|
|
223 |
|
|
|
(64 |
) |
|
Wood Products |
|
|
270 |
|
|
|
912 |
|
|
|
(642 |
) |
|
|
418 |
|
|
|
2,145 |
|
|
|
(1,727 |
) |
|
|
|
|
512 |
|
|
|
1,238 |
|
|
|
(726 |
) |
|
|
937 |
|
|
|
2,834 |
|
|
|
(1,897 |
) |
|
Unallocated Items |
|
|
(43 |
) |
|
|
(33 |
) |
|
|
(10 |
) |
|
|
(73 |
) |
|
|
(132 |
) |
|
|
59 |
|
|
Adjusted EBITDA |
|
$ |
469 |
|
|
$ |
1,205 |
|
|
$ |
(736 |
) |
|
$ |
864 |
|
|
$ |
2,702 |
|
|
$ |
(1,838 |
) |
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.
24
The table below reconciles Adjusted EBITDA for the quarter ended June 30, 2023:
|
DOLLAR AMOUNTS IN MILLIONS |
|
Timberlands |
|
|
Real Estate &
|
|
|
Wood
|
|
|
Unallocated
|
|
|
Total |
|
|||||
|
Adjusted EBITDA by Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Net earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
230 |
|
||||
|
Interest expense, net of capitalized interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70 |
|
||||
|
Income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25 |
|
||||
|
Net contribution (charge) to earnings |
|
$ |
104 |
|
|
$ |
52 |
|
|
$ |
218 |
|
|
$ |
(49 |
) |
|
$ |
325 |
|
|
Non-operating pension and other post-employment benefit costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
12 |
|
|
|
12 |
|
|
Interest income and other |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(18 |
) |
|
|
(18 |
) |
|
Operating income (loss) |
|
|
104 |
|
|
|
52 |
|
|
|
218 |
|
|
|
(55 |
) |
|
|
319 |
|
|
Depreciation, depletion and amortization |
|
|
68 |
|
|
|
5 |
|
|
|
52 |
|
|
|
1 |
|
|
|
126 |
|
|
Basis of real estate sold |
|
|
— |
|
|
|
13 |
|
|
|
— |
|
|
|
— |
|
|
|
13 |
|
|
Special items included in operating income (loss) (1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11 |
|
|
|
11 |
|
|
Adjusted EBITDA |
|
$ |
172 |
|
|
$ |
70 |
|
|
$ |
270 |
|
|
$ |
(43 |
) |
|
$ |
469 |
|
The table below reconciles Adjusted EBITDA for the quarter ended June 30, 2022:
|
DOLLAR AMOUNTS IN MILLIONS |
|
Timberlands |
|
|
Real Estate &
|
|
|
Wood
|
|
|
Unallocated
|
|
|
Total |
|
|||||
|
Adjusted EBITDA by Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Net earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
788 |
|
||||
|
Interest expense, net of capitalized interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65 |
|
||||
|
Income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
184 |
|
||||
|
Net contribution (charge) to earnings |
|
$ |
153 |
|
|
$ |
65 |
|
|
$ |
863 |
|
|
$ |
(44 |
) |
|
$ |
1,037 |
|
|
Non-operating pension and other post-employment benefit costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11 |
|
|
|
11 |
|
|
Interest income and other |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1 |
) |
|
|
(1 |
) |
|
Operating income (loss) |
|
|
153 |
|
|
|
65 |
|
|
|
863 |
|
|
|
(34 |
) |
|
|
1,047 |
|
|
Depreciation, depletion and amortization |
|
|
66 |
|
|
|
3 |
|
|
|
49 |
|
|
|
1 |
|
|
|
119 |
|
|
Basis of real estate sold |
|
|
— |
|
|
|
39 |
|
|
|
— |
|
|
|
— |
|
|
|
39 |
|
|
Adjusted EBITDA |
|
$ |
219 |
|
|
$ |
107 |
|
|
$ |
912 |
|
|
$ |
(33 |
) |
|
$ |
1,205 |
|
The table below reconciles Adjusted EBITDA for the year-to-date period ended June 30, 2023:
|
DOLLAR AMOUNTS IN MILLIONS |
|
Timberlands |
|
|
Real Estate &
|
|
|
Wood
|
|
|
Unallocated
|
|
|
Total |
|
|||||
|
Adjusted EBITDA by Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Net earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
381 |
|
||||
|
Interest expense, net of capitalized interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
136 |
|
||||
|
Income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47 |
|
||||
|
Net contribution (charge) to earnings |
|
$ |
224 |
|
|
$ |
105 |
|
|
$ |
313 |
|
|
$ |
(78 |
) |
|
$ |
564 |
|
|
Non-operating pension and other post-employment benefit costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
21 |
|
|
|
21 |
|
|
Interest income and other |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(30 |
) |
|
|
(30 |
) |
|
Operating income (loss) |
|
|
224 |
|
|
|
105 |
|
|
|
313 |
|
|
|
(87 |
) |
|
|
555 |
|
|
Depreciation, depletion and amortization |
|
|
136 |
|
|
|
8 |
|
|
|
105 |
|
|
|
3 |
|
|
|
252 |
|
|
Basis of real estate sold |
|
|
— |
|
|
|
46 |
|
|
|
— |
|
|
|
— |
|
|
|
46 |
|
|
Special items included in operating income (loss) (1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11 |
|
|
|
11 |
|
|
Adjusted EBITDA |
|
$ |
360 |
|
|
$ |
159 |
|
|
$ |
418 |
|
|
$ |
(73 |
) |
|
$ |
864 |
|
25
The table below reconciles Adjusted EBITDA for the year-to-date period ended June 30, 2022:
|
DOLLAR AMOUNTS IN MILLIONS |
|
Timberlands |
|
|
Real Estate
|
|
|
Wood
|
|
|
Unallocated
|
|
|
Total |
|
|||||
|
Adjusted EBITDA by Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Net earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,559 |
|
||||
|
Interest expense, net of capitalized interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
137 |
|
||||
|
Loss on debt extinguishment (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
276 |
|
||||
|
Income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
393 |
|
||||
|
Net contribution (charge) to earnings |
|
$ |
335 |
|
|
$ |
146 |
|
|
$ |
2,045 |
|
|
$ |
(161 |
) |
|
$ |
2,365 |
|
|
Non-operating pension and other post-employment benefit costs |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
26 |
|
|
|
26 |
|
|
Interest income and other |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Operating income (loss) |
|
|
335 |
|
|
|
146 |
|
|
|
2,045 |
|
|
|
(135 |
) |
|
|
2,391 |
|
|
Depreciation, depletion and amortization |
|
|
131 |
|
|
|
7 |
|
|
|
100 |
|
|
|
3 |
|
|
|
241 |
|
|
Basis of real estate sold |
|
|
— |
|
|
|
70 |
|
|
|
— |
|
|
|
— |
|
|
|
70 |
|
|
Adjusted EBITDA |
|
$ |
466 |
|
|
$ |
223 |
|
|
$ |
2,145 |
|
|
$ |
(132 |
) |
|
$ |
2,702 |
|
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 |
|
|
YEAR-TO-DATE ENDED |
|
||||||||||
|
DOLLAR AMOUNTS IN MILLIONS |
|
JUNE 2023 |
|
|
JUNE 2022 |
|
|
JUNE 2023 |
|
|
JUNE 2022 |
|
||||
|
Net earnings |
|
$ |
230 |
|
|
$ |
788 |
|
|
$ |
381 |
|
|
$ |
1,559 |
|
|
Environmental remediation charge |
|
|
8 |
|
|
|
— |
|
|
|
8 |
|
|
|
— |
|
|
Loss on debt extinguishment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
207 |
|
|
Net earnings before special items |
|
$ |
238 |
|
|
$ |
788 |
|
|
$ |
389 |
|
|
$ |
1,766 |
|
Net Earnings per Diluted Share Before Special Items
|
|
|
QUARTER ENDED |
|
|
YEAR-TO-DATE ENDED |
|
||||||||||
|
|
|
JUNE 2023 |
|
|
JUNE 2022 |
|
|
JUNE 2023 |
|
|
JUNE 2022 |
|
||||
|
Net earnings per diluted share |
|
$ |
0.31 |
|
|
$ |
1.06 |
|
|
$ |
0.52 |
|
|
$ |
2.09 |
|
|
Environmental remediation charge |
|
|
0.01 |
|
|
|
— |
|
|
|
0.01 |
|
|
|
— |
|
|
Loss on debt extinguishment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.28 |
|
|
Net earnings per diluted share before special items |
|
$ |
0.32 |
|
|
$ |
1.06 |
|
|
$ |
0.53 |
|
|
$ |
2.37 |
|
CRITICAL ACCOUNTING POLICIES
There have been no significant changes during year-to-date 2023 to the critical accounting policies presented in our 2022 Annual Report on Form 10-K.
Item 3. QUANTITATIVE AND QUALITATIVE D ISCLOSURES ABOUT MARKET RISK
LONG-TERM INDEBTEDNESS OBLIGATIONS
The following summary of our long-term indebtedness obligations includes:
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.
26
Summary of Long-Term Indebtedness Principal Obligations as of June 30, 2023
|
DOLLAR AMOUNTS IN MILLIONS |
|
2023 |
|
|
2024 |
|
|
2025 |
|
|
2026 |
|
|
2027 |
|
|
THEREAFTER |
|
|
TOTAL (1) |
|
|
FAIR VALUE |
|
||||||||
|
Fixed-rate debt |
|
$ |
978 |
|
|
$ |
— |
|
|
$ |
210 |
|
|
$ |
1,022 |
|
|
$ |
300 |
|
|
$ |
3,333 |
|
|
$ |
5,843 |
|
|
$ |
5,687 |
|
|
Average interest rate |
|
|
5.44 |
% |
|
|
— |
% |
|
|
8.31 |
% |
|
|
5.52 |
% |
|
|
6.95 |
% |
|
|
4.82 |
% |
|
|
5.28 |
% |
|
N/A |
|
|
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 June 30, 2023, 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 year-to-date 2023 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 PRO CEEDINGS
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 F ACTORS
There have been no material changes with respect to the risk factors disclosed in our 2022 Annual Report on Form 10-K.
Item 2. UNREGISTERED SALES OF EQUITY S ECURITIES 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 second quarter 2023:
|
COMMON SHARE REPURCHASES DURING SECOND QUARTER 2023 |
|
TOTAL NUMBER
|
|
|
AVERAGE PRICE
|
|
|
TOTAL NUMBER
|
|
|
APPROXIMATE
|
|
||||
|
April 1 – April 30 |
|
|
283,244 |
|
|
$ |
30.36 |
|
|
|
283,244 |
|
|
$ |
333,205,159 |
|
|
May 1 – May 31 |
|
|
1,406,630 |
|
|
|
29.44 |
|
|
|
1,406,630 |
|
|
|
291,801,000 |
|
|
June 1 – June 30 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
291,801,000 |
|
|
Total |
|
|
1,689,874 |
|
|
$ |
29.59 |
|
|
|
1,689,874 |
|
|
$ |
291,801,000 |
|
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.
During second quarter 2023, we repurchased 1,689,874 shares for approximately $50 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 June 30, 2023, we had remaining authorization of $292 million for future stock repurchases.
I tem 5. OTHER INFORMATION
Rule 10b5-1 Trading Arrangements
During second quarter 2023, two of the company’s executive officers adopted trading plans intended to satisfy the affirmative defense conditions of
27
Frequency of Say on Pay
As previously reported in our Form 8-K filed on May 15, 2023, the 2023 Annual Meeting of Shareholders was held on May 12, 2023 (the “2023 Annual Meeting”). The shareholders voted on the matters set forth in such Form 8-K, including Proposal 3 related to the say-on-frequency advisory vote. Based on the voting results for Proposal 3 as set forth in the Form 8-K, and as was recommended with respect to this proposal by the board of directors in the proxy statement for the 2023 Annual Meeting, the board has determined that future advisory votes regarding named executive officer compensation will be conducted on an annual basis. This disclosure is intended to satisfy the requirements of Item 5.07(d) of Form 8-K.
28
Item 6. EXHI BITS
|
|
|
|
4.1 |
Officer’s Certificate dated as of May 17, 2023 executed by Weyerhaeuser Company as Issuer of 4.750% Senior Notes due 2026 (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed on May 17, 2023 – 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 June 30, 2023, has been formatted in Inline XBRL. |
29
S IGNATURES
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: July 28, 2023 |
By: |
/s/ David M. Wold |
|
|
|
David M. Wold |
|
|
|
Senior Vice President and Chief Financial Officer |
|
|
|
(Principal Financial and Accounting Officer and Duly Authorized Officer) |
30