WEYERHAEUSER CO [WY] Filings

10-Q 1 wy-10q_20220331.htm 10-Q wy-10q_20220331.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 MARCH 31, 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 April 25, 2022, 744,498 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	24
ITEM 4.	CONTROLS AND PROCEDURES	24

PART II	OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	24
ITEM 1A.	RISK FACTORS	24
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	24
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES – NOT APPLICABLE
ITEM 4.	MINE SAFETY DISCLOSURES – NOT APPLICABLE
ITEM 5.	OTHER INFORMATION – NOT APPLICABLE
ITEM 6.	EXHIBITS	26
	SIGNATURES	27

PART I – FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

WEYERHAEUSER COMPANY

CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)

	QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES	MARCH 2022			MARCH 2021
Net sales (Note 3)	$	3,112		$	2,506
Costs of sales		1,647			1,430
Gross margin		1,465			1,076
Selling expenses		23			20
General and administrative expenses		92			90
Other operating costs, net (Note 13)		6			10
Operating income		1,344			956
Non-operating pension and other post-employment benefit costs (Note 6)		(15	)		(8	)
Interest income and other		(1	)		1
Interest expense, net of capitalized interest		(72	)		(79	)
Loss on debt extinguishment (Note 8)		(276	)		—
Earnings before income taxes		980			870
Income taxes (Note 14)		(209	)		(189	)
Net earnings	$	771		$	681

Earnings per share, basic and diluted (Note 4)	$	1.03		$	0.91
Weighted average shares outstanding (in thousands) (Note 4):
Basic		747,507			748,718
Diluted		748,823			750,024

See accompanying Notes to Consolidated Financial Statements.

WEYERHAEUSER COMPANY

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(UNAUDITED)

	QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS	MARCH 2022		MARCH 2021
Net earnings	$	771	$	681
Other comprehensive income (loss):
Foreign currency translation adjustments		16		9
Changes in unamortized actuarial loss, net of tax expense of $5 and $7		13		20
Changes in unamortized net prior service credit, net of tax (expense) benefit of ($1) and $1		—		1
Total other comprehensive income		29		30
Total comprehensive income	$	800	$	711

See accompanying Notes to Consolidated Financial Statements.

WEYERHAEUSER COMPANY

CONSOLIDATED BALANCE SHEET

(UNAUDITED)

DOLLAR AMOUNTS IN MILLIONS, EXCEPT PAR VALUE	MARCH 31, 2022			DECEMBER 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	1,205		$	1,879
Receivables, net		745			507
Receivables for taxes		8			24
Inventories (Note 5)		611			520
Prepaid expenses and other current assets		206			205
Total current assets		2,775			3,135
Property and equipment, less accumulated depreciation of $3,654 and $3,592		2,026			2,057
Construction in progress		203			175
Timber and timberlands at cost, less depletion		11,469			11,510
Minerals and mineral rights, less depletion		252			255
Deferred tax assets		15			17
Other assets		376			503
Total assets	$	17,116		$	17,652
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	310		$	281
Accrued liabilities (Note 7)		674			673
Total current liabilities		984			954
Long-term debt, net (Note 8)		5,053			5,099
Deferred tax liabilities		66			46
Deferred pension and other post-employment benefits (Note 6)		432			440
Other liabilities		344			346
Total liabilities		6,879			6,885
Commitments and contingencies (Note 10)
Equity:
Common shares: $1.25 par value; authorized 1,360 million shares; issued and outstanding: 745,442 thousand shares at March 31, 2022 and 747,301 thousand shares at December 31, 2021		932			934
Other capital		8,076			8,181
Retained earnings		1,679			2,131
Accumulated other comprehensive loss (Note 11)		(450	)		(479	)
Total equity		10,237			10,767
Total liabilities and equity	$	17,116		$	17,652

See accompanying Notes to Consolidated Financial Statements.

WEYERHAEUSER COMPANY

CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

	QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS	MARCH 2022			MARCH 2021
Cash flows from operations:
Net earnings	$	771		$	681
Noncash charges (credits) to earnings:
Depreciation, depletion and amortization		122			118
Basis of real estate sold		31			27
Deferred income taxes, net		14			8
Pension and other post-employment benefits (Note 6)		25			19
Share-based compensation expense (Note 12)		8			7
Loss on debt extinguishment		276			—
Change in:
Receivables, net		(238	)		(139	)
Receivables and payables for taxes		110			120
Inventories		(87	)		(60	)
Prepaid expenses and other current assets		(1	)		(2	)
Accounts payable and accrued liabilities		(62	)		(60	)
Pension and post-employment benefit contributions and payments		(4	)		(8	)
Other		(8	)		(13	)
Net cash from operations		957			698
Cash flows from investing activities:
Capital expenditures for property and equipment		(50	)		(31	)
Capital expenditures for timberlands reforestation		(20	)		(22	)
Acquisition of timberlands		(18	)		—
Other		1			—
Net cash from investing activities		(87	)		(53	)
Cash flows from financing activities:
Cash dividends on common shares		(1,218	)		(127	)
Net proceeds from issuance of long-term debt (Note 8)		881			—
Payments on long-term debt (Note 8)		(1,203	)		—
Proceeds from exercise of stock options		12			17
Repurchases of common shares (Note 4)		(118	)		—
Other		(18	)		(14	)
Net cash from financing activities		(1,664	)		(124	)
Net change in cash, cash equivalents and restricted cash		(794	)		521
Cash, cash equivalents and restricted cash at beginning of period		1,999			495
Cash, cash equivalents and restricted cash at end of period	$	1,205		$	1,016
Cash paid (received) during the period for:
Interest, net of amount capitalized of $1 and $1	$	78		$	75
Income taxes, net of refunds	$	85		$	66

See accompanying Notes to Consolidated Financial Statements.

WEYERHAEUSER COMPANY

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(UNAUDITED)

	QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES	MARCH 2022			MARCH 2021
Common shares:
Balance at beginning of period	$	934		$	934
Issued for exercise of stock options and vested units		2			2
Repurchases of common shares (Note 4)		(4	)		—
Balance at end of period		932			936
Other capital:
Balance at beginning of period		8,181			8,208
Issued for exercise of stock options		11			16
Repurchases of common shares (Note 4)		(117	)		—
Share-based compensation		8			7
Other transactions, net		(7	)		(9	)
Balance at end of period		8,076			8,222
Retained earnings:
Balance at beginning of period		2,131			411
Net earnings		771			681
Dividends on common shares		(1,223	)		(130	)
Balance at end of period		1,679			962
Accumulated other comprehensive loss:
Balance at beginning of period		(479	)		(822	)
Other comprehensive income		29			30
Balance at end of period (Note 11)		(450	)		(792	)
Total equity:
Balance at end of period	$	10,237		$	9,328

Dividends paid per common share	$	1.63		$	0.17

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	10

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, NET	13

NOTE 14:	INCOME TAXES	13
NOTE 15:	RESTRICTED CASH	13
NOTE 16:	TIMBERLAND ACQUISITION	13

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE QUARTERS ENDED MARCH 31, 2022 AND 2021

NOTE 1: BASIS OF PRESENTATION

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

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

NOTE 2: BUSINESS SEGMENTS

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

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

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

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

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

	QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS	MARCH 2022			MARCH 2021
Sales to unaffiliated customers:
Timberlands	$	465		$	379
Real Estate & ENR		128			106
Wood Products		2,519			2,021
		3,112			2,506
Intersegment sales:
Timberlands		161			134

Total sales		3,273			2,640
Intersegment eliminations		(161	)		(134	)
Total	$	3,112		$	2,506
Net contribution (charge) to earnings:
Timberlands	$	182		$	108
Real Estate & ENR		81			66
Wood Products		1,182			840
		1,445			1,014
Unallocated items⁽¹⁾		(117	)		(65	)
Net contribution to earnings		1,328			949
Interest expense, net of capitalized interest		(72	)		(79	)
Loss on debt extinguishment		(276	)		—
Earnings before income taxes		980			870
Income taxes		(209	)		(189	)
Net earnings	$	771		$	681

(1)

Unallocated items are gains or charges not related to, or allocated to, an individual operating segment. They include all or a portion of items such as share-based compensation, pension and post-employment costs, elimination of intersegment profit in inventory and LIFO, foreign exchange transaction gains and losses, interest income and other as well as legacy obligations.

NOTE 3: REVENUE RECOGNITION

A reconciliation of revenue recognized by our major products:

	QUARTER ENDED
DOLLAR AMOUNTS IN MILLIONS	MARCH 2022		MARCH 2021
Net sales to unaffiliated customers:
Timberlands segment
Delivered logs:
West
Domestic sales	$	113	$	79
Export grade sales		146		122
Subtotal West		259		201
South		154		131
North		15		16
Subtotal delivered logs sales		428		348
Stumpage and pay-as-cut timber		9		6
Recreational and other lease revenue		17		16
Other⁽¹⁾		11		9
Net sales attributable to Timberlands segment		465		379
Real Estate & ENR segment
Real estate		97		84
Energy and natural resources		31		22
Net sales attributable to Real Estate & ENR segment		128		106
Wood Products segment
Structural lumber		1,206		990
Oriented strand board		564		438
Engineered solid section		196		142
Engineered I-joists		137		83
Softwood plywood		58		56
Medium density fiberboard		48		48
Complementary building products		215		171
Other⁽²⁾		95		93
Net sales attributable to Wood Products segment		2,519		2,021
Total net sales	$	3,112	$	2,506

(1)	Other Timberlands sales include sales of seeds and seedlings from our nursery operations as well as wood chips.

(2)	Other Wood Products sales include wood chips, other byproducts and third-party residual log sales from our Canadian Forestlands operations.

NOTE 4: NET EARNINGS PER SHARE AND SHARE REPURCHASES

Our basic and diluted earnings per share were:

●	$1.03 during first quarter 2022 and

●	$0.91 during first quarter 2021.

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
SHARES IN THOUSANDS	MARCH 2022		MARCH 2021
Weighted average common shares outstanding – basic		747,507		748,718
Dilutive potential common shares:
Stock options		384		217
Restricted stock units		420		738
Performance share units		512		351
Total effect of outstanding dilutive potential common shares		1,316		1,306
Weighted average common shares outstanding – dilutive		748,823		750,024

We use the treasury stock method to calculate the dilutive effect of our outstanding stock options, restricted stock units and performance share units.

Potential Shares Not Included in the Computation of Diluted Earnings per Share

The following shares were not included in the computation of diluted earnings per share because they were either antidilutive or the required performance or market conditions were not met. Some or all of these shares may be dilutive potential common shares in future periods.

	QUARTER ENDED
SHARES IN THOUSANDS	MARCH 2022		MARCH 2021
Stock options		—		147
Performance share units		693		1,115

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 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).

During first quarter 2022, we repurchased 3,197,675 common shares for approximately $121 million under the 2021 Repurchase Program. As of March 31, 2022, we had remaining authorization of $806 million for future share repurchases. We did not repurchase shares during first quarter 2021.

All common stock repurchases under the 2021 Repurchase Program were made in open-market transactions. We record share repurchases upon trade date as opposed to the settlement date when cash is disbursed. We record a liability for repurchases that have not yet been settled as of period end. There were 78,380 unsettled shares (approximately $3 million) as of March 31, 2022 and no unsettled shares as of December 31, 2021.

NOTE 5: INVENTORIES

Inventories include raw materials, work-in-process, finished goods, as well as materials and supplies.

DOLLAR AMOUNTS IN MILLIONS	MARCH 31, 2022		DECEMBER 31, 2021
LIFO inventories:
Logs	$	30	$	26
Lumber, plywood, panels and fiberboard		80		61
Other products		22		17
Moving average cost or FIFO inventories:
Logs		104		65
Lumber, plywood, panels, fiberboard and engineered wood products		116		106
Other products		140		131
Materials and supplies		119		114
Total	$	611	$	520

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.