UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED SEPTEMBERJUNE 30, 20222023
or
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM TO TO ______
COMMISSION FILE NUMBER: 1-4825
WEYERHAEUSER COMPANY
(Exact name of registrant as specified in its charter)
Washington | 91-0470860 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |
220 Occidental Avenue South Seattle, Washington | 98104-7800 | |
(Address of principal executive offices) | (Zip Code) |
(206)539-3000
(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 | ||
Common Stock, par value $1.25 per share | WY | New York Stock Exchange |
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. ☒Yes☐ No
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). ☒Yes☐ No
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.
Large accelerated filer | ☒ | 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 ☒ No
As of OctoberJuly 24, 2022, 735,9172023, 730,748 thousand shares of the registrant’s common stock ($1.25 par value) were outstanding.
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. |
| ||
ITEM 6. | |||
PART I – FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
WEYERHAEUSER COMPANY
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
|
| QUARTER ENDED |
|
| YEAR-TO-DATE ENDED |
|
| QUARTER ENDED |
|
| YEAR-TO-DATE ENDED |
| ||||||||||||||||||||
DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES |
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| JUNE 2023 |
|
| JUNE 2022 |
|
| JUNE 2023 |
|
| JUNE 2022 |
| ||||||||
Net sales (Note 3) |
| $ | 2,276 |
|
| $ | 2,345 |
|
| $ | 8,361 |
|
| $ | 7,995 |
| ||||||||||||||||
Net sales (Note 3) |
| $ | 1,997 |
|
| $ | 2,973 |
|
| $ | 3,878 |
|
| $ | 6,085 |
| ||||||||||||||||
Costs of sales |
|
| 1,694 |
|
|
| 1,589 |
|
|
| 5,130 |
|
|
| 4,602 |
|
|
| 1,528 |
|
|
| 1,789 |
|
|
| 3,040 |
|
|
| 3,436 |
|
Gross margin |
|
| 582 |
|
|
| 756 |
|
|
| 3,231 |
|
|
| 3,393 |
|
|
| 469 |
|
|
| 1,184 |
|
|
| 838 |
|
|
| 2,649 |
|
Selling expenses |
|
| 24 |
|
|
| 24 |
|
|
| 70 |
|
|
| 68 |
|
|
| 22 |
|
|
| 23 |
|
|
| 44 |
|
|
| 46 |
|
General and administrative expenses |
|
| 100 |
|
|
| 98 |
|
|
| 294 |
|
|
| 283 |
|
|
| 108 |
|
|
| 102 |
|
|
| 209 |
|
|
| 194 |
|
Other operating costs (income), net (Note 13) |
|
| 1 |
|
|
| (15 | ) |
|
| 19 |
|
|
| 8 |
| ||||||||||||||||
Other operating costs, net (Note 13) |
|
| 20 |
|
|
| 12 |
|
|
| 30 |
|
|
| 18 |
| ||||||||||||||||
Operating income |
|
| 457 |
|
|
| 649 |
|
|
| 2,848 |
|
|
| 3,034 |
|
|
| 319 |
|
|
| 1,047 |
|
|
| 555 |
|
|
| 2,391 |
|
Non-operating pension and other post-employment benefit costs (Note 6) |
|
| (12 | ) |
|
| (5 | ) |
|
| (38 | ) |
|
| (14 | ) | ||||||||||||||||
Non-operating pension and other post-employment benefit costs (Note 6) |
|
| (12 | ) |
|
| (11 | ) |
|
| (21 | ) |
|
| (26 | ) | ||||||||||||||||
Interest income and other |
|
| 9 |
|
|
| 1 |
|
|
| 9 |
|
|
| 4 |
|
|
| 18 |
|
|
| 1 |
|
|
| 30 |
|
|
| — |
|
Interest expense, net of capitalized interest |
|
| (67 | ) |
|
| (79 | ) |
|
| (204 | ) |
|
| (236 | ) |
|
| (70 | ) |
|
| (65 | ) |
|
| (136 | ) |
|
| (137 | ) |
Loss on debt extinguishment (Note 8) |
|
| — |
|
|
| — |
|
|
| (276 | ) |
|
| — |
| ||||||||||||||||
Loss on debt extinguishment (Note 8) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (276 | ) | ||||||||||||||||
Earnings before income taxes |
|
| 387 |
|
|
| 566 |
|
|
| 2,339 |
|
|
| 2,788 |
|
|
| 255 |
|
|
| 972 |
|
|
| 428 |
|
|
| 1,952 |
|
Income taxes (Note 14) |
|
| (77 | ) |
|
| (84 | ) |
|
| (470 | ) |
|
| (597 | ) | ||||||||||||||||
Income taxes (Note 14) | �� |
| (25 | ) |
|
| (184 | ) |
|
| (47 | ) |
|
| (393 | ) | ||||||||||||||||
Net earnings |
| $ | 310 |
|
| $ | 482 |
|
| $ | 1,869 |
|
| $ | 2,191 |
|
| $ | 230 |
|
| $ | 788 |
|
| $ | 381 |
|
| $ | 1,559 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Earnings per share, basic and diluted (Note 4) |
| $ | 0.42 |
|
| $ | 0.64 |
|
| $ | 2.51 |
|
| $ | 2.92 |
| ||||||||||||||||
Weighted average shares outstanding (in thousands) (Note 4): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Earnings per share, basic and diluted (Note 4) |
| $ | 0.31 |
|
| $ | 1.06 |
|
| $ | 0.52 |
|
| $ | 2.09 |
| ||||||||||||||||
Weighted average shares outstanding (in thousands) (Note 4): |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Basic |
|
| 740,058 |
|
|
| 750,105 |
|
|
| 743,990 |
|
|
| 749,657 |
|
|
| 732,021 |
|
|
| 744,542 |
|
|
| 732,599 |
|
|
| 746,017 |
|
Diluted |
|
| 740,975 |
|
|
| 751,443 |
|
|
| 745,081 |
|
|
| 750,999 |
|
|
| 732,362 |
|
|
| 745,582 |
|
|
| 732,961 |
|
|
| 747,194 |
|
See accompanying Notes to Consolidated Financial Statements.
1
WEYERHAEUSER COMPANY
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(UNAUDITED)
|
| QUARTER ENDED |
|
| YEAR-TO-DATE ENDED |
|
| QUARTER ENDED |
|
| YEAR-TO-DATE ENDED |
| ||||||||||||||||||||
DOLLAR AMOUNTS IN MILLIONS |
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| JUNE 2023 |
|
| JUNE 2022 |
|
| JUNE 2023 |
|
| JUNE 2022 |
| ||||||||
Net earnings |
| $ | 310 |
|
| $ | 482 |
|
| $ | 1,869 |
|
| $ | 2,191 |
|
| $ | 230 |
|
| $ | 788 |
|
| $ | 381 |
|
| $ | 1,559 |
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Foreign currency translation adjustments |
|
| (53 | ) |
|
| (25 | ) |
|
| (62 | ) |
|
| (1 | ) |
|
| 7 |
|
|
| (25 | ) |
|
| 7 |
|
|
| (9 | ) |
Changes in unamortized actuarial loss, net of tax expense of $11, $10, $40 and $55 |
|
| 32 |
|
|
| 29 |
|
|
| 122 |
|
|
| 170 |
| ||||||||||||||||
Changes in unamortized net prior service credit, net of tax expense of $0, $0, $1 and $0 |
|
| 1 |
|
|
| 1 |
|
|
| 1 |
|
|
| 2 |
| ||||||||||||||||
Total other comprehensive income (loss) |
|
| (20 | ) |
|
| 5 |
|
|
| 61 |
|
|
| 171 |
| ||||||||||||||||
Changes in unamortized actuarial loss, net of tax expense of $2, $24, $4 and $29 |
|
| 7 |
|
|
| 77 |
|
|
| 14 |
|
|
| 90 |
| ||||||||||||||||
Changes in unamortized net prior service credit, net of tax (expense) benefit of $1, $0, $1 and ($1) |
|
| 1 |
|
|
| — |
|
|
| 1 |
|
|
| — |
| ||||||||||||||||
Total other comprehensive income |
|
| 15 |
|
|
| 52 |
|
|
| 22 |
|
|
| 81 |
| ||||||||||||||||
Total comprehensive income |
| $ | 290 |
|
| $ | 487 |
|
| $ | 1,930 |
|
| $ | 2,362 |
|
| $ | 245 |
|
| $ | 840 |
|
| $ | 403 |
|
| $ | 1,640 |
|
See accompanying Notes to Consolidated Financial Statements.
2
WEYERHAEUSER COMPANY
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
DOLLAR AMOUNTS IN MILLIONS, EXCEPT PAR VALUE |
| SEPTEMBER 30, 2022 |
|
| DECEMBER 31, 2021 |
|
| JUNE 30, |
|
| DECEMBER 31, |
| ||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 1,920 |
|
| $ | 1,879 |
|
| $ | 1,095 |
|
| $ | 1,581 |
|
Short-term investments (Note 9) |
|
| 665 |
|
|
| — |
| ||||||||
Receivables, net |
|
| 425 |
|
|
| 507 |
|
|
| 462 |
|
|
| 357 |
|
Receivables for taxes |
|
| 15 |
|
|
| 24 |
|
|
| 18 |
|
|
| 42 |
|
Inventories (Note 5) |
|
| 542 |
|
|
| 520 |
| ||||||||
Inventories (Note 5) |
|
| 539 |
|
|
| 550 |
| ||||||||
Prepaid expenses and other current assets |
|
| 146 |
|
|
| 205 |
|
|
| 188 |
|
|
| 216 |
|
Total current assets |
|
| 3,048 |
|
|
| 3,135 |
|
|
| 2,967 |
|
|
| 2,746 |
|
Property and equipment, less accumulated depreciation of $3,680 and $3,592 |
|
| 1,997 |
|
|
| 2,057 |
| ||||||||
Property and equipment, less accumulated depreciation of $3,820 and $3,710 |
|
| 2,133 |
|
|
| 2,171 |
| ||||||||
Construction in progress |
|
| 245 |
|
|
| 175 |
|
|
| 260 |
|
|
| 222 |
|
Timber and timberlands at cost, less depletion |
|
| 11,681 |
|
|
| 11,510 |
|
|
| 11,512 |
|
|
| 11,604 |
|
Minerals and mineral rights, less depletion |
|
| 245 |
|
|
| 255 |
|
|
| 207 |
|
|
| 214 |
|
Deferred tax assets |
|
| 10 |
|
|
| 17 |
|
|
| 8 |
|
|
| 8 |
|
Other assets |
|
| 364 |
|
|
| 503 |
|
|
| 383 |
|
|
| 375 |
|
Total assets |
| $ | 17,590 |
|
| $ | 17,652 |
|
| $ | 17,470 |
|
| $ | 17,340 |
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Current maturities of long-term debt (Note 8) |
| $ | 118 |
|
| $ | — |
| ||||||||
Current maturities of long-term debt (Note 8) |
| $ | 980 |
|
| $ | 982 |
| ||||||||
Accounts payable |
|
| 272 |
|
|
| 281 |
|
|
| 254 |
|
|
| 247 |
|
Accrued liabilities (Note 7) |
|
| 664 |
|
|
| 673 |
| ||||||||
Accrued liabilities (Note 7) |
|
| 473 |
|
|
| 511 |
| ||||||||
Total current liabilities |
|
| 1,054 |
|
|
| 954 |
|
|
| 1,707 |
|
|
| 1,740 |
|
Long-term debt, net (Note 8) |
|
| 4,935 |
|
|
| 5,099 |
| ||||||||
Long-term debt, net (Note 8) |
|
| 4,817 |
|
|
| 4,071 |
| ||||||||
Deferred tax liabilities |
|
| 89 |
|
|
| 46 |
|
|
| 105 |
|
|
| 96 |
|
Deferred pension and other post-employment benefits (Note 6) |
|
| 335 |
|
|
| 440 |
| ||||||||
Deferred pension and other post-employment benefits (Note 6) |
|
| 348 |
|
|
| 344 |
| ||||||||
Other liabilities |
|
| 339 |
|
|
| 346 |
|
|
| 352 |
|
|
| 340 |
|
Total liabilities |
|
| 6,752 |
|
|
| 6,885 |
|
|
| 7,329 |
|
|
| 6,591 |
|
Commitments and contingencies (Note 10) |
|
|
|
|
|
|
|
| ||||||||
Commitments and contingencies (Note 10) |
|
|
|
|
|
| ||||||||||
Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Common shares: $1.25 par value; authorized 1,360 million shares; issued and outstanding: 737,547 thousand shares at September 30, 2022 and 747,301 thousand shares at December 31, 2021 |
|
| 922 |
|
|
| 934 |
| ||||||||
Common shares: $1.25 par value; authorized 1,360 million shares; issued and outstanding: 730,850 thousand shares at June 30, 2023 and 732,794 thousand shares at December 31, 2022 |
|
| 914 |
|
|
| 916 |
| ||||||||
Other capital |
|
| 7,824 |
|
|
| 8,181 |
|
|
| 7,624 |
|
|
| 7,691 |
|
Retained earnings |
|
| 2,510 |
|
|
| 2,131 |
|
|
| 1,828 |
|
|
| 2,389 |
|
Accumulated other comprehensive loss (Note 11) |
|
| (418 | ) |
|
| (479 | ) | ||||||||
Accumulated other comprehensive loss (Note 11) |
|
| (225 | ) |
|
| (247 | ) | ||||||||
Total equity |
|
| 10,838 |
|
|
| 10,767 |
|
|
| 10,141 |
|
|
| 10,749 |
|
Total liabilities and equity |
| $ | 17,590 |
|
| $ | 17,652 |
|
| $ | 17,470 |
|
| $ | 17,340 |
|
See accompanying Notes to Consolidated Financial Statements.
3
WEYERHAEUSER COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
|
| YEAR-TO-DATE ENDED |
|
| YEAR-TO-DATE ENDED |
| ||||||||||
DOLLAR AMOUNTS IN MILLIONS |
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| JUNE 2023 |
|
| JUNE 2022 |
| ||||
Cash flows from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Net earnings |
| $ | 1,869 |
|
| $ | 2,191 |
|
| $ | 381 |
|
| $ | 1,559 |
|
Noncash charges (credits) to earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Depreciation, depletion and amortization |
|
| 360 |
|
|
| 356 |
|
|
| 252 |
|
|
| 241 |
|
Basis of real estate sold |
|
| 77 |
|
|
| 62 |
|
|
| 46 |
|
|
| 70 |
|
Deferred income taxes, net |
|
| 17 |
|
|
| 16 |
| ||||||||
Pension and other post-employment benefits (Note 6) |
|
| 65 |
|
|
| 46 |
| ||||||||
Share-based compensation expense (Note 12) |
|
| 25 |
|
|
| 23 |
| ||||||||
Gain on sale of timberlands (Note 16) |
|
| — |
|
|
| (32 | ) | ||||||||
Loss on debt extinguishment (Note 8) |
|
| 276 |
|
|
| — |
| ||||||||
Pension and other post-employment benefits (Note 6) |
|
| 32 |
|
|
| 44 |
| ||||||||
Share-based compensation expense (Note 12) |
|
| 17 |
|
|
| 17 |
| ||||||||
Loss on debt extinguishment (Note 8) |
|
| — |
|
|
| 276 |
| ||||||||
Other |
|
| 2 |
|
|
| 14 |
| ||||||||
Change in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Receivables, net |
|
| 81 |
|
|
| (47 | ) |
|
| (105 | ) |
|
| (40 | ) |
Receivables and payables for taxes |
|
| 15 |
|
|
| 93 |
|
|
| 27 |
|
|
| 27 |
|
Inventories |
|
| (30 | ) |
|
| (55 | ) |
|
| 14 |
|
|
| (58 | ) |
Prepaid expenses and other current assets |
|
| (7 | ) |
|
| (21 | ) |
|
| 8 |
|
|
| (3 | ) |
Accounts payable and accrued liabilities |
|
| (23 | ) |
|
| 116 |
|
|
| (30 | ) |
|
| (15 | ) |
Pension and post-employment benefit contributions and payments |
|
| (19 | ) |
|
| (56 | ) |
|
| (11 | ) |
|
| (14 | ) |
Other |
|
| (41 | ) |
|
| (27 | ) |
|
| (11 | ) |
|
| (15 | ) |
Net cash from operations |
|
| 2,665 |
|
|
| 2,665 |
|
|
| 622 |
|
|
| 2,103 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Capital expenditures for property and equipment |
|
| (207 | ) |
|
| (184 | ) |
|
| (119 | ) |
|
| (121 | ) |
Capital expenditures for timberlands reforestation |
|
| (38 | ) |
|
| (39 | ) |
|
| (33 | ) |
|
| (30 | ) |
Acquisition of timberlands (Note 16) |
|
| (286 | ) |
|
| (149 | ) | ||||||||
Proceeds from sale of timberlands (Note 16) |
|
| — |
|
|
| 261 |
| ||||||||
Acquisition of timberlands (Note 15) |
|
| (2 | ) |
|
| (283 | ) | ||||||||
Purchase of short-term investments |
|
| (664 | ) |
|
| — |
| ||||||||
Other |
|
| 1 |
|
|
| 3 |
|
|
| — |
|
|
| 1 |
|
Net cash from investing activities |
|
| (530 | ) |
|
| (108 | ) |
|
| (818 | ) |
|
| (433 | ) |
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Cash dividends on common shares |
|
| (1,485 | ) |
|
| (382 | ) |
|
| (938 | ) |
|
| (1,352 | ) |
Net proceeds from issuance of long-term debt (Note 8) |
|
| 881 |
|
|
| — |
| ||||||||
Payments on long-term debt (Note 8) |
|
| (1,203 | ) |
|
| (225 | ) | ||||||||
Proceeds from exercise of stock options |
|
| 15 |
|
|
| 46 |
| ||||||||
Repurchases of common shares (Note 4) |
|
| (402 | ) |
|
| (26 | ) | ||||||||
Net proceeds from issuance of long-term debt (Note 8) |
|
| 743 |
|
|
| 881 |
| ||||||||
Payments on long-term debt (Note 8) |
|
| — |
|
|
| (1,203 | ) | ||||||||
Repurchases of common shares (Note 4) |
|
| (85 | ) |
|
| (259 | ) | ||||||||
Other |
|
| (20 | ) |
|
| (19 | ) |
|
| (10 | ) |
|
| (5 | ) |
Net cash from financing activities |
|
| (2,214 | ) |
|
| (606 | ) |
|
| (290 | ) |
|
| (1,938 | ) |
Net change in cash, cash equivalents and restricted cash |
|
| (79 | ) |
|
| 1,951 |
|
|
| (486 | ) |
|
| (268 | ) |
Cash, cash equivalents and restricted cash at beginning of period |
|
| 1,999 |
|
|
| 495 |
|
|
| 1,581 |
|
|
| 1,999 |
|
Cash, cash equivalents and restricted cash at end of period |
| $ | 1,920 |
|
| $ | 2,446 |
|
| $ | 1,095 |
|
| $ | 1,731 |
|
Cash paid (received) during the period for: |
|
|
|
|
|
|
|
| ||||||||
Interest, net of amount capitalized of $5 and $3 |
| $ | 211 |
|
| $ | 237 |
| ||||||||
Cash paid during the period for: |
|
|
|
|
|
| ||||||||||
Interest, net of amount capitalized of $3 and $3 |
| $ | 127 |
|
| $ | 149 |
| ||||||||
Income taxes, net of refunds |
| $ | 446 |
|
| $ | 494 |
|
| $ | 18 |
|
| $ | 354 |
|
See accompanyingNotes to Consolidated Financial Statements.
4
WEYERHAEUSER COMPANY
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(UNAUDITED)
|
| QUARTER ENDED |
|
| YEAR-TO-DATE ENDED |
|
| QUARTER ENDED |
|
| YEAR-TO-DATE ENDED |
| ||||||||||||||||||||
DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES |
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| JUNE 2023 |
|
| JUNE 2022 |
|
| JUNE 2023 |
|
| JUNE 2022 |
| ||||||||
Common shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Balance at beginning of period |
| $ | 927 |
|
| $ | 937 |
|
| $ | 934 |
|
| $ | 934 |
|
| $ | 916 |
|
| $ | 932 |
|
| $ | 916 |
|
| $ | 934 |
|
Issued for exercise of stock options and vested units |
|
| — |
|
|
| — |
|
|
| 2 |
|
|
| 3 |
|
|
| 1 |
|
|
| — |
|
|
| 2 |
|
|
| 2 |
|
Repurchases of common shares (Note 4) |
|
| (5 | ) |
|
| (1 | ) |
|
| (14 | ) |
|
| (1 | ) | ||||||||||||||||
Repurchases of common shares (Note 4) |
|
| (3 | ) |
|
| (5 | ) |
|
| (4 | ) |
|
| (9 | ) | ||||||||||||||||
Balance at end of period |
|
| 922 |
|
|
| 936 |
|
|
| 922 |
|
|
| 936 |
|
|
| 914 |
|
|
| 927 |
|
|
| 914 |
|
|
| 927 |
|
Other capital: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Balance at beginning of period |
|
| 7,954 |
|
|
| 8,258 |
|
|
| 8,181 |
|
|
| 8,208 |
|
|
| 7,662 |
|
|
| 8,076 |
|
|
| 7,691 |
|
|
| 8,181 |
|
Issued for exercise of stock options |
|
| 1 |
|
|
| 1 |
|
|
| 14 |
|
|
| 44 |
|
|
| — |
|
|
| 2 |
|
|
| 2 |
|
|
| 13 |
|
Repurchases of common shares (Note 4) |
|
| (140 | ) |
|
| (25 | ) |
|
| (390 | ) |
|
| (25 | ) | ||||||||||||||||
Repurchases of common shares (Note 4) |
|
| (47 | ) |
|
| (133 | ) |
|
| (81 | ) |
|
| (250 | ) | ||||||||||||||||
Share-based compensation |
|
| 8 |
|
|
| 8 |
|
|
| 25 |
|
|
| 23 |
|
|
| 9 |
|
|
| 9 |
|
|
| 17 |
|
|
| 17 |
|
Other transactions, net |
|
| 1 |
|
|
| — |
|
|
| (6 | ) |
|
| (8 | ) |
|
| — |
|
|
| — |
|
|
| (5 | ) |
|
| (7 | ) |
Balance at end of period |
|
| 7,824 |
|
|
| 8,242 |
|
|
| 7,824 |
|
|
| 8,242 |
|
|
| 7,624 |
|
|
| 7,954 |
|
|
| 7,624 |
|
|
| 7,954 |
|
Retained earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Balance at beginning of period |
|
| 2,333 |
|
|
| 1,861 |
|
|
| 2,131 |
|
|
| 411 |
|
|
| 1,738 |
|
|
| 1,679 |
|
|
| 2,389 |
|
|
| 2,131 |
|
Net earnings |
|
| 310 |
|
|
| 482 |
|
|
| 1,869 |
|
|
| 2,191 |
|
|
| 230 |
|
|
| 788 |
|
|
| 381 |
|
|
| 1,559 |
|
Dividends on common shares |
|
| (133 | ) |
|
| (501 | ) |
|
| (1,490 | ) |
|
| (760 | ) |
|
| (140 | ) |
|
| (134 | ) |
|
| (942 | ) |
|
| (1,357 | ) |
Balance at end of period |
|
| 2,510 |
|
|
| 1,842 |
|
|
| 2,510 |
|
|
| 1,842 |
|
|
| 1,828 |
|
|
| 2,333 |
|
|
| 1,828 |
|
|
| 2,333 |
|
Accumulated other comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Balance at beginning of period |
|
| (398 | ) |
|
| (656 | ) |
|
| (479 | ) |
|
| (822 | ) |
|
| (240 | ) |
|
| (450 | ) |
|
| (247 | ) |
|
| (479 | ) |
Other comprehensive income (loss) |
|
| (20 | ) |
|
| 5 |
|
|
| 61 |
|
|
| 171 |
| ||||||||||||||||
Balance at end of period (Note 11) |
|
| (418 | ) |
|
| (651 | ) |
|
| (418 | ) |
|
| (651 | ) | ||||||||||||||||
Other comprehensive income |
|
| 15 |
|
|
| 52 |
|
|
| 22 |
|
|
| 81 |
| ||||||||||||||||
Balance at end of period (Note 11) |
|
| (225 | ) |
|
| (398 | ) |
|
| (225 | ) |
|
| (398 | ) | ||||||||||||||||
Total equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Balance at end of period |
| $ | 10,838 |
|
| $ | 10,369 |
|
| $ | 10,838 |
|
| $ | 10,369 |
|
| $ | 10,141 |
|
| $ | 10,816 |
|
| $ | 10,141 |
|
| $ | 10,816 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Dividends paid per common share |
| $ | 0.18 |
|
| $ | 0.17 |
|
| $ | 1.99 |
|
| $ | 0.51 |
|
| $ | 0.19 |
|
| $ | 0.18 |
|
| $ | 1.28 |
|
| $ | 1.81 |
|
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 | ||
6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE QUARTERS AND YEAR-TO-DATE PERIODS ENDED SEPTEMBERJUNE 30, 20222023 AND 20212022
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, 2021.2022. 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: 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 ownour 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 categorizedorganized 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 production, and wind and solar); 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 |
|
| YEAR-TO-DATE ENDED |
| ||||||||||
DOLLAR AMOUNTS IN MILLIONS |
| JUNE 2023 |
|
| JUNE 2022 |
|
| JUNE 2023 |
|
| JUNE 2022 |
| ||||
Sales to unaffiliated customers: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Timberlands |
| $ | 417 |
|
| $ | 515 |
|
| $ | 879 |
|
| $ | 980 |
|
Real Estate & ENR |
|
| 80 |
|
|
| 117 |
|
|
| 181 |
|
|
| 245 |
|
Wood Products |
|
| 1,500 |
|
|
| 2,341 |
|
|
| 2,818 |
|
|
| 4,860 |
|
|
| 1,997 |
|
|
| 2,973 |
|
|
| 3,878 |
|
|
| 6,085 |
| |
Intersegment sales: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Timberlands |
|
| 150 |
|
|
| 156 |
|
|
| 292 |
|
|
| 317 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total sales |
|
| 2,147 |
|
|
| 3,129 |
|
|
| 4,170 |
|
|
| 6,402 |
|
Intersegment eliminations |
|
| (150 | ) |
|
| (156 | ) |
|
| (292 | ) |
|
| (317 | ) |
Total |
| $ | 1,997 |
|
| $ | 2,973 |
|
| $ | 3,878 |
|
| $ | 6,085 |
|
Net contribution (charge) to earnings: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Timberlands |
| $ | 104 |
|
| $ | 153 |
|
| $ | 224 |
|
| $ | 335 |
|
Real Estate & ENR |
|
| 52 |
|
|
| 65 |
|
|
| 105 |
|
|
| 146 |
|
Wood Products |
|
| 218 |
|
|
| 863 |
|
|
| 313 |
|
|
| 2,045 |
|
|
| 374 |
|
|
| 1,081 |
|
|
| 642 |
|
|
| 2,526 |
| |
Unallocated items(1) |
|
| (49 | ) |
|
| (44 | ) |
|
| (78 | ) |
|
| (161 | ) |
Net contribution to earnings |
|
| 325 |
|
|
| 1,037 |
|
|
| 564 |
|
|
| 2,365 |
|
Interest expense, net of capitalized interest |
|
| (70 | ) |
|
| (65 | ) |
|
| (136 | ) |
|
| (137 | ) |
Loss on debt extinguishment |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (276 | ) |
Earnings before income taxes |
|
| 255 |
|
|
| 972 |
|
|
| 428 |
|
|
| 1,952 |
|
Income taxes |
|
| (25 | ) |
|
| (184 | ) |
|
| (47 | ) |
|
| (393 | ) |
Net earnings |
| $ | 230 |
|
| $ | 788 |
|
| $ | 381 |
|
| $ | 1,559 |
|
7
|
| QUARTER ENDED |
|
| YEAR-TO-DATE ENDED |
| ||||||||||
DOLLAR AMOUNTS IN MILLIONS |
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
| ||||
Sales to unaffiliated customers: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timberlands |
| $ | 441 |
|
| $ | 423 |
|
| $ | 1,421 |
|
| $ | 1,207 |
|
Real Estate & ENR |
|
| 68 |
|
|
| 69 |
|
|
| 313 |
|
|
| 285 |
|
Wood Products |
|
| 1,767 |
|
|
| 1,853 |
|
|
| 6,627 |
|
|
| 6,503 |
|
|
|
| 2,276 |
|
|
| 2,345 |
|
|
| 8,361 |
|
|
| 7,995 |
|
Intersegment sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timberlands |
|
| 133 |
|
|
| 129 |
|
|
| 450 |
|
|
| 399 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total sales |
|
| 2,409 |
|
|
| 2,474 |
|
|
| 8,811 |
|
|
| 8,394 |
|
Intersegment eliminations |
|
| (133 | ) |
|
| (129 | ) |
|
| (450 | ) |
|
| (399 | ) |
Total |
| $ | 2,276 |
|
| $ | 2,345 |
|
| $ | 8,361 |
|
| $ | 7,995 |
|
Net contribution (charge) to earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timberlands |
| $ | 107 |
|
| $ | 133 |
|
| $ | 442 |
|
| $ | 354 |
|
Real Estate & ENR |
|
| 48 |
|
|
| 45 |
|
|
| 194 |
|
|
| 174 |
|
Wood Products |
|
| 344 |
|
|
| 517 |
|
|
| 2,389 |
|
|
| 2,695 |
|
|
|
| 499 |
|
|
| 695 |
|
|
| 3,025 |
|
|
| 3,223 |
|
Unallocated items(1) |
|
| (45 | ) |
|
| (50 | ) |
|
| (206 | ) |
|
| (199 | ) |
Net contribution to earnings |
|
| 454 |
|
|
| 645 |
|
|
| 2,819 |
|
|
| 3,024 |
|
Interest expense, net of capitalized interest |
|
| (67 | ) |
|
| (79 | ) |
|
| (204 | ) |
|
| (236 | ) |
Loss on debt extinguishment |
|
| — |
|
|
| — |
|
|
| (276 | ) |
|
| — |
|
Earnings before income taxes |
|
| 387 |
|
|
| 566 |
|
|
| 2,339 |
|
|
| 2,788 |
|
Income taxes |
|
| (77 | ) |
|
| (84 | ) |
|
| (470 | ) |
|
| (597 | ) |
Net earnings |
| $ | 310 |
|
| $ | 482 |
|
| $ | 1,869 |
|
| $ | 2,191 |
|
|
|
NOTE 3: REVENUE 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 |
| $ | 101 |
|
| $ | 103 |
|
| $ | 194 |
|
| $ | 216 |
|
Export grade sales |
|
| 105 |
|
|
| 205 |
|
|
| 241 |
|
|
| 351 |
|
Subtotal West |
|
| 206 |
|
|
| 308 |
|
|
| 435 |
|
|
| 567 |
|
South |
|
| 162 |
|
|
| 160 |
|
|
| 330 |
|
|
| 314 |
|
North |
|
| 7 |
|
|
| 10 |
|
|
| 24 |
|
|
| 25 |
|
Subtotal delivered logs sales |
|
| 375 |
|
|
| 478 |
|
|
| 789 |
|
|
| 906 |
|
Stumpage and pay-as-cut timber |
|
| 15 |
|
|
| 11 |
|
|
| 31 |
|
|
| 20 |
|
Recreational and other lease revenue |
|
| 17 |
|
|
| 16 |
|
|
| 35 |
|
|
| 33 |
|
Other(1) |
|
| 10 |
|
|
| 10 |
|
|
| 24 |
|
|
| 21 |
|
Net sales attributable to Timberlands segment |
|
| 417 |
|
|
| 515 |
|
|
| 879 |
|
|
| 980 |
|
Real Estate & ENR segment |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Real estate |
|
| 47 |
|
|
| 90 |
|
|
| 119 |
|
|
| 187 |
|
Energy and natural resources |
|
| 33 |
|
|
| 27 |
|
|
| 62 |
|
|
| 58 |
|
Net sales attributable to Real Estate & ENR segment |
|
| 80 |
|
|
| 117 |
|
|
| 181 |
|
|
| 245 |
|
Wood Products segment |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Structural lumber |
|
| 573 |
|
|
| 998 |
|
|
| 1,088 |
|
|
| 2,204 |
|
Oriented strand board |
|
| 215 |
|
|
| 497 |
|
|
| 423 |
|
|
| 1,061 |
|
Engineered solid section |
|
| 215 |
|
|
| 247 |
|
|
| 384 |
|
|
| 443 |
|
Engineered I-joists |
|
| 126 |
|
|
| 168 |
|
|
| 213 |
|
|
| 305 |
|
Softwood plywood |
|
| 44 |
|
|
| 53 |
|
|
| 85 |
|
|
| 111 |
|
Medium density fiberboard |
|
| 42 |
|
|
| 53 |
|
|
| 80 |
|
|
| 101 |
|
Complementary building products |
|
| 204 |
|
|
| 239 |
|
|
| 367 |
|
|
| 454 |
|
Other(2) |
|
| 81 |
|
|
| 86 |
|
|
| 178 |
|
|
| 181 |
|
Net sales attributable to Wood Products segment |
|
| 1,500 |
|
|
| 2,341 |
|
|
| 2,818 |
|
|
| 4,860 |
|
Total net sales |
| $ | 1,997 |
|
| $ | 2,973 |
|
| $ | 3,878 |
|
| $ | 6,085 |
|
|
| QUARTER ENDED |
|
| YEAR-TO-DATE ENDED |
| ||||||||||
DOLLAR AMOUNTS IN MILLIONS |
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
| ||||
Net sales to unaffiliated customers: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timberlands segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delivered logs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
West |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic sales |
| $ | 97 |
|
| $ | 76 |
|
| $ | 313 |
|
| $ | 235 |
|
Export grade sales |
|
| 127 |
|
|
| 150 |
|
|
| 478 |
|
|
| 414 |
|
Subtotal West |
|
| 224 |
|
|
| 226 |
|
|
| 791 |
|
|
| 649 |
|
South |
|
| 166 |
|
|
| 153 |
|
|
| 480 |
|
|
| 429 |
|
North |
|
| 15 |
|
|
| 13 |
|
|
| 40 |
|
|
| 38 |
|
Subtotal delivered logs sales |
|
| 405 |
|
|
| 392 |
|
|
| 1,311 |
|
|
| 1,116 |
|
Stumpage and pay-as-cut timber |
|
| 10 |
|
|
| 9 |
|
|
| 30 |
|
|
| 22 |
|
Recreational and other lease revenue |
|
| 18 |
|
|
| 16 |
|
|
| 51 |
|
|
| 48 |
|
Other(1) |
|
| 8 |
|
|
| 6 |
|
|
| 29 |
|
|
| 21 |
|
Net sales attributable to Timberlands segment |
|
| 441 |
|
|
| 423 |
|
|
| 1,421 |
|
|
| 1,207 |
|
Real Estate & ENR segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate |
|
| 30 |
|
|
| 45 |
|
|
| 217 |
|
|
| 212 |
|
Energy and natural resources |
|
| 38 |
|
|
| 24 |
|
|
| 96 |
|
|
| 73 |
|
Net sales attributable to Real Estate & ENR segment |
|
| 68 |
|
|
| 69 |
|
|
| 313 |
|
|
| 285 |
|
Wood Products segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Structural lumber |
|
| 676 |
|
|
| 681 |
|
|
| 2,880 |
|
|
| 3,020 |
|
Oriented strand board |
|
| 287 |
|
|
| 470 |
|
|
| 1,348 |
|
|
| 1,513 |
|
Engineered solid section |
|
| 233 |
|
|
| 183 |
|
|
| 676 |
|
|
| 491 |
|
Engineered I-joists |
|
| 166 |
|
|
| 128 |
|
|
| 471 |
|
|
| 315 |
|
Softwood plywood |
|
| 47 |
|
|
| 45 |
|
|
| 158 |
|
|
| 170 |
|
Medium density fiberboard |
|
| 50 |
|
|
| 52 |
|
|
| 151 |
|
|
| 143 |
|
Complementary building products |
|
| 222 |
|
|
| 211 |
|
|
| 676 |
|
|
| 595 |
|
Other(2) |
|
| 86 |
|
|
| 83 |
|
|
| 267 |
|
|
| 256 |
|
Net sales attributable to Wood Products segment |
|
| 1,767 |
|
|
| 1,853 |
|
|
| 6,627 |
|
|
| 6,503 |
|
Total net sales |
| $ | 2,276 |
|
| $ | 2,345 |
|
| $ | 8,361 |
|
| $ | 7,995 |
|
|
|
| (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:
● $0.31 during second quarter 2023 and $0.52 during year-to-date 2023; ● $1.06 during second quarter 2022 and $2.09 during year-to-date 2022. 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. Diluted earnings per share is net earnings divided by the sum of the weighted average number of our outstanding common shares and the effect of our outstanding dilutive potential common shares.
|
| QUARTER ENDED |
|
| YEAR-TO-DATE ENDED |
| ||||||||||
SHARES IN THOUSANDS |
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
| ||||
Weighted average common shares outstanding – basic |
|
| 740,058 |
|
|
| 750,105 |
|
|
| 743,990 |
|
|
| 749,657 |
|
Dilutive potential common shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options |
|
| 192 |
|
|
| 293 |
|
|
| 294 |
|
|
| 318 |
|
Restricted stock units |
|
| 420 |
|
|
| 730 |
|
|
| 417 |
|
|
| 709 |
|
Performance share units |
|
| 305 |
|
|
| 315 |
|
|
| 380 |
|
|
| 315 |
|
Total effect of outstanding dilutive potential common shares |
|
| 917 |
|
|
| 1,338 |
|
|
| 1,091 |
|
|
| 1,342 |
|
Weighted average common shares outstanding – dilutive |
|
| 740,975 |
|
|
| 751,443 |
|
|
| 745,081 |
|
|
| 750,999 |
|
|
| QUARTER ENDED |
|
| YEAR-TO-DATE ENDED |
| ||||||||||
SHARES IN THOUSANDS |
| JUNE 2023 |
|
| JUNE 2022 |
|
| JUNE 2023 |
|
| JUNE 2022 |
| ||||
Weighted average common shares outstanding – basic |
|
| 732,021 |
|
|
| 744,542 |
|
|
| 732,599 |
|
|
| 746,017 |
|
Dilutive potential common shares: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Stock options |
|
| 111 |
|
|
| 308 |
|
|
| 124 |
|
|
| 346 |
|
Restricted stock units |
|
| 20 |
|
|
| 410 |
|
|
| 23 |
|
|
| 415 |
|
Performance share units |
|
| 210 |
|
|
| 322 |
|
|
| 215 |
|
|
| 416 |
|
Total effect of outstanding dilutive potential common shares |
|
| 341 |
|
|
| 1,040 |
|
|
| 362 |
|
|
| 1,177 |
|
Weighted average common shares outstanding – dilutive |
|
| 732,362 |
|
|
| 745,582 |
|
|
| 732,961 |
|
|
| 747,194 |
|
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 |
|
| QUARTER ENDED |
|
| YEAR-TO-DATE ENDED |
| ||||||||||||||||||||
SHARES IN THOUSANDS |
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| JUNE 2023 |
|
| JUNE 2022 |
|
| JUNE 2023 |
|
| JUNE 2022 |
| ||||||||
Stock options |
|
| 620 |
|
|
| 789 |
|
|
| 620 |
|
|
| 789 |
|
|
| 787 |
|
|
| — |
|
|
| 787 |
|
|
| — |
|
Performance share units |
|
| 623 |
|
|
| 1,067 |
|
|
| 623 |
|
|
| 1,067 |
|
|
| 682 |
|
|
| 573 |
|
|
| 682 |
|
|
| 573 |
|
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 $1$1 billion of outstanding shares. Concurrently, the board terminated the remaining repurchase authorization under the share repurchase program approved by the board in February 2019 (the 2019 Repurchase Program).
We repurchased 4,234,8381,689,874 common shares for approximately $145$50 million (including transaction fees) under the 2021 Repurchase Program during thirdsecond quarter 20222023 and 11,217,3002,805,434 common shares for approximately $404$85 million under the 2021 Repurchase Program during year-to-date 2023. As of June 30, 2023, we had remaining authorization of $292 million for future share repurchases. During year-to-date 2022, we repurchased 6,982,462 common shares for approximately $259 million (including transaction fees) under the 2021 Repurchase Program during year-to-date 2022. As of September 30, 2022, we had remaining authorization of $523 million for future share repurchases. During year-to-date 2021, we repurchased 780,228 common shares for approximately $26 million (including transaction fees) under the 2019 Repurchase Program.
All common stock repurchases under the 2019 Repurchase Program and 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 64,135 unsettled shares (approximately $2 million) as of September 30, 2022 and no unsettled shares as of June 30, 2023, and 223,548 unsettled shares (approximately $7 million) as of December 31, 2021.2022.
NOTE 5: INVENTORIES
Inventories include raw materials, work-in-process and finished goods, as well as materials and supplies.
DOLLAR AMOUNTS IN MILLIONS |
| SEPTEMBER 30, 2022 |
|
| DECEMBER 31, 2021 |
| ||
LIFO inventories: |
|
|
|
|
|
|
|
|
Logs |
| $ | 24 |
|
| $ | 26 |
|
Lumber, plywood, panels and fiberboard |
|
| 60 |
|
|
| 61 |
|
Other products |
|
| 14 |
|
|
| 17 |
|
Moving average cost or FIFO inventories: |
|
|
|
|
|
|
|
|
Logs |
|
| 52 |
|
|
| 65 |
|
Lumber, plywood, panels, fiberboard and engineered wood products |
|
| 116 |
|
|
| 106 |
|
Other products |
|
| 147 |
|
|
| 131 |
|
Materials and supplies |
|
| 129 |
|
|
| 114 |
|
Total |
| $ | 542 |
|
| $ | 520 |
|
DOLLAR AMOUNTS IN MILLIONS |
| JUNE 30, |
|
| DECEMBER 31, |
| ||
LIFO inventories: |
|
|
|
|
|
| ||
Logs |
| $ | 25 |
|
| $ | 32 |
|
Lumber, plywood, panels and fiberboard |
|
| 69 |
|
|
| 61 |
|
Other products |
|
| 19 |
|
|
| 9 |
|
Moving average cost or FIFO inventories: |
|
|
|
|
|
| ||
Logs |
|
| 40 |
|
|
| 56 |
|
Lumber, plywood, panels, fiberboard and engineered wood products |
|
| 110 |
|
|
| 122 |
|
Other products |
|
| 132 |
|
|
| 140 |
|
Materials and supplies |
|
| 144 |
|
|
| 130 |
|
Total |
| $ | 539 |
|
| $ | 550 |
|
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 |
|
| PENSION |
| ||||||||||||||||||||||||||
|
| QUARTER ENDED |
|
| YEAR-TO-DATE ENDED |
|
| QUARTER ENDED |
|
| YEAR-TO-DATE ENDED |
| ||||||||||||||||||||
DOLLAR AMOUNTS IN MILLIONS |
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| JUNE 2023 |
|
| JUNE 2022 |
|
| JUNE 2023 |
|
| JUNE 2022 |
| ||||||||
Service cost |
| $ | 9 |
|
| $ | 11 |
|
| $ | 27 |
|
| $ | 32 |
|
| $ | 5 |
|
| $ | 8 |
|
| $ | 11 |
|
| $ | 18 |
|
Interest cost |
|
| 27 |
|
|
| 24 |
|
|
| 80 |
|
|
| 73 |
|
|
| 29 |
|
|
| 26 |
|
|
| 59 |
|
|
| 53 |
|
Expected return on plan assets |
|
| (40 | ) |
|
| (51 | ) |
|
| (120 | ) |
|
| (153 | ) |
|
| (30 | ) |
|
| (41 | ) |
|
| (60 | ) |
|
| (80 | ) |
Amortization of actuarial loss |
|
| 23 |
|
|
| 29 |
|
|
| 70 |
|
|
| 86 |
|
|
| 11 |
|
|
| 23 |
|
|
| 19 |
|
|
| 47 |
|
Amortization of prior service cost |
|
| 1 |
|
|
| 1 |
|
|
| 2 |
|
|
| 2 |
|
|
| 1 |
|
|
| — |
|
|
| 1 |
|
|
| 1 |
|
Total net periodic benefit cost – pension |
| $ | 20 |
|
| $ | 14 |
|
| $ | 59 |
|
| $ | 40 |
|
| $ | 16 |
|
| $ | 16 |
|
| $ | 30 |
|
| $ | 39 |
|
|
| OTHER POST-EMPLOYMENT BENEFITS |
| |||||||||||||
|
| QUARTER ENDED |
|
| YEAR-TO-DATE ENDED |
| ||||||||||
DOLLAR AMOUNTS IN MILLIONS |
| JUNE 2023 |
|
| JUNE 2022 |
|
| JUNE 2023 |
|
| JUNE 2022 |
| ||||
Interest cost |
| $ | 1 |
|
| $ | 1 |
|
| $ | 2 |
|
| $ | 2 |
|
Amortization of actuarial loss |
|
| 1 |
|
|
| 2 |
|
|
| 1 |
|
|
| 3 |
|
Amortization of prior service credit |
|
| (1 | ) |
|
| — |
|
|
| (1 | ) |
|
| — |
|
Total net periodic benefit cost – other post-employment benefits |
| $ | 1 |
|
| $ | 3 |
|
| $ | 2 |
|
| $ | 5 |
|
|
| OTHER POST-EMPLOYMENT BENEFITS |
| |||||||||||||
|
| QUARTER ENDED |
|
| YEAR-TO-DATE ENDED |
| ||||||||||
DOLLAR AMOUNTS IN MILLIONS |
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
| ||||
Interest cost |
| $ | — |
|
| $ | — |
|
| $ | 2 |
|
| $ | 2 |
|
Amortization of actuarial loss |
|
| 1 |
|
|
| 2 |
|
|
| 4 |
|
|
| 4 |
|
Amortization of prior service credit |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Total net periodic benefit cost – other post-employment benefits |
| $ | 1 |
|
| $ | 2 |
|
| $ | 6 |
|
| $ | 6 |
|
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.
During second quarter 2022, we recorded an increaseNo adjustments to the beginning of the year fair value of the pension assets of $54 million, or 2 percent. We also updated our census data that is used to estimate our beginning of the year projected benefit obligation for our pension plans, which resulted in a projected benefit obligation decrease of $13 million, or less than 1 percent. The net effect of these updates was a $67 million improvement in funded status. This change in funded status was reflected on our Consolidated Balance Sheet as of June 30, 2022.obligations were necessary during second quarter 2023.
NOTE 7: ACCRUED LIABILITIES
Accrued liabilities were comprised of the following:
DOLLAR AMOUNTS IN MILLIONS |
| JUNE 30, |
|
| DECEMBER 31, |
| ||
Compensation and employee benefit costs |
| $ | 157 |
|
| $ | 201 |
|
Current portion of lease liabilities |
|
| 20 |
|
|
| 22 |
|
Customer rebates, volume discounts and deferred income |
|
| 137 |
|
|
| 132 |
|
Interest |
|
| 72 |
|
|
| 69 |
|
Taxes payable |
|
| 33 |
|
|
| 23 |
|
Other |
|
| 54 |
|
|
| 64 |
|
Total |
| $ | 473 |
|
| $ | 511 |
|
DOLLAR AMOUNTS IN MILLIONS |
| SEPTEMBER 30, 2022 |
|
| DECEMBER 31, 2021 |
| ||
Compensation and employee benefit costs |
| $ | 213 |
|
| $ | 225 |
|
Current portion of lease liabilities |
|
| 22 |
|
|
| 24 |
|
Customer rebates, volume discounts and deferred income |
|
| 165 |
|
|
| 164 |
|
Interest |
|
| 72 |
|
|
| 83 |
|
Taxes payable |
|
| 125 |
|
|
| 106 |
|
Other |
|
| 67 |
|
|
| 71 |
|
Total |
| $ | 664 |
|
| $ | 673 |
|
NOTE 8: LONG-TERM DEBT AND LINE OF CREDIT
In July 2023, we repaid $118 million of our 7.125% notes at maturity.
In May 2023, we completed an offering of debt securities by issuing $750 million of 4.750 percent notes due in May 2026. 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 investments classified as held-to-maturity securities.
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 $900$900 million in notes and using the net proceeds plus cash on hand to close cash tender offers for $931$931 million of principal in higher interest rate notes. We issued $450$450 million of 3.375 percent notes due in March 2033 and $450$450 million of 4.000 percent notes due in March 2052.2052. The net proceeds after deducting the discount, underwriting fees and issuance costs were $444$444 million and $437$437 million, respectively.The net proceeds were used to retire $592$592 million of our 7.375 percent notes due in March 2032 $161, $161 million of our 8.500 percent notes due in January 2025 $73, $73 million of our 7.125 percent notes due in July 2023 $65, $65 million of our 7.950 percent notes due in March 2025, and $40$40 million of our 7.850 percent notes due in July 2026. We paid holders an aggregate $1.2$1.2 billion in cash reflecting principal, premium to par and tender premium. A net pretax charge of $276$276 million ($207 million after-tax) was included in the Consolidated Statement of Operations in first quarter 2022 for premiums to retire $931$931 million of principal plus unamortized debt issuance costs and unamortized debt discounts in connection with the early debt retirement.
In May 2021,March 2023, we repaid our $225 million variable-rate term loan that was scheduled to mature in July 2026.
In January 2020, we refinanced and extended our $1.5entered 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 arewill bear interest at LIBORa floating rate based on either the adjusted term Secured Overnight Financing Rate (SOFR) plus a spread or at other interest ratesa mutually agreed upon between the borrower and the lending banks.base rate plus a spread. We had no outstanding borrowings on our credit facility as of SeptemberJune 30, 20222023 and December 31, 2021.2022.
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 |
| $ | 5,797 |
|
| $ | 5,053 |
|
Fair value (level 2) |
| $ | 5,687 |
|
| $ | 4,918 |
|
|
|
|
|
|
|
|
|
|
DOLLAR AMOUNTS IN MILLIONS |
| SEPTEMBER 30, 2022 |
|
| DECEMBER 31, 2021 |
| ||
Long-term fixed rate debt (including current maturities): |
|
|
|
|
|
|
|
|
Carrying value |
| $ | 5,053 |
|
| $ | 5,099 |
|
Fair value (level 2) |
| $ | 4,846 |
|
| $ | 6,221 |
|
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 $665 million in short-term investments classified as held-to-maturity debt securities, which consist of a mixture of term deposits and Treasury bills. We did not have any short-term investments classified as held-to-maturity debt securities as of December 31, 2022. These short-term investments mature within one year and are recorded in "Short-term investments" on our Consolidated Balance Sheet. We record held-to-maturity debt securities at amortized cost, which approximates fair value.
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 SeptemberJune 30, 2022,2023, our total accrual for future estimated remediation costs on active Superfund sites and other sites for which we are potentially responsible was approximately $63$75 million. These amounts are recorded in "Accrued liabilities" and "Other liabilities" on our Consolidated Balance Sheet.
11
NOTE 11: ACCUMULATED OTHER 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 |
| $ | (451 | ) |
| $ | (709 | ) |
| $ | (458 | ) |
| $ | (720 | ) |
Other comprehensive (loss) income before reclassifications |
|
| (2 | ) |
|
| 59 |
|
|
| (1 | ) |
|
| 51 |
|
Amounts reclassified from accumulated other comprehensive loss to earnings(2) |
|
| 9 |
|
|
| 18 |
|
|
| 15 |
|
|
| 37 |
|
Total other comprehensive income |
|
| 7 |
|
|
| 77 |
|
|
| 14 |
|
|
| 88 |
|
Balance at end of period |
| $ | (444 | ) |
| $ | (632 | ) |
| $ | (444 | ) |
| $ | (632 | ) |
Other post-employment benefits(1) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Balance at beginning of period |
| $ | 20 |
|
| $ | — |
|
| $ | 20 |
|
| $ | (2 | ) |
Other comprehensive income (loss) before reclassifications |
|
| 1 |
|
|
| (1 | ) |
|
| 1 |
|
|
| — |
|
Amounts reclassified from accumulated other comprehensive loss to earnings(2) |
|
| — |
|
|
| 1 |
|
|
| — |
|
|
| 2 |
|
Total other comprehensive income |
|
| 1 |
|
|
| — |
|
|
| 1 |
|
|
| 2 |
|
Balance at end of period |
| $ | 21 |
|
| $ | — |
|
| $ | 21 |
|
| $ | — |
|
Translation adjustments and other |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Balance at beginning of period |
| $ | 191 |
|
| $ | 259 |
|
| $ | 191 |
|
| $ | 243 |
|
Translation adjustments |
|
| 7 |
|
|
| (25 | ) |
|
| 7 |
|
|
| (9 | ) |
Total other comprehensive income (loss) |
|
| 7 |
|
|
| (25 | ) |
|
| 7 |
|
|
| (9 | ) |
Balance at end of period |
|
| 198 |
|
|
| 234 |
|
|
| 198 |
|
|
| 234 |
|
Accumulated other comprehensive loss, end of period |
| $ | (225 | ) |
| $ | (398 | ) |
| $ | (225 | ) |
| $ | (398 | ) |
|
| QUARTER ENDED |
|
| YEAR-TO-DATE ENDED |
| ||||||||||
DOLLAR AMOUNTS IN MILLIONS |
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
| ||||
Pension(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
| $ | (632 | ) |
| $ | (924 | ) |
| $ | (720 | ) |
| $ | (1,064 | ) |
Other comprehensive income before reclassifications |
|
| 14 |
|
|
| 6 |
|
|
| 65 |
|
|
| 102 |
|
Amounts reclassified from accumulated other comprehensive loss to earnings(2) |
|
| 19 |
|
|
| 23 |
|
|
| 56 |
|
|
| 67 |
|
Total other comprehensive income |
|
| 33 |
|
|
| 29 |
|
|
| 121 |
|
|
| 169 |
|
Balance at end of period |
| $ | (599 | ) |
| $ | (895 | ) |
| $ | (599 | ) |
| $ | (895 | ) |
Other post-employment benefits(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
| $ | — |
|
| $ | (10 | ) |
| $ | (2 | ) |
| $ | (12 | ) |
Other comprehensive loss before reclassifications |
|
| (1 | ) |
|
| (1 | ) |
|
| (1 | ) |
|
| (1 | ) |
Amounts reclassified from accumulated other comprehensive loss to earnings(2) |
|
| 1 |
|
|
| 2 |
|
|
| 3 |
|
|
| 4 |
|
Total other comprehensive income |
|
| — |
|
|
| 1 |
|
|
| 2 |
|
|
| 3 |
|
Balance at end of period |
| $ | — |
|
| $ | (9 | ) |
| $ | — |
|
| $ | (9 | ) |
Translation adjustments and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at beginning of period |
| $ | 234 |
|
| $ | 278 |
|
| $ | 243 |
|
| $ | 254 |
|
Translation adjustments |
|
| (53 | ) |
|
| (25 | ) |
|
| (62 | ) |
|
| (1 | ) |
Total other comprehensive loss |
|
| (53 | ) |
|
| (25 | ) |
|
| (62 | ) |
|
| (1 | ) |
Balance at end of period |
|
| 181 |
|
|
| 253 |
|
|
| 181 |
|
|
| 253 |
|
Accumulated other comprehensive loss, end of period |
| $ | (418 | ) |
| $ | (651 | ) |
| $ | (418 | ) |
| $ | (651 | ) |
|
|
|
NOTE 12: SHARE-BASED COMPENSATION
Share-based compensation activity during year-to-date 20222023 included the following:
SHARES IN THOUSANDS |
| GRANTED |
|
| VESTED |
|
| GRANTED |
|
| VESTED |
| ||||
Restricted stock units (RSUs) |
|
| 626 |
|
|
| 857 |
|
|
| 840 |
|
|
| 768 |
|
Performance share units (PSUs) |
|
| 306 |
|
|
| 419 |
|
|
| 392 |
|
|
| 228 |
|
A total of 1.5 million861 thousand shares of common stock were issued as a result of RSU vestings, PSU vestings and stock option exercises.
Restricted Stock Units
The weighted average fair value of the RSUs granted in 20222023 was $41.94.$33.77. The vesting provisions for RSUs granted in 20222023 were consistent with prior year grants.
Performance Share Units
The weighted average grant date fair value of PSUs granted in 20222023 was $49.77.$37.58. The final number of shares granted in 20222023 will vest between a range of 0 percent to 150 percent of each grant's target, depending upon actual company performance compared against an industry peer group. PSUs granted in 20222023 will vest at a maximum of 100 percent of target value in the event of negative absolute company total shareholder return.
Weighted Average Assumptions Used in Estimating the Value of Performance Share Units Granted in 20222023
PERFORMANCE SHARE UNITS | |||
Performance period |
| 2/09/2023 – 12/31/2025 | |
Valuation date average stock price |
| ||
|
| ||
|
| ||
|
|
(1) |
| $33.96 |
Expected dividends | 2.25% | |
Risk-free rate | 4.21% – 4.66% | |
Expected volatility | 29.26% – 40.19% |
12
NOTE 13: OTHER OPERATING COSTS, (INCOME), NET
Other operating costs, (income), 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 |
| $ | 12 |
|
| $ | 1 |
|
| $ | 13 |
|
| $ | 1 |
|
Foreign exchange gains, net |
|
| (3 | ) |
|
| (3 | ) |
|
| (2 | ) |
|
| (4 | ) |
Litigation expense, net |
|
| 1 |
|
|
| 4 |
|
|
| 2 |
|
|
| 8 |
|
Research and development expenses |
|
| 1 |
|
|
| 2 |
|
|
| 3 |
|
|
| 3 |
|
Other, net |
|
| 9 |
|
|
| 8 |
|
|
| 14 |
|
|
| 10 |
|
Total other operating costs, net |
| $ | 20 |
|
| $ | 12 |
|
| $ | 30 |
|
| $ | 18 |
|
|
| QUARTER ENDED |
|
| YEAR-TO-DATE ENDED |
| ||||||||||
DOLLAR AMOUNTS IN MILLIONS |
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
| ||||
Foreign exchange gains, net |
| $ | (8 | ) |
| $ | (5 | ) |
| $ | (12 | ) |
| $ | (2 | ) |
Gain on sale of timberlands |
|
| — |
|
|
| (32 | ) |
|
| — |
|
|
| (32 | ) |
Litigation expense, net |
|
| 2 |
|
|
| 5 |
|
|
| 10 |
|
|
| 11 |
|
Research and development expenses |
|
| 1 |
|
|
| 1 |
|
|
| 4 |
|
|
| 3 |
|
Other, net |
|
| 6 |
|
|
| 16 |
|
|
| 17 |
|
|
| 28 |
|
Total other operating costs (income), net |
| $ | 1 |
|
| $ | (15 | ) |
| $ | 19 |
|
| $ | 8 |
|
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 20222023 estimated annual effective tax rate, excluding discrete items, differs from the U.S. federal statutory tax rate of 21 percent primarily due to state and foreign income taxes and tax benefits associated with our nontaxable REIT earnings.
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:TIMBERLAND ACQUISITIONS
DOLLAR AMOUNTS IN MILLIONS |
| SEPTEMBER 30, 2022 |
|
| SEPTEMBER 30, 2021 |
|
| DECEMBER 31, 2021 |
| |||
Cash and cash equivalents |
| $ | 1,920 |
|
| $ | 2,326 |
|
| $ | 1,879 |
|
Restricted cash included in other assets(1) |
|
| — |
|
|
| 120 |
|
|
| 120 |
|
Total cash, cash equivalents and restricted cash |
| $ | 1,920 |
|
| $ | 2,446 |
|
| $ | 1,999 |
|
|
|
On July 19, 2023, we completed the purchase of 22 thousand acres of Mississippi timberlands for approximately $60 million.
NOTE 16: TIMBERLAND ACQUISITIONS AND DIVESTITURES
Carolinas Acquisition
On April 14,May 18, 2022, we announced an agreement tocompleted the purchase of 81 thousand acres of North and South Carolina timberlands for approximately $265$265 million. We completed the purchase on May 18, 2022 and recorded $263$263 million of timberland assets in “Timber and timberlands at cost, less depletion” and $2$2 million of related assets in “Property and equipment, net” on our Consolidated Balance Sheet.
13
Washington Divestiture
On April 30, 2021, we announced an agreement to sell 145 thousand acres of timberlands in the North Cascades region of Washington. On July 7, 2021, we completed the sale for $261 million in cash proceeds, which is net of purchase price adjustments and closing costs. This transaction was structured as a like-kind exchange along with the Alabama acquisition discussed below. As a result of the sale, a gain of $32 million was recorded in the Timberlands segment in our third quarter 2021 Consolidated Statement of Operations.
This divestiture was not considered a strategic shift that had, or will have, a major effect on our operations or financial results and therefore did not meet the requirements for presentation as discontinued operations.
Alabama Acquisition
On February 25, 2021, we announced an agreement to purchase 69 thousand acres of southwest Alabama timberlands for approximately $149 million. We completed the purchase on April 27, 2021 and recorded $148 million of timberland assets in “Timber and timberlands at cost, less depletion” and $1 million of related assets in “Property and equipment, net” on our Consolidated Balance Sheet. As discussed above, this transaction was structured as a like-kind exchange.
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 expectations relating to returns on invested pension plan assets and expected benefit payments; 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, impacts from any future restrictions related to COVID or other viral or similar outbreak, 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:
● 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
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, impacts from any future restrictions related to COVID or other viral or similar outbreak, 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. TheOur 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.
While underlying longer-term fundamentals remain favorable for construction of new housing in
Over the U.S.,past year, home sales and building activity have 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 thirdsecond quarter 20222023 averaged 1.461.45 million units, a 4.5 percent increase from first quarter 2023. Single-family starts averaged 929 thousand units, an 1111.4 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 secondfirst quarter 2022. Single family starts averaged 0.9 million units, a 16 percent decrease from second quarter 2022. Multi-family starts averaged 551 thousand units in third quarter 2022, which was a 2 percent decrease from second quarter 2022.2023. Sales of newly built, single familysingle-family homes averaged a seasonally adjusted annual rate of 608694 thousand units for thirdsecond quarter 2022, a decrease2023, an increase of 0.28.8 percent from the prior quarter. Over the medium to long-term, we expect continued strength in thea favorable U.S. housing construction market supported by strong demographics in the key homebuying age cohorts, a decade of underbuilding and an aginga historically low housing stock.inventory.
Repair and remodeling expenditures increaseddecreased by 1.81.9 percent from first quarter 2023 to second quarter 2022 to third quarter 20222023 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 benefittedbenefited 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 aan aging U.S. housing stock, with a median age of 43 years old.years.
In U.S. wood product markets, demand was measured mostin 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 third quarter 2022 as buyers adjustedtemporary and permanent mill curtailments and wildfires in Canada, led to a more uncertain economic environment.moderately tighter markets. The Random Lengths Framing Lumber Composite price averaged $591/$409/MBF and the OSB Composite averaged $449/$360/MSF in thirdsecond quarter 2022.2023. Over the course of the thirdsecond quarter, prices declinedincreased from $604/$417/MBF to $512/$438/MBF for lumber and from $425/$297/MSF to $402/$432/MSF for OSB, reflecting a softening housing construction market. Pricing for both lumber and OSB remain well above 10-year averages.OSB.
In Western log markets, Douglas fir sawlog prices fellrose by 2.90.4 percent in thirdsecond quarter 20222023 compared with secondfirst quarter 20222023, as reported by RISI Log Lines based on Weyerhaeuser’s portfoliosales mix. Overall, domestic prices in the West were supportedstayed consistent, with lower lumber prices offset by steady demand and constrainedcontinued constraints in log supplies associated with log and haul capacity in the region.supply. In the South, delivered sawlog prices increased by 0.2remained flat in second quarter 2023 compared to first quarter 2023 and declined 1.5 percent from second quarter 2022 and 5.5 percent from third quarter 2021 as reported by TimberMart-South, as mills are carrying higher inventories to mitigate log and haul capacity constraints.constraints eased somewhat.
Currency exchange rates, available supply from other countries and trade policy affect our export businesses. During thirdsecond quarter 2022,2023, end use demand softened which was partlyin export markets, partially offset by continued disruptions of otherin global sources of log and lumber supply. In Japan, total housing starts increased 1.4decreased 1.6 percent year to date through AugustMay compared to the same period in 2021,2022, while the key Post and Beam segment saw a 2.85.9 percent decrease. An increase in lumber imports to Japan from Europe to Japan placed downward pressure on market conditions. China demand was held back by theirhas improved from low levels late in 2022 but remains subdued due to general economic conditions but constraintsand increased supply of supply sourceslogs from other countries supported demand from U.S. producers.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 5.76.3 percent at the end of first quarter 2023 to 6.7 percent at the end of second quarter 20222023. While mortgage rates remain elevated, home buyers have responded favorably to 6.7 percent at the endeven 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 the third quarter. This represents an increase of 3.6 percentage points from the end of 2021,existing homes for sale which has had a negative impact on home affordability and has reducedled to increased demand for homebuying.available new homes.
Monetary policy set by the U.S. Federal Reserve affects changes in the rate of inflation as well as changes in demand and supply for goods and services and fluctuations in labor markets.
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 8.23.0 percent year over year in SeptemberJune 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 relative strengthcondition 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 was 3.5of 3.6 percent in September 2022, compared to 3.6June 2023 remained near historically low levels and increased 0.1 percent atfrom the end of the second quarter.first quarter 2023. Labor force participation hasincreased to 62.362.6 percent in September 2022,June 2023, from 61.762.2 percent in September 2021, but this remains below pre-pandemicJune 2022, approaching pre-Pandemic levels of over 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, and carbon capture and storage and renewable energy activities.
In mid-September 2022, Weyerhaeuser employee members of the International Association of Machinists and Aerospace Workers union commenced a work stoppage affecting the company’s operations in Washington and Oregon. The stoppage involves approximately 1,200 employees and affects four lumber mills in our Wood Products segment and a portion of our Western Timberlands operations. This event has had a negative impact on our results of operations for the third quarter, including reductions in fee harvest volumes and sale volumes for Western Timberlands, as well as reductions in production volumes and sales volumes for our lumber business. The stoppage has had a similar impact on our fourth quarter results to date. On October 28, 2022, the company announced the successful resolution of the work stoppage and will resume normal operations as soon as possible.CONSOLIDATED RESULTS
CONSOLIDATED RESULTS
How We Did ThirdSecond Quarter 20222023 and Year-to-Date 20222023
|
| QUARTER ENDED |
|
| AMOUNT OF CHANGE |
|
| YEAR-TO-DATE ENDED |
|
| AMOUNT OF CHANGE |
|
| QUARTER ENDED |
|
| AMOUNT OF |
|
| YEAR-TO-DATE ENDED |
|
| AMOUNT OF |
| ||||||||||||||||||||||||
DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES |
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| 2022 VS. 2021 |
|
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| 2022 VS. 2021 |
|
| JUNE 2023 |
|
| JUNE 2022 |
|
| 2023 VS. |
|
| JUNE 2023 |
|
| JUNE 2022 |
|
| 2023 VS. |
| ||||||||||||
Net sales |
| $ | 2,276 |
|
| $ | 2,345 |
|
| $ | (69 | ) |
| $ | 8,361 |
|
| $ | 7,995 |
|
| $ | 366 |
|
| $ | 1,997 |
|
| $ | 2,973 |
|
| $ | (976 | ) |
| $ | 3,878 |
|
| $ | 6,085 |
|
| $ | (2,207 | ) |
Costs of sales |
| $ | 1,694 |
|
| $ | 1,589 |
|
| $ | 105 |
|
| $ | 5,130 |
|
| $ | 4,602 |
|
| $ | 528 |
|
| $ | 1,528 |
|
| $ | 1,789 |
|
| $ | (261 | ) |
| $ | 3,040 |
|
| $ | 3,436 |
|
| $ | (396 | ) |
Operating income |
| $ | 457 |
|
| $ | 649 |
|
| $ | (192 | ) |
| $ | 2,848 |
|
| $ | 3,034 |
|
| $ | (186 | ) |
| $ | 319 |
|
| $ | 1,047 |
|
| $ | (728 | ) |
| $ | 555 |
|
| $ | 2,391 |
|
| $ | (1,836 | ) |
Net earnings |
| $ | 310 |
|
| $ | 482 |
|
| $ | (172 | ) |
| $ | 1,869 |
|
| $ | 2,191 |
|
| $ | (322 | ) |
| $ | 230 |
|
| $ | 788 |
|
| $ | (558 | ) |
| $ | 381 |
|
| $ | 1,559 |
|
| $ | (1,178 | ) |
Earnings per share, basic and diluted |
| $ | 0.42 |
|
| $ | 0.64 |
|
| $ | (0.22 | ) |
| $ | 2.51 |
|
| $ | 2.92 |
|
| $ | (0.41 | ) |
| $ | 0.31 |
|
| $ | 1.06 |
|
| $ | (0.75 | ) |
| $ | 0.52 |
|
| $ | 2.09 |
|
| $ | (1.57 | ) |
Comparing ThirdSecond Quarter 2023 with Second Quarter 2022 with Third Quarter 2021
Net sales
Net sales decreased $69$976 million – 333 percent – primarily due to an $86$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 for oriented strand board,and sales volumes across most product lines, as well as decreased sales volumes for structural lumber.
Thisa $101 million decrease was partially offset by an $18 million increase in Timberlands net 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 increaseddecreased sales realizations for Southern logs.
Costs of sales
Costs of sales increased $105 million – 7 percent – primarily due to increased freightvolumes and raw material costs across most product lines within our Wood Products segment, as well as increased logging and hauling costs within our Timberlands segment.decreased freight costs.
Operating income
Operating income decreased $192$1,836 million – 3077 percent – primarily due to a $174$1,811 million decrease in consolidated gross margin, (see discussion of components above).as discussed above.
Net earnings
Net earnings decreased $172$1,178 million – 3676 percent – primarily due to the $192$1,836 million decrease in operating income, as discussed above.
This decrease was partially offset by a $12 million decrease in interest expense, as well as a $7$346 million decrease in income tax expense (refer to Interest Expenseand Income Taxes), .
Comparing Year-to-Date 2022 with Year-to-Date 2021
Net sales
Net sales increased $366 million – 5 percent – primarily due to a $214 million increase in Timberlands sales to unaffiliated customers attributable to increased sales realizations and sales volumes in the Western and Southern regions, as well as a $124 million increase in Wood Products sales to unaffiliated customers attributable to increased sales realizations across most product lines.
Costs of sales
Costs of sales increased $528 million – 11 percent – primarily due to increased freight and raw material costs within our Wood Products segment, as well as increased third-party log purchases and logging and hauling costs within our Timberlands segment.
Operating income
Operating income decreased $186 million – 6 percent – primarily due to a $162 million decrease in consolidated gross margin (see discussion of components above).
Net earnings
Net earnings decreased $322 million – 15 percent – primarily due to 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
TIMBERLANDS
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 | ) |
These decreases were partially offset by a $127 million decrease in income tax expense, as well as a $32 million decrease in interest expense (refer to Income Taxes and Interest Expense).
TIMBERLANDS
How We Did ThirdComparing Second Quarter 2023 with Second Quarter 2022 and Year-to-Date 2022
|
| QUARTER ENDED |
|
| AMOUNT OF CHANGE |
|
| YEAR-TO-DATE ENDED |
|
| AMOUNT OF CHANGE |
| ||||||||||||
DOLLAR AMOUNTS IN MILLIONS |
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| 2022 VS. 2021 |
|
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| 2022 VS. 2021 |
| ||||||
Net sales to unaffiliated customers: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delivered logs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
West |
| $ | 224 |
|
| $ | 226 |
|
| $ | (2 | ) |
| $ | 791 |
|
| $ | 649 |
|
| $ | 142 |
|
South |
|
| 166 |
|
|
| 153 |
|
|
| 13 |
|
|
| 480 |
|
|
| 429 |
|
|
| 51 |
|
North |
|
| 15 |
|
|
| 13 |
|
|
| 2 |
|
|
| 40 |
|
|
| 38 |
|
|
| 2 |
|
Subtotal delivered logs sales |
|
| 405 |
|
|
| 392 |
|
|
| 13 |
|
|
| 1,311 |
|
|
| 1,116 |
|
|
| 195 |
|
Stumpage and pay-as-cut timber |
|
| 10 |
|
|
| 9 |
|
|
| 1 |
|
|
| 30 |
|
|
| 22 |
|
|
| 8 |
|
Recreational and other lease revenue |
|
| 18 |
|
|
| 16 |
|
|
| 2 |
|
|
| 51 |
|
|
| 48 |
|
|
| 3 |
|
Other(1) |
|
| 8 |
|
|
| 6 |
|
|
| 2 |
|
|
| 29 |
|
|
| 21 |
|
|
| 8 |
|
Subtotal net sales to unaffiliated customers |
|
| 441 |
|
|
| 423 |
|
|
| 18 |
|
|
| 1,421 |
|
|
| 1,207 |
|
|
| 214 |
|
Intersegment sales |
|
| 133 |
|
|
| 129 |
|
|
| 4 |
|
|
| 450 |
|
|
| 399 |
|
|
| 51 |
|
Total sales |
| $ | 574 |
|
| $ | 552 |
|
| $ | 22 |
|
| $ | 1,871 |
|
| $ | 1,606 |
|
| $ | 265 |
|
Costs of sales |
| $ | 442 |
|
| $ | 428 |
|
| $ | 14 |
|
| $ | 1,360 |
|
| $ | 1,218 |
|
| $ | 142 |
|
Operating income and Net contribution to earnings |
| $ | 107 |
|
| $ | 133 |
|
| $ | (26 | ) |
| $ | 442 |
|
| $ | 354 |
|
| $ | 88 |
|
|
|
Comparing Third Quarter 2022 with Third Quarter 2021
Net sales to unaffiliated customers
Net sales to unaffiliated customers increased $18decreased $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 $13 million increase in Southern log sales attributable to a 9 percent increase in sales realizations. Western log sales decreased $2 million due to a 9 percent decrease in sales volumes, primarily attributable to the work stoppage in Washington and Oregon, partially offset by a 9 percent increase in sales realizations.
Intersegment sales
Intersegment sales increased $4 million – 3 percent – primarily due to a 9 percent increase in sales realizations, partially offset by a 56 percent decreaseincrease in sales volumes, primarily attributable to the work stoppage in Washington and Oregon.volumes.
Costs of sales
Costs of sales increased $14decreased $56 million – 311 percent – primarily due to increased loggingdecreased Western third-party log purchases and hauling costs, partially offset by a 3 percent decrease in sales volumes, primarily attributable to the work stoppage in Washington and Oregon.export log freight costs.
Operating income and Net contribution to earnings
Operating income and net contribution to earnings decreased $26$49 million – 20 percent – primarily due to a $32 million gain on sale of timberlands recorded in third quarter 2021, partially offset by the change in the components of gross margin, as discussed above.
Comparing Year-to-Date 2022 with Year-to-Date 2021
Net sales to unaffiliated customers
Net sales to unaffiliated customers increased $214 million – 18 percent – primarily due to a $142 million increase in Western log sales attributable to a 19 percent increase in sales realizations and a 2 percent increase in sales volumes, as well as a $51 million increase in Southern log sales attributable to a 9 percent increase in sales realizations and a 3 percent increase in sales volumes.
Intersegment sales
Intersegment sales increased $51 million – 13 percent – primarily due to a 16 percent increase in sales realizations, partially offset by a 3 percent decrease in sales volumes.
Costs of sales
Costs of sales increased $142 million – 12 percent – primarily due to increased third-party log purchases and logging and hauling costs.
Operating income and Net contribution to earnings
Operating income and net contribution to earnings increased $88 million – 2532 percent – primarily due to the change in the components of gross margin, as discussed above,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 $32$16 million gain on saleincrease 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 timberlands recordedsales
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 third quarter 2021.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 |
|
|
| QUARTER ENDED |
|
| AMOUNT OF CHANGE |
|
| YEAR-TO-DATE ENDED |
|
| AMOUNT OF CHANGE |
| ||||||||||||
VOLUMES IN THOUSANDS |
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| 2022 VS. 2021 |
|
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| 2022 VS. 2021 |
| ||||||
Third-party log sales – tons: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
West(1) |
|
| 1,411 |
|
|
| 1,555 |
|
|
| (144 | ) |
|
| 4,793 |
|
|
| 4,702 |
|
|
| 91 |
|
South |
|
| 4,310 |
|
|
| 4,304 |
|
|
| 6 |
|
|
| 12,612 |
|
|
| 12,236 |
|
|
| 376 |
|
North |
|
| 177 |
|
|
| 195 |
|
|
| (18 | ) |
|
| 505 |
|
|
| 571 |
|
|
| (66 | ) |
Total |
|
| 5,898 |
|
|
| 6,054 |
|
|
| (156 | ) |
|
| 17,910 |
|
|
| 17,509 |
|
|
| 401 |
|
Fee harvest volumes – tons: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
West(1) |
|
| 1,760 |
|
|
| 1,930 |
|
|
| (170 | ) |
|
| 6,085 |
|
|
| 6,130 |
|
|
| (45 | ) |
South |
|
| 6,112 |
|
|
| 5,912 |
|
|
| 200 |
|
|
| 18,113 |
|
|
| 17,144 |
|
|
| 969 |
|
North |
|
| 245 |
|
|
| 264 |
|
|
| (19 | ) |
|
| 703 |
|
|
| 800 |
|
|
| (97 | ) |
Total |
|
| 8,117 |
|
|
| 8,106 |
|
|
| 11 |
|
|
| 24,901 |
|
|
| 24,074 |
|
|
| 827 |
|
|
|
REAL ESTATE, ENERGY AND NATURAL RESOURCES
How We Did ThirdSecond Quarter 20222023 and Year-to-Date 20222023
|
| QUARTER ENDED |
|
| AMOUNT OF CHANGE |
|
| YEAR-TO-DATE ENDED |
|
| AMOUNT OF CHANGE |
|
| QUARTER ENDED |
|
| AMOUNT OF |
|
| YEAR-TO-DATE ENDED |
|
| AMOUNT OF |
| ||||||||||||||||||||||||
DOLLAR AMOUNTS IN MILLIONS |
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| 2022 VS. 2021 |
|
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| 2022 VS. 2021 |
|
| JUNE 2023 |
|
| JUNE 2022 |
|
| 2023 VS. |
|
| JUNE 2023 |
|
| JUNE 2022 |
|
| 2023 VS. |
| ||||||||||||
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Real estate |
| $ | 30 |
|
| $ | 45 |
|
| $ | (15 | ) |
| $ | 217 |
|
| $ | 212 |
|
| $ | 5 |
|
| $ | 47 |
|
| $ | 90 |
|
| $ | (43 | ) |
| $ | 119 |
|
| $ | 187 |
|
| $ | (68 | ) |
Energy and natural resources |
|
| 38 |
|
|
| 24 |
|
|
| 14 |
|
|
| 96 |
|
|
| 73 |
|
|
| 23 |
|
|
| 33 |
|
|
| 27 |
|
|
| 6 |
|
|
| 62 |
|
|
| 58 |
|
|
| 4 |
|
Total |
| $ | 68 |
|
| $ | 69 |
|
| $ | (1 | ) |
| $ | 313 |
|
| $ | 285 |
|
| $ | 28 |
|
| $ | 80 |
|
| $ | 117 |
|
| $ | (37 | ) |
| $ | 181 |
|
| $ | 245 |
|
| $ | (64 | ) |
Costs of sales |
| $ | 14 |
|
| $ | 18 |
|
| $ | (4 | ) |
| $ | 100 |
|
| $ | 93 |
|
| $ | 7 |
|
| $ | 21 |
|
| $ | 45 |
|
| $ | (24 | ) |
| $ | 62 |
|
| $ | 86 |
|
| $ | (24 | ) |
Operating income and Net contribution to earnings |
| $ | 48 |
|
| $ | 45 |
|
| $ | 3 |
|
| $ | 194 |
|
| $ | 174 |
|
| $ | 20 |
|
| $ | 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 ThirdSecond Quarter 2023 with Second Quarter 2022 with Third Quarter 2021
Net sales
Net sales decreased $1$37 million – 132 percent – primarily due to a decrease in acres sold, partially offset by an increase in royalty income from our Energy and Natural Resources business.the average price per acre sold.
Costs of sales
Costs of sales decreased $4$24 million – 2253 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 increased $3decreased $13 million – 720 percent – primarily due to the change in the components of gross margin, as discussed above.
Comparing Year-to-Date 20222023 with Year-to-Date 20212022
Net sales
Net sales increased $28decreased $64 million – 1026 percent – primarily due to increases in acres sold and royalty income from our Energy and Natural Resources business, partially offset by a decrease in mitigation bank credit sales.
Costs of sales
Costs of sales increased $7 million – 8 percent – primarily due to an increase 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 mitigation bank credit sales.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 increased $20decreased $41 million – 1128 percent – primarily due to the change in the components of gross margin, as discussed above.
REAL ESTATE SALES STATISTICS
|
| QUARTER ENDED |
|
| AMOUNT OF CHANGE |
|
| YEAR-TO-DATE ENDED |
|
| AMOUNT OF CHANGE |
|
| QUARTER ENDED |
|
| AMOUNT OF |
|
| YEAR-TO-DATE ENDED |
|
| AMOUNT OF |
| ||||||||||||||||||||||||
|
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| 2022 VS. 2021 |
|
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| 2022 VS. 2021 |
|
| JUNE 2023 |
|
| JUNE 2022 |
|
| 2023 VS. |
|
| JUNE 2023 |
|
| JUNE 2022 |
|
| 2023 VS. |
| ||||||||||||
Acres sold |
|
| 5,014 |
|
|
| 11,037 |
|
|
| (6,023 | ) |
|
| 56,046 |
|
|
| 48,907 |
|
|
| 7,139 |
|
|
| 9,281 |
|
|
| 26,906 |
|
|
| (17,625 | ) |
|
| 30,034 |
|
|
| 51,032 |
|
|
| (20,998 | ) |
Average price per acre |
| $ | 5,046 |
|
| $ | 4,005 |
|
| $ | 1,041 |
|
| $ | 3,624 |
|
| $ | 3,632 |
|
| $ | (8 | ) |
| $ | 4,790 |
|
| $ | 3,215 |
|
| $ | 1,575 |
|
| $ | 3,720 |
|
| $ | 3,484 |
|
| $ | 236 |
|
WOOD PRODUCTS
How We Did ThirdSecond Quarter 20222023 and Year-to-Date 20222023
|
| 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 | ) |
|
| QUARTER ENDED |
|
| AMOUNT OF CHANGE |
|
| YEAR-TO-DATE ENDED |
|
| AMOUNT OF CHANGE |
| ||||||||||||
DOLLAR AMOUNTS IN MILLIONS |
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| 2022 VS. 2021 |
|
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| 2022 VS. 2021 |
| ||||||
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Structural lumber |
| $ | 676 |
|
| $ | 681 |
|
| $ | (5 | ) |
| $ | 2,880 |
|
| $ | 3,020 |
|
| $ | (140 | ) |
Oriented strand board |
|
| 287 |
|
|
| 470 |
|
|
| (183 | ) |
|
| 1,348 |
|
|
| 1,513 |
|
|
| (165 | ) |
Engineered solid section |
|
| 233 |
|
|
| 183 |
|
|
| 50 |
|
|
| 676 |
|
|
| 491 |
|
|
| 185 |
|
Engineered I-joists |
|
| 166 |
|
|
| 128 |
|
|
| 38 |
|
|
| 471 |
|
|
| 315 |
|
|
| 156 |
|
Softwood plywood |
|
| 47 |
|
|
| 45 |
|
|
| 2 |
|
|
| 158 |
|
|
| 170 |
|
|
| (12 | ) |
Medium density fiberboard |
|
| 50 |
|
|
| 52 |
|
|
| (2 | ) |
|
| 151 |
|
|
| 143 |
|
|
| 8 |
|
Complementary building products |
|
| 222 |
|
|
| 211 |
|
|
| 11 |
|
|
| 676 |
|
|
| 595 |
|
|
| 81 |
|
Other products produced(1) |
|
| 86 |
|
|
| 83 |
|
|
| 3 |
|
|
| 267 |
|
|
| 256 |
|
|
| 11 |
|
Total |
| $ | 1,767 |
|
| $ | 1,853 |
|
| $ | (86 | ) |
| $ | 6,627 |
|
| $ | 6,503 |
|
| $ | 124 |
|
Costs of sales |
| $ | 1,360 |
|
| $ | 1,270 |
|
| $ | 90 |
|
| $ | 4,050 |
|
| $ | 3,623 |
|
| $ | 427 |
|
Operating income and Net contribution to earnings |
| $ | 344 |
|
| $ | 517 |
|
| $ | (173 | ) |
| $ | 2,389 |
|
| $ | 2,695 |
|
| $ | (306 | ) |
|
|
Comparing ThirdSecond Quarter 2023 with Second Quarter 2022 with Third Quarter 2021
Net sales
Net sales decreased $86$841 million – 536 percent – due to:
These decreases were partially offset by:19
|
|
|
|
|
|
Costs of sales
Costs of sales increased $90decreased $196 million – 714 percent – primarily due to increased freightdecreased 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 $173$645 million – 3375 percent – primarily due to the change in the components of gross margin, as discussed above.
Comparing Year-to-Date 20222023 with Year-to-Date 20212022
Net sales
Net sales increased $124decreased $2,042 million – 242 percent – due to:
|
|
● |
|
|
|
|
|
|
|
These increases were partially offset by a $165$638 million decrease in oriented strand board sales dueattributable to a 1561 percent decrease in sales realizations, partially offset by a 53 percent increase in sales volumes;
Costs of sales
Costs of sales increased $427decreased $313 million – 12 percent – primarily due to increased freightdecreased 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 $306$1,732 million – 1185 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 | ) |
|
| QUARTER ENDED |
|
| AMOUNT OF CHANGE |
|
| YEAR-TO-DATE ENDED |
|
| AMOUNT OF CHANGE |
| ||||||||||||
VOLUMES IN MILLIONS(1) |
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| 2022 VS. 2021 |
|
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| 2022 VS. 2021 |
| ||||||
Structural lumber – board feet |
|
| 1,216 |
|
|
| 1,320 |
|
|
| (104 | ) |
|
| 3,662 |
|
|
| 3,717 |
|
|
| (55 | ) |
Oriented strand board – square feet (3/8”) |
|
| 715 |
|
|
| 681 |
|
|
| 34 |
|
|
| 2,167 |
|
|
| 2,058 |
|
|
| 109 |
|
Engineered solid section – cubic feet |
|
| 5.9 |
|
|
| 5.9 |
|
|
| — |
|
|
| 18.0 |
|
|
| 18.7 |
|
|
| (0.7 | ) |
Engineered I-joists – lineal feet |
|
| 47 |
|
|
| 49 |
|
|
| (2 | ) |
|
| 142 |
|
|
| 149 |
|
|
| (7 | ) |
Softwood plywood – square feet (3/8”) |
|
| 74 |
|
|
| 69 |
|
|
| 5 |
|
|
| 219 |
|
|
| 240 |
|
|
| (21 | ) |
Medium density fiberboard – square feet (3/4”) |
|
| 40 |
|
|
| 55 |
|
|
| (15 | ) |
|
| 129 |
|
|
| 162 |
|
|
| (33 | ) |
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 CHANGE |
|
| YEAR-TO-DATE ENDED |
|
| AMOUNT OF CHANGE |
|
| QUARTER ENDED |
|
| AMOUNT OF |
|
| YEAR-TO-DATE ENDED |
|
| AMOUNT OF |
| ||||||||||||||||||||||||
VOLUMES IN MILLIONS |
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| 2022 VS. 2021 |
|
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| 2022 VS. 2021 |
|
| JUNE 2023 |
|
| JUNE 2022 |
|
| 2023 VS. |
|
| JUNE 2023 |
|
| JUNE 2022 |
|
| 2023 VS. |
| ||||||||||||
Structural lumber – board feet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Production |
|
| 1,140 |
|
|
| 1,222 |
|
|
| (82 | ) |
|
| 3,575 |
|
|
| 3,667 |
|
|
| (92 | ) |
|
| 1,164 |
|
|
| 1,232 |
|
|
| (68 | ) |
|
| 2,307 |
|
|
| 2,435 |
|
|
| (128 | ) |
Outside purchase |
|
| 35 |
|
|
| 56 |
|
|
| (21 | ) |
|
| 120 |
|
|
| 160 |
|
|
| (40 | ) |
|
| 36 |
|
|
| 43 |
|
|
| (7 | ) |
|
| 75 |
|
|
| 85 |
|
|
| (10 | ) |
Total |
|
| 1,175 |
|
|
| 1,278 |
|
|
| (103 | ) |
|
| 3,695 |
|
|
| 3,827 |
|
|
| (132 | ) |
|
| 1,200 |
|
|
| 1,275 |
|
|
| (75 | ) |
|
| 2,382 |
|
|
| 2,520 |
|
|
| (138 | ) |
Oriented strand board – square feet (3/8”): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Production |
|
| 735 |
|
|
| 715 |
|
|
| 20 |
|
|
| 2,232 |
|
|
| 2,140 |
|
|
| 92 |
|
|
| 727 |
|
|
| 758 |
|
|
| (31 | ) |
|
| 1,488 |
|
|
| 1,497 |
|
|
| (9 | ) |
Outside purchase |
|
| 18 |
|
|
| 62 |
|
|
| (44 | ) |
|
| 154 |
|
|
| 201 |
|
|
| (47 | ) |
|
| 19 |
|
|
| 66 |
|
|
| (47 | ) |
|
| 36 |
|
|
| 136 |
|
|
| (100 | ) |
Total |
|
| 753 |
|
|
| 777 |
|
|
| (24 | ) |
|
| 2,386 |
|
|
| 2,341 |
|
|
| 45 |
|
|
| 746 |
|
|
| 824 |
|
|
| (78 | ) |
|
| 1,524 |
|
|
| 1,633 |
|
|
| (109 | ) |
Engineered solid section – cubic feet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Production |
|
| 6.0 |
|
|
| 5.8 |
|
|
| 0.2 |
|
|
| 18.1 |
|
|
| 18.0 |
|
|
| 0.1 |
|
|
| 5.9 |
|
|
| 6.4 |
|
|
| (0.5 | ) |
|
| 10.5 |
|
|
| 12.1 |
|
|
| (1.6 | ) |
Outside purchase |
|
| 3.6 |
|
|
| 0.2 |
|
|
| 3.4 |
|
|
| 4.1 |
|
|
| 0.7 |
|
|
| 3.4 |
|
|
| 4.0 |
|
|
| 0.3 |
|
|
| 3.7 |
|
|
| 6.0 |
|
|
| 0.5 |
|
|
| 5.5 |
|
Total |
|
| 9.6 |
|
|
| 6.0 |
|
|
| 3.6 |
|
|
| 22.2 |
|
|
| 18.7 |
|
|
| 3.5 |
|
|
| 9.9 |
|
|
| 6.7 |
|
|
| 3.2 |
|
|
| 16.5 |
|
|
| 12.6 |
|
|
| 3.9 |
|
Engineered I-joists – lineal feet: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Production |
|
| 47 |
|
|
| 49 |
|
|
| (2 | ) |
|
| 141 |
|
|
| 144 |
|
|
| (3 | ) |
|
| 38 |
|
|
| 50 |
|
|
| (12 | ) |
|
| 63 |
|
|
| 94 |
|
|
| (31 | ) |
Outside purchase |
|
| 1 |
|
|
| 2 |
|
|
| (1 | ) |
|
| 6 |
|
|
| 6 |
|
|
| — |
|
|
| — |
|
|
| 3 |
|
|
| (3 | ) |
|
| 1 |
|
|
| 5 |
|
|
| (4 | ) |
Total |
|
| 48 |
|
|
| 51 |
|
|
| (3 | ) |
|
| 147 |
|
|
| 150 |
|
|
| (3 | ) |
|
| 38 |
|
|
| 53 |
|
|
| (15 | ) |
|
| 64 |
|
|
| 99 |
|
|
| (35 | ) |
Softwood plywood – square feet (3/8”): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Production |
|
| 64 |
|
|
| 61 |
|
|
| 3 |
|
|
| 197 |
|
|
| 203 |
|
|
| (6 | ) |
|
| 84 |
|
|
| 67 |
|
|
| 17 |
|
|
| 158 |
|
|
| 133 |
|
|
| 25 |
|
Outside purchase |
|
| 9 |
|
|
| 12 |
|
|
| (3 | ) |
|
| 27 |
|
|
| 38 |
|
|
| (11 | ) |
|
| 11 |
|
|
| 8 |
|
|
| 3 |
|
|
| 23 |
|
|
| 18 |
|
|
| 5 |
|
Total |
|
| 73 |
|
|
| 73 |
|
|
| — |
|
|
| 224 |
|
|
| 241 |
|
|
| (17 | ) |
|
| 95 |
|
|
| 75 |
|
|
| 20 |
|
|
| 181 |
|
|
| 151 |
|
|
| 30 |
|
Medium density fiberboard – square feet (3/4"): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Production |
|
| 38 |
|
|
| 55 |
|
|
| (17 | ) |
|
| 130 |
|
|
| 163 |
|
|
| (33 | ) |
|
| 33 |
|
|
| 48 |
|
|
| (15 | ) |
|
| 67 |
|
|
| 92 |
|
|
| (25 | ) |
Total |
|
| 38 |
|
|
| 55 |
|
|
| (17 | ) |
|
| 130 |
|
|
| 163 |
|
|
| (33 | ) |
|
| 33 |
|
|
| 48 |
|
|
| (15 | ) |
|
| 67 |
|
|
| 92 |
|
|
| (25 | ) |
21
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 |
|
| YEAR-TO-DATE ENDED |
|
| AMOUNT OF CHANGE |
|
| QUARTER ENDED |
|
| AMOUNT OF |
|
| YEAR-TO-DATE ENDED |
|
| AMOUNT OF |
| ||||||||||||||||||||||||
DOLLAR AMOUNTS IN MILLIONS |
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| 2022 VS. 2021 |
|
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| 2022 VS. 2021 |
|
| JUNE 2023 |
|
| JUNE 2022 |
|
| 2023 VS. |
|
| JUNE 2023 |
|
| JUNE 2022 |
|
| 2023 VS. |
| ||||||||||||
Unallocated corporate function and variable compensation expense |
| $ | (36 | ) |
| $ | (33 | ) |
| $ | (3 | ) |
| $ | (103 | ) |
| $ | (94 | ) |
| $ | (9 | ) |
| $ | (32 | ) |
| $ | (36 | ) |
| $ | 4 |
|
| $ | (59 | ) |
| $ | (67 | ) |
| $ | 8 |
|
Liability classified share-based compensation |
|
| 2 |
|
|
| (1 | ) |
|
| 3 |
|
|
| 5 |
|
|
| (2 | ) |
|
| 7 |
|
|
| (2 | ) |
|
| 2 |
|
|
| (4 | ) |
|
| (2 | ) |
|
| 3 |
|
|
| (5 | ) |
Foreign exchange gain |
|
| 9 |
|
|
| 5 |
|
|
| 4 |
|
|
| 12 |
|
|
| 2 |
|
|
| 10 |
| ||||||||||||||||||||||||
Foreign exchange gain (loss) |
|
| 2 |
|
|
| 3 |
|
|
| (1 | ) |
|
| 1 |
|
|
| 3 |
|
|
| (2 | ) | ||||||||||||||||||||||||
Elimination of intersegment profit in inventory and LIFO |
|
| 2 |
|
|
| 12 |
|
|
| (10 | ) |
|
| (39 | ) |
|
| (33 | ) |
|
| (6 | ) |
|
| 3 |
|
|
| 18 |
|
|
| (15 | ) |
|
| 12 |
|
|
| (41 | ) |
|
| 53 |
|
Other |
|
| (19 | ) |
|
| (29 | ) |
|
| 10 |
|
|
| (52 | ) |
|
| (62 | ) |
|
| 10 |
|
|
| (26 | ) |
|
| (21 | ) |
|
| (5 | ) |
|
| (39 | ) |
|
| (33 | ) |
|
| (6 | ) |
Operating loss |
|
| (42 | ) |
|
| (46 | ) |
|
| 4 |
|
|
| (177 | ) |
|
| (189 | ) |
|
| 12 |
|
|
| (55 | ) |
|
| (34 | ) |
|
| (21 | ) |
|
| (87 | ) |
|
| (135 | ) |
|
| 48 |
|
Non-operating pension and other post-employment benefit costs |
|
| (12 | ) |
|
| (5 | ) |
|
| (7 | ) |
|
| (38 | ) |
|
| (14 | ) |
|
| (24 | ) |
|
| (12 | ) |
|
| (11 | ) |
|
| (1 | ) |
|
| (21 | ) |
|
| (26 | ) |
|
| 5 |
|
Interest income and other |
|
| 9 |
|
|
| 1 |
|
|
| 8 |
|
|
| 9 |
|
|
| 4 |
|
|
| 5 |
|
|
| 18 |
|
|
| 1 |
|
|
| 17 |
|
|
| 30 |
|
|
| — |
|
|
| 30 |
|
Net charge to earnings |
| $ | (45 | ) |
| $ | (50 | ) |
| $ | 5 |
|
| $ | (206 | ) |
| $ | (199 | ) |
| $ | (7 | ) |
| $ | (49 | ) |
| $ | (44 | ) |
| $ | (5 | ) |
| $ | (78 | ) |
| $ | (161 | ) |
| $ | 83 |
|
Comparing ThirdSecond Quarter 2023 with Second Quarter 2022 with Third Quarter 2021
Net charge to earnings decreasedincreased $5 million – 1011 percent – primarily due to:
● |
|
|
|
|
|
These changes were partially offset by a $10$15 million increase in elimination of intersegment profit in inventory and LIFO.LIFO and
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 20222023 with Year-to-Date 20212022
Net charge to earnings increased $7decreased $83 million – 452 percent – primarily due to a $24$53 million increasedecrease in non-operating pensionelimination of intersegment profit in inventory and other post-employment benefit costs.
This increase was partially offset by a $10 million increase in foreign exchange gain due to strengthening of the U.S. dollar,LIFO, as well as a $7$30 million decreaseincrease in liability classified share-based compensation driven byinterest income and other due to an increase in the change ininterest rate on our stock price.cash and short-term investment accounts.
INTEREST EXPENSE
Our interest expense, net of capitalized interest, was:
● $70 million for second quarter 2023 and $136 million year-to-date 2023; ● $65 million for second quarter 2022 and $137 million year-to-date 2022.
|
|
|
|
Interest expense decreasedincreased by $12$5 million compared to thirdsecond quarter 2021 and decreased by $32 million compared to year-to-date 20212022 primarily due to decreasesan increase in theweighted average outstanding debt andin 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.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:
● a $25 million expense for second quarter 2023 and $47 million year-to-date 2023; ● a $184 million expense for second quarter 2022 and $393 million year-to-date 2022.
|
|
|
|
Our provision for income taxes is primarily driven by earnings generated by our TRSs. Income tax expense decreased by $127$346 million compared to year-to-date 20212022 primarily due to a tax benefit of approximately $69 million resulting from the $276 million pretax loss on debt extinguishment recordeddecrease in first quarter 2022,our TRS earnings in 2023, as well as a decrease in our estimated annual effective tax rate.
Refer to Note 14: Income Taxes and Note 8: Long-Term Debt and Line of Creditfor 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 SeptemberJune 30, 2022,2023, we had over $1.9approximately $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 January 2025.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:
● $622 million for year-to-date 2023 and ● $2,103 million for year-to-date 2022.
|
|
|
|
Net cash from operations remained consistent asdecreased $1,481 million primarily due to decreased cash inflows from our business operations wereoperations. This change was partially offset by a $48$336 million decrease in cash paid for income taxes,taxes.
CASH FROM INVESTING ACTIVITIES
Consolidated net cash from investing activities was:
Net cash from investing activities decreased $385 million primarily due to a $37$664 million decreaseincrease in pension and post-employment benefit contributions and payments, andcash paid for short-term investments. This change was partially offset by a $26$281 million decrease in cash paid for interest.acquisition of timberlands.
CASH FROM INVESTING ACTIVITIES
Consolidated net cash from investing activities was:
|
|
|
|
Net cash from investing activities decreased $422 million, primarily due to:
|
|
|
|
|
|
Summary of Capital Spending by Business Segment
|
| YEAR-TO-DATE ENDED |
|
| YEAR-TO-DATE ENDED |
| ||||||||||
DOLLAR AMOUNTS IN MILLIONS |
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| JUNE 2023 |
|
| JUNE 2022 |
| ||||
Timberlands |
| $ | 75 |
|
| $ | 76 |
|
| $ | 48 |
|
| $ | 53 |
|
Wood Products |
|
| 163 |
|
|
| 146 |
|
|
| 99 |
|
|
| 95 |
|
Unallocated Items |
|
| 7 |
|
|
| 1 |
|
|
| 5 |
|
|
| 3 |
|
Total |
| $ | 245 |
|
| $ | 223 |
|
| $ | 152 |
|
| $ | 151 |
|
We anticipate our capital expenditures for 20222023 to be approximately $460$440 million. The amount we spend on capital expenditures could change.
CASH FROM FINANCING ACTIVITIES
Consolidated net cash from financing activities was:
● $(290) million for year-to-date 2023 and ● $(1,938) million for year-to-date 2022.
|
|
|
|
Net cash from financing activities decreased $1,608increased $1,648 million, primarily due to:
● a $1,203 million decrease in cash used for payments on long-term debt; ● a $414 million decrease in cash used for payments of dividends and ● a $174 million decrease in cash used for repurchases of common stock. 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 SeptemberJune 30, 20222023 or December 31, 2021. This credit facility expires in January 2025.2022.
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. We plan to transition our revolving credit facility to an alternate reference rate prior to the cessation of LIBOR. 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 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.
In May 2021, we repaid our $225 million variable-rate term loan that was scheduled to mature in July 2026.
Refer to Note 8: Long-Term Debt and Line of Credit for further information.
Debt Covenants
As of SeptemberJune 30, 2022,2023, Weyerhaeuser Company was in compliance with its debt covenants. There have been no significant changes to the debt covenants presented in our 20212022 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:
|
|
|
|
Our average stock price was $37.24 and $35.41 for year-to-date 2022 and 2021, respectively.
Dividend Payments
We paid cash dividends on common shares of:
|
|
|
|
The increasedecrease 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 ($1,084 million in total) paid in the first quarter of 2022 based on 2021 financial results.results for a total of $1,084 million paid in first quarter 2022.
Share Repurchases
We repurchased 4,234,8381,689,874 common shares for approximately $145$50 million (including transaction fees) during thirdsecond quarter 20222023 and 11,217,3002,805,434 common shares for approximately $404$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. During third quarter and year-to-date 2021, we repurchased 780,228 common shares for approximately $26 million (including transaction fees) under the 2019 Repurchase Program. There were 64,135 unsettled shares (approximately $2 million) as of September 30, 2022 and no unsettled shares as of June 30, 2023 and 223,548 unsettled shares (approximately $7 million) as of December 31, 2021.2022. 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 CHANGE |
|
| YEAR-TO-DATE ENDED |
|
| AMOUNT OF CHANGE |
|
| QUARTER ENDED |
|
| AMOUNT OF |
|
| YEAR-TO-DATE ENDED |
|
| AMOUNT OF |
| ||||||||||||||||||||||||
DOLLAR AMOUNTS IN MILLIONS |
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| 2022 VS. 2021 |
|
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| 2022 VS. 2021 |
|
| JUNE 2023 |
|
| JUNE 2022 |
|
| 2023 VS. |
|
| JUNE 2023 |
|
| JUNE 2022 |
|
| 2023 VS. |
| ||||||||||||
Adjusted EBITDA by Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Timberlands |
| $ | 168 |
|
| $ | 165 |
|
| $ | 3 |
|
| $ | 634 |
|
| $ | 517 |
|
| $ | 117 |
|
| $ | 172 |
|
| $ | 219 |
|
| $ | (47 | ) |
| $ | 360 |
|
| $ | 466 |
|
| $ | (106 | ) |
Real Estate & ENR |
|
| 60 |
|
|
| 60 |
|
|
| — |
|
|
| 283 |
|
|
| 247 |
|
|
| 36 |
|
|
| 70 |
|
|
| 107 |
|
|
| (37 | ) |
|
| 159 |
|
|
| 223 |
|
|
| (64 | ) |
Wood Products |
|
| 395 |
|
|
| 565 |
|
|
| (170 | ) |
|
| 2,540 |
|
|
| 2,840 |
|
|
| (300 | ) |
|
| 270 |
|
|
| 912 |
|
|
| (642 | ) |
|
| 418 |
|
|
| 2,145 |
|
|
| (1,727 | ) |
|
|
| 623 |
|
|
| 790 |
|
|
| (167 | ) |
|
| 3,457 |
|
|
| 3,604 |
|
|
| (147 | ) |
|
| 512 |
|
|
| 1,238 |
|
|
| (726 | ) |
|
| 937 |
|
|
| 2,834 |
|
|
| (1,897 | ) |
Unallocated Items |
|
| (40 | ) |
|
| (44 | ) |
|
| 4 |
|
|
| (172 | ) |
|
| (184 | ) |
|
| 12 |
|
|
| (43 | ) |
|
| (33 | ) |
|
| (10 | ) |
|
| (73 | ) |
|
| (132 | ) |
|
| 59 |
|
Adjusted EBITDA |
| $ | 583 |
|
| $ | 746 |
|
| $ | (163 | ) |
| $ | 3,285 |
|
| $ | 3,420 |
|
| $ | (135 | ) |
| $ | 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 SeptemberJune 30, 2022:2023:
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 |
|
DOLLAR AMOUNTS IN MILLIONS |
| Timberlands |
|
| Real Estate & ENR |
|
| Wood Products |
|
| Unallocated Items |
|
| Total |
| |||||
Adjusted EBITDA by Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 310 |
|
Interest expense, net of capitalized interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 67 |
|
Income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 77 |
|
Net contribution (charge) to earnings |
| $ | 107 |
|
| $ | 48 |
|
| $ | 344 |
|
| $ | (45 | ) |
| $ | 454 |
|
Non-operating pension and other post-employment benefit costs |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 12 |
|
|
| 12 |
|
Interest income and other |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (9 | ) |
|
| (9 | ) |
Operating income (loss) |
|
| 107 |
|
|
| 48 |
|
|
| 344 |
|
|
| (42 | ) |
|
| 457 |
|
Depreciation, depletion and amortization |
|
| 61 |
|
|
| 5 |
|
|
| 51 |
|
|
| 2 |
|
|
| 119 |
|
Basis of real estate sold |
|
| — |
|
|
| 7 |
|
|
| — |
|
|
| — |
|
|
| 7 |
|
Adjusted EBITDA |
| $ | 168 |
|
| $ | 60 |
|
| $ | 395 |
|
| $ | (40 | ) |
| $ | 583 |
|
The table below reconciles Adjusted EBITDA for the quarter ended SeptemberJune 30, 2021:2022:
DOLLAR AMOUNTS IN MILLIONS |
| Timberlands |
|
| Real Estate & ENR |
|
| Wood Products |
|
| Unallocated Items |
|
| Total |
| |||||
Adjusted EBITDA by Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 482 |
|
Interest expense, net of capitalized interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 79 |
|
Income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 84 |
|
Net contribution (charge) to earnings |
| $ | 133 |
|
| $ | 45 |
|
| $ | 517 |
|
| $ | (50 | ) |
| $ | 645 |
|
Non-operating pension and other post-employment benefit costs |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 5 |
|
|
| 5 |
|
Interest income and other |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1 | ) |
|
| (1 | ) |
Operating income (loss) |
|
| 133 |
|
|
| 45 |
|
|
| 517 |
|
|
| (46 | ) |
|
| 649 |
|
Depreciation, depletion and amortization |
|
| 64 |
|
|
| 4 |
|
|
| 48 |
|
|
| 2 |
|
|
| 118 |
|
Basis of real estate sold |
|
| — |
|
|
| 11 |
|
|
| — |
|
|
| — |
|
|
| 11 |
|
Special items included in operating income (loss)(1) |
|
| (32 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (32 | ) |
Adjusted EBITDA |
| $ | 165 |
|
| $ | 60 |
|
| $ | 565 |
|
| $ | (44 | ) |
| $ | 746 |
|
|
|
The table below reconciles Adjusted EBITDA for the year-to-date period ended SeptemberJune 30, 2022:2023:
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 |
|
DOLLAR AMOUNTS IN MILLIONS |
| Timberlands |
|
| Real Estate & ENR |
|
| Wood Products |
|
| Unallocated Items |
|
| Total |
| |||||
Adjusted EBITDA by Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 1,869 |
|
Interest expense, net of capitalized interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 204 |
|
Loss on debt extinguishment(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 276 |
|
Income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 470 |
|
Net contribution (charge) to earnings |
| $ | 442 |
|
| $ | 194 |
|
| $ | 2,389 |
|
| $ | (206 | ) |
| $ | 2,819 |
|
Non-operating pension and other post-employment benefit costs |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 38 |
|
|
| 38 |
|
Interest income and other |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (9 | ) |
|
| (9 | ) |
Operating income (loss) |
|
| 442 |
|
|
| 194 |
|
|
| 2,389 |
|
|
| (177 | ) |
|
| 2,848 |
|
Depreciation, depletion and amortization |
|
| 192 |
|
|
| 12 |
|
|
| 151 |
|
|
| 5 |
|
|
| 360 |
|
Basis of real estate sold |
|
| — |
|
|
| 77 |
|
|
| — |
|
|
| — |
|
|
| 77 |
|
Adjusted EBITDA |
| $ | 634 |
|
| $ | 283 |
|
| $ | 2,540 |
|
| $ | (172 | ) |
| $ | 3,285 |
|
25
|
|
The table below reconciles Adjusted EBITDA for the year-to-date period ended SeptemberJune 30, 2021:2022:
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 |
|
DOLLAR AMOUNTS IN MILLIONS |
| Timberlands |
|
| Real Estate & ENR |
|
| Wood Products |
|
| Unallocated Items |
|
| Total |
| |||||
Adjusted EBITDA by Segment: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 2,191 |
|
Interest expense, net of capitalized interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 236 |
|
Income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 597 |
|
Net contribution (charge) to earnings |
| $ | 354 |
|
| $ | 174 |
|
| $ | 2,695 |
|
| $ | (199 | ) |
| $ | 3,024 |
|
Non-operating pension and other post-employment benefit costs |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 14 |
|
|
| 14 |
|
Interest income and other |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (4 | ) |
|
| (4 | ) |
Operating income (loss) |
|
| 354 |
|
|
| 174 |
|
|
| 2,695 |
|
|
| (189 | ) |
|
| 3,034 |
|
Depreciation, depletion and amortization |
|
| 195 |
|
|
| 11 |
|
|
| 145 |
|
|
| 5 |
|
|
| 356 |
|
Basis of real estate sold |
|
| — |
|
|
| 62 |
|
|
| — |
|
|
| — |
|
|
| 62 |
|
Special items included in operating income (loss)(1) |
|
| (32 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (32 | ) |
Adjusted EBITDA |
| $ | 517 |
|
| $ | 247 |
|
| $ | 2,840 |
|
| $ | (184 | ) |
| $ | 3,420 |
|
|
|
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 |
|
| QUARTER ENDED |
|
| YEAR-TO-DATE ENDED |
| ||||||||||||||||||||
DOLLAR AMOUNTS IN MILLIONS |
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| JUNE 2023 |
|
| JUNE 2022 |
|
| JUNE 2023 |
|
| JUNE 2022 |
| ||||||||
Net earnings |
| $ | 310 |
|
| $ | 482 |
|
| $ | 1,869 |
|
| $ | 2,191 |
|
| $ | 230 |
|
| $ | 788 |
|
| $ | 381 |
|
| $ | 1,559 |
|
Environmental remediation charge |
|
| 8 |
|
|
| — |
|
|
| 8 |
|
|
| — |
| ||||||||||||||||
Loss on debt extinguishment |
|
| — |
|
|
| — |
|
|
| 207 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 207 |
|
Gain on sale of timberlands |
|
| — |
|
|
| (32 | ) |
|
| — |
|
|
| (32 | ) | ||||||||||||||||
Net earnings before special items |
| $ | 310 |
|
| $ | 450 |
|
| $ | 2,076 |
|
| $ | 2,159 |
|
| $ | 238 |
|
| $ | 788 |
|
| $ | 389 |
|
| $ | 1,766 |
|
Net Earnings per Diluted Share Before Special Items
|
| QUARTER ENDED |
|
| YEAR-TO-DATE ENDED |
|
| QUARTER ENDED |
|
| YEAR-TO-DATE ENDED |
| ||||||||||||||||||||
|
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| SEPTEMBER 2022 |
|
| SEPTEMBER 2021 |
|
| JUNE 2023 |
|
| JUNE 2022 |
|
| JUNE 2023 |
|
| JUNE 2022 |
| ||||||||
Net earnings per diluted share |
| $ | 0.42 |
|
| $ | 0.64 |
|
| $ | 2.51 |
|
| $ | 2.92 |
|
| $ | 0.31 |
|
| $ | 1.06 |
|
| $ | 0.52 |
|
| $ | 2.09 |
|
Environmental remediation charge |
|
| 0.01 |
|
|
| — |
|
|
| 0.01 |
|
|
| — |
| ||||||||||||||||
Loss on debt extinguishment |
|
| — |
|
|
| — |
|
|
| 0.28 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 0.28 |
|
Gain on sale of timberlands |
|
| — |
|
|
| (0.04 | ) |
|
| — |
|
|
| (0.04 | ) | ||||||||||||||||
Net earnings per diluted share before special items |
| $ | 0.42 |
|
| $ | 0.60 |
|
| $ | 2.79 |
|
| $ | 2.88 |
|
| $ | 0.32 |
|
| $ | 1.06 |
|
| $ | 0.53 |
|
| $ | 2.37 |
|
CRITICAL ACCOUNTING POLICIES
There have been no significant changes during year-to-date 20222023 to the critical accounting policies presented in our 20212022 Annual Report on Form 10-K.
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.
26
Summary of Long-Term Indebtedness Principal Obligations as of SeptemberJune 30, 20222023
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 |
|
DOLLAR AMOUNTS IN MILLIONS |
| 2022 |
|
| 2023 |
|
| 2024 |
|
| 2025 |
|
| 2026 |
|
| THEREAFTER |
|
| TOTAL(1) |
|
| FAIR VALUE |
| ||||||||
Fixed-rate debt |
| $ | — |
|
| $ | 978 |
|
| $ | — |
|
| $ | 210 |
|
| $ | 272 |
|
| $ | 3,633 |
|
| $ | 5,093 |
|
| $ | 4,846 |
|
Average interest rate |
|
| — | % |
|
| 5.44 | % |
|
| — | % |
|
| 8.31 | % |
|
| 7.65 | % |
|
| 5.00 | % |
|
| 5.36 | % |
| 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 SeptemberJune 30, 2022,2023, 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 2022 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 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 20212022 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 thirdsecond quarter 2022:2023:
COMMON SHARE REPURCHASES DURING THIRD 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 |
| ||||
July 1 – July 31 |
|
| 1,675,436 |
|
| $ | 34.83 |
|
|
| 1,675,436 |
|
| $ | 610,116,001 |
|
August 1 – August 31 |
|
| 1,346,245 |
|
|
| 35.54 |
|
|
| 1,346,245 |
|
|
| 562,268,165 |
|
September 1 – September 30 |
|
| 1,213,157 |
|
|
| 32.15 |
|
|
| 1,213,157 |
|
|
| 523,268,401 |
|
Total |
|
| 4,234,838 |
|
| $ | 34.29 |
|
|
| 4,234,838 |
|
| $ | 523,268,401 |
|
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 thirdsecond quarter 2022,2023, we repurchased 4,234,838 common1,689,874 shares for approximately $145$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 SeptemberJune 30, 2022,2023, we had remaining authorization of $523$292 million for future stock repurchases.
Item 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 Rule 10b5–1(c). David M. Wold, senior vice president and chief financial officer, adopted a plan on June 5, 2023 to initiate the cashless exercise of 8,095 stock options in the aggregate, 3,693 of which expire on February 12, 2024 and 4,402 of which expire on February 12, 2025, and thereby sell on the open market 8,095 shares of common stock underlying the stock options at a designated strike price. Mr. Wold’s plan begins on September 5, 2023 and expires when all of the options are exercised and all of the underlying shares are sold or on February 12, 2024, whichever occurs first. Denise M. Merle,
27
senior vice president and chief administration officer, adopted a plan on June 14, 2023 to sell an aggregate of 22,500 shares of common stock. Ms. Merle’s plan begins on September 13, 2023 and expires when all of the shares are sold or on September 11, 2024, whichever occurs first.
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. EXHIBITS
| Officer’s Certificate dated as of May 17, 2023 executed by Weyerhaeuser Company |
|
|
|
|
|
|
|
|
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 |
SIGNATURES29
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: | By: | /s/ David M. Wold |
David M. Wold | ||
Senior Vice President and Chief Financial Officer | ||
(Principal Financial and Accounting Officer and Duly Authorized Officer) |
2930