WEYERHAEUSER CO [WY] Filings

10-Q 1 wy-10q_20220930.htm 10-Q wy-10q_20220930.htm

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 SEPTEMBER 30, 2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER: 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

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 October 24, 2022, 735,917 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:
	CONSOLIDATED STATEMENT OF OPERATIONS	1
	CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME	2
	CONSOLIDATED BALANCE SHEET	3
	CONSOLIDATED STATEMENT OF CASH FLOWS	4
	CONSOLIDATED STATEMENT OF CHANGES IN EQUITY	5
	INDEX FOR NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	6
	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	7
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)	14
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	26
ITEM 4.	CONTROLS AND PROCEDURES	27

PART II	OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	27
ITEM 1A.	RISK FACTORS	27
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	27
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES – NOT APPLICABLE
ITEM 4.	MINE SAFETY DISCLOSURES – NOT APPLICABLE
ITEM 5.	OTHER INFORMATION – NOT APPLICABLE
ITEM 6.	EXHIBITS	28
	SIGNATURES	29

PART I – FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

WEYERHAEUSER COMPANY

CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)

	QUARTER ENDED						YEAR-TO-DATE ENDED
DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES	SEPTEMBER 2022			SEPTEMBER 2021			SEPTEMBER 2022			SEPTEMBER 2021
Net sales (Note 3)	$	2,276		$	2,345		$	8,361		$	7,995
Costs of sales		1,694			1,589			5,130			4,602
Gross margin		582			756			3,231			3,393
Selling expenses		24			24			70			68
General and administrative expenses		100			98			294			283
Other operating costs (income), net (Note 13)		1			(15	)		19			8
Operating income		457			649			2,848			3,034
Non-operating pension and other post-employment benefit costs (Note 6)		(12	)		(5	)		(38	)		(14	)
Interest income and other		9			1			9			4
Interest expense, net of capitalized interest		(67	)		(79	)		(204	)		(236	)
Loss on debt extinguishment (Note 8)		—			—			(276	)		—
Earnings before income taxes		387			566			2,339			2,788
Income taxes (Note 14)		(77	)		(84	)		(470	)		(597	)
Net earnings	$	310		$	482		$	1,869		$	2,191

Earnings per share, basic and diluted (Note 4)	$	0.42		$	0.64		$	2.51		$	2.92
Weighted average shares outstanding (in thousands) (Note 4):
Basic		740,058			750,105			743,990			749,657
Diluted		740,975			751,443			745,081			750,999

See accompanying Notes to Consolidated Financial Statements.

WEYERHAEUSER COMPANY

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(UNAUDITED)

	QUARTER ENDED						YEAR-TO-DATE ENDED
DOLLAR AMOUNTS IN MILLIONS	SEPTEMBER 2022			SEPTEMBER 2021			SEPTEMBER 2022			SEPTEMBER 2021
Net earnings	$	310		$	482		$	1,869		$	2,191
Other comprehensive income (loss):
Foreign currency translation adjustments		(53	)		(25	)		(62	)		(1	)
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
Total comprehensive income	$	290		$	487		$	1,930		$	2,362

See accompanying Notes to Consolidated Financial Statements.

WEYERHAEUSER COMPANY

CONSOLIDATED BALANCE SHEET

(UNAUDITED)

DOLLAR AMOUNTS IN MILLIONS, EXCEPT PAR VALUE	SEPTEMBER 30, 2022			DECEMBER 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	1,920		$	1,879
Receivables, net		425			507
Receivables for taxes		15			24
Inventories (Note 5)		542			520
Prepaid expenses and other current assets		146			205
Total current assets		3,048			3,135
Property and equipment, less accumulated depreciation of $3,680 and $3,592		1,997			2,057
Construction in progress		245			175
Timber and timberlands at cost, less depletion		11,681			11,510
Minerals and mineral rights, less depletion		245			255
Deferred tax assets		10			17
Other assets		364			503
Total assets	$	17,590		$	17,652
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt (Note 8)	$	118		$	—
Accounts payable		272			281
Accrued liabilities (Note 7)		664			673
Total current liabilities		1,054			954
Long-term debt, net (Note 8)		4,935			5,099
Deferred tax liabilities		89			46
Deferred pension and other post-employment benefits (Note 6)		335			440
Other liabilities		339			346
Total liabilities		6,752			6,885
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
Other capital		7,824			8,181
Retained earnings		2,510			2,131
Accumulated other comprehensive loss (Note 11)		(418	)		(479	)
Total equity		10,838			10,767
Total liabilities and equity	$	17,590		$	17,652

See accompanying Notes to Consolidated Financial Statements.

WEYERHAEUSER COMPANY

CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

	YEAR-TO-DATE ENDED
DOLLAR AMOUNTS IN MILLIONS	SEPTEMBER 2022			SEPTEMBER 2021
Cash flows from operations:
Net earnings	$	1,869		$	2,191
Noncash charges (credits) to earnings:
Depreciation, depletion and amortization		360			356
Basis of real estate sold		77			62
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			—
Change in:
Receivables, net		81			(47	)
Receivables and payables for taxes		15			93
Inventories		(30	)		(55	)
Prepaid expenses and other current assets		(7	)		(21	)
Accounts payable and accrued liabilities		(23	)		116
Pension and post-employment benefit contributions and payments		(19	)		(56	)
Other		(41	)		(27	)
Net cash from operations		2,665			2,665
Cash flows from investing activities:
Capital expenditures for property and equipment		(207	)		(184	)
Capital expenditures for timberlands reforestation		(38	)		(39	)
Acquisition of timberlands (Note 16)		(286	)		(149	)
Proceeds from sale of timberlands (Note 16)		—			261
Other		1			3
Net cash from investing activities		(530	)		(108	)
Cash flows from financing activities:
Cash dividends on common shares		(1,485	)		(382	)
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	)
Other		(20	)		(19	)
Net cash from financing activities		(2,214	)		(606	)
Net change in cash, cash equivalents and restricted cash		(79	)		1,951
Cash, cash equivalents and restricted cash at beginning of period		1,999			495
Cash, cash equivalents and restricted cash at end of period	$	1,920		$	2,446
Cash paid (received) during the period for:
Interest, net of amount capitalized of $5 and $3	$	211		$	237
Income taxes, net of refunds	$	446		$	494

See accompanying Notes to Consolidated Financial Statements.

WEYERHAEUSER COMPANY

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(UNAUDITED)

	QUARTER ENDED						YEAR-TO-DATE ENDED
DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES	SEPTEMBER 2022			SEPTEMBER 2021			SEPTEMBER 2022			SEPTEMBER 2021
Common shares:
Balance at beginning of period	$	927		$	937		$	934		$	934
Issued for exercise of stock options and vested units		—			—			2			3
Repurchases of common shares (Note 4)		(5	)		(1	)		(14	)		(1	)
Balance at end of period		922			936			922			936
Other capital:
Balance at beginning of period		7,954			8,258			8,181			8,208
Issued for exercise of stock options		1			1			14			44
Repurchases of common shares (Note 4)		(140	)		(25	)		(390	)		(25	)
Share-based compensation		8			8			25			23
Other transactions, net		1			—			(6	)		(8	)
Balance at end of period		7,824			8,242			7,824			8,242
Retained earnings:
Balance at beginning of period		2,333			1,861			2,131			411
Net earnings		310			482			1,869			2,191
Dividends on common shares		(133	)		(501	)		(1,490	)		(760	)
Balance at end of period		2,510			1,842			2,510			1,842
Accumulated other comprehensive loss:
Balance at beginning of period		(398	)		(656	)		(479	)		(822	)
Other comprehensive income (loss)		(20	)		5			61			171
Balance at end of period (Note 11)		(418	)		(651	)		(418	)		(651	)
Total equity:
Balance at end of period	$	10,838		$	10,369		$	10,838		$	10,369

Dividends paid per common share	$	0.18		$	0.17		$	1.99		$	0.51

See accompanying Notes to Consolidated Financial Statements.

INDEX FOR NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1:	BASIS OF PRESENTATION	7

NOTE 2:	BUSINESS SEGMENTS	7

NOTE 3:	REVENUE RECOGNITION	8

NOTE 4:	NET EARNINGS PER SHARE AND SHARE REPURCHASES	8

NOTE 5:	INVENTORIES	9

NOTE 6:	PENSION AND OTHER POST-EMPLOYMENT BENEFIT PLANS	10

NOTE 7:	ACCRUED LIABILITIES	10

NOTE 8:	LONG-TERM DEBT AND LINE OF CREDIT	11

NOTE 9:	FAIR VALUE OF FINANCIAL INSTRUMENTS	11

NOTE 10:	LEGAL PROCEEDINGS, COMMITMENTS AND CONTINGENCIES	11

NOTE 11:	ACCUMULATED OTHER COMPREHENSIVE LOSS	12

NOTE 12:	SHARE-BASED COMPENSATION	12

NOTE 13:	OTHER OPERATING COSTS (INCOME), NET	13

NOTE 14:	INCOME TAXES	13
NOTE 15:	RESTRICTED CASH	13
NOTE 16:	TIMBERLAND ACQUISITIONS AND DIVESTITURES	13

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE QUARTERS AND YEAR-TO-DATE PERIODS ENDED SEPTEMBER 30, 2022 AND 2021

NOTE 1: BASIS OF PRESENTATION

Our consolidated financial statements provide an overall view of our results of operations, financial condition and cash flows. They include our accounts and the accounts of entities we control, including majority-owned domestic and foreign subsidiaries. They do not include our intercompany transactions and accounts, which are eliminated. Throughout these Notes to Consolidated Financial Statements, unless specified otherwise, references to “Weyerhaeuser,” “we,” “the company” and “our” refer to the consolidated company.

The accompanying unaudited Consolidated Financial Statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of our financial position, results of operations and cash flows for the interim periods presented. Except as otherwise disclosed in these Notes to Consolidated Financial Statements, such adjustments are of a normal, recurring nature. The Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission pertaining to interim financial statements. Certain information and footnote disclosures normally included in our annual Consolidated Financial Statements have been condensed or omitted. These quarterly Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2021. Results of operations for interim periods should not necessarily be regarded as indicative of the results that may be expected for the full year.

NOTE 2: BUSINESS SEGMENTS

We are principally engaged in growing and harvesting timber; manufacturing, distributing and selling products made from trees; maximizing the value of every acre we own through the sale of higher and better use (HBU) properties; and monetizing the value of surface and subsurface assets through leases and royalties. Our business segments are categorized based primarily on products and services which include:

●	Timberlands – Logs, timber, recreational leases and other products;

●	Real Estate, Energy and Natural Resources (Real Estate & ENR) – Real Estate (sales of timberlands) and ENR (rights to explore for and extract hard minerals, construction materials, natural gas, and wind and solar resources) and

●	Wood Products – Structural lumber, oriented strand board, engineered wood products and building materials distribution.

A reconciliation of our business segment information to the respective information in the Consolidated Statement of Operations is as follows:

	QUARTER ENDED				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