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Weyerhaeuser (WY) Beats Q1 Earnings on Increased Sales
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Weyerhaeuser Company (WY - Free Report) reported better-than-expected results in first-quarter 2017, with earnings and sales beating their respective Zacks Consensus Estimates by 22.2% and 6.5%.
Earnings from continuing operations before special items came in at 22 cents per share, above the Zacks Consensus Estimate 18 cents. Also, the bottom line was 10% above the year-ago tally of 20 cents.
The company’s net sales totaled $1.693 billion in the quarter, surpassing the Zacks Consensus Estimate of $1.59 billion. Also, the top line grew 20.5% year over year.
Segmental Details
Weyerhaeuser operates through three business segments, results of which are detailed below:
Timberlands: The segment’s revenues (excluding intersegment sales) totaled $486 million, up 25.6% year over year. It accounted for 28.7% of net sales.
Real Estate, Energy and Natural Resources: The segment’s revenues, accounting for 3.1% of net sales, were $53 million, up 35.9% from the year-ago tally.
Wood Products: The segment generated revenues (excluding intersegment sales) of $1,154 million, accounting for 68.2% of net sales. Compared with the year-ago quarter, the figure was up 17.9%.
Margins
In the quarter, Weyerhaeuser’s cost of sales grew 15.3% year over year, representing 75.1% of net sales compared with 78.5% in the year-ago quarter. Gross margin grew 340 basis points to 24.9%.
Selling, general and administrative expenses comprised 6.4% of net sales down from 7.3% in the year-ago quarter. Research and development expenses were $4 million, below $5 million in the year-ago quarter.
Adjusted earnings before interest, tax, depreciation and amortization (“EBITDA”) came in at $454 million, above $336 million in the year-ago quarter. EBITDA margin in the quarter was 26.8%.
Balance Sheet & Cash Flow
Exiting the first quarter, Weyerhaeuser had cash and cash equivalents of $455 million, down from $676 million in the preceding quarter. Long-term debt dipped 1% sequentially to $6,263 million.
In the quarter, the company generated net cash of $35 million from its operating activities, down 25.5% year over year. Capital spending decreased 8.8% to $52 million.
During the quarter, the company paid dividends worth $233 million.
Outlook
For the second quarter 2017, Weyerhaeuser anticipates Timberland segment’s earnings and adjusted EBITDA to be flat with the year-ago quarter. While results in the West will be influenced by sequentially higher realizations, lower harvest volume and higher logging road and silviculture costs, sequentially higher silviculture expenses and higher harvest volumes will impact results in the South.
For Real Estate, Energy and Natural Resources segment, the company anticipates sequentially comparable earnings and adjusted EBITDA in the second quarter while predicts adjusted EBITDA to exceed $250 million in 2017.
For the Wood Products segment, the company predicts sequentially higher earnings and adjusted EBITDA on the back of higher average sales realizations and increased sales volume.
During the first quarter, the company completed its merger with Plum Creek Timber Company, Inc. In the quarters ahead, it anticipates realizing merger synergies.
With a market capitalization of $26.1 billion, Weyerhaeuser currently carries a Zacks Rank #2 (Buy). Some other stocks worth considering in the industry include Louisiana-Pacific Corp. (LPX - Free Report) , Universal Forest Products, Inc. (UFPI - Free Report) and Trex Co. Inc. (TREX - Free Report) . While Louisiana-Pacific sports a Zacks Rank #1 (Strong Buy), both Universal Forest Products and Trex Co. carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Louisiana-Pacific Corp.’s financial performance was impressive, with an average positive earnings surprise of 66.28% for the last four quarters. Also, earnings estimates for 2017 were revised upward over the last 60 days.
Universal Forest Products reported an average positive earnings surprise of 2.35% over the trailing four quarters. Earnings estimates for 2017 and 2018 were revised upward over the last 60 days.
Trex Co. performed well in the last four quarters, with an average positive earnings surprise of 10.47%. Also, its earnings estimates for 2017 improved in the last 60 days.
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Weyerhaeuser (WY) Beats Q1 Earnings on Increased Sales
Weyerhaeuser Company (WY - Free Report) reported better-than-expected results in first-quarter 2017, with earnings and sales beating their respective Zacks Consensus Estimates by 22.2% and 6.5%.
Earnings from continuing operations before special items came in at 22 cents per share, above the Zacks Consensus Estimate 18 cents. Also, the bottom line was 10% above the year-ago tally of 20 cents.
The company’s net sales totaled $1.693 billion in the quarter, surpassing the Zacks Consensus Estimate of $1.59 billion. Also, the top line grew 20.5% year over year.
Segmental Details
Weyerhaeuser operates through three business segments, results of which are detailed below:
Timberlands: The segment’s revenues (excluding intersegment sales) totaled $486 million, up 25.6% year over year. It accounted for 28.7% of net sales.
Real Estate, Energy and Natural Resources: The segment’s revenues, accounting for 3.1% of net sales, were $53 million, up 35.9% from the year-ago tally.
Wood Products: The segment generated revenues (excluding intersegment sales) of $1,154 million, accounting for 68.2% of net sales. Compared with the year-ago quarter, the figure was up 17.9%.
Margins
In the quarter, Weyerhaeuser’s cost of sales grew 15.3% year over year, representing 75.1% of net sales compared with 78.5% in the year-ago quarter. Gross margin grew 340 basis points to 24.9%.
Selling, general and administrative expenses comprised 6.4% of net sales down from 7.3% in the year-ago quarter. Research and development expenses were $4 million, below $5 million in the year-ago quarter.
Adjusted earnings before interest, tax, depreciation and amortization (“EBITDA”) came in at $454 million, above $336 million in the year-ago quarter. EBITDA margin in the quarter was 26.8%.
Balance Sheet & Cash Flow
Exiting the first quarter, Weyerhaeuser had cash and cash equivalents of $455 million, down from $676 million in the preceding quarter. Long-term debt dipped 1% sequentially to $6,263 million.
In the quarter, the company generated net cash of $35 million from its operating activities, down 25.5% year over year. Capital spending decreased 8.8% to $52 million.
During the quarter, the company paid dividends worth $233 million.
Outlook
For the second quarter 2017, Weyerhaeuser anticipates Timberland segment’s earnings and adjusted EBITDA to be flat with the year-ago quarter. While results in the West will be influenced by sequentially higher realizations, lower harvest volume and higher logging road and silviculture costs, sequentially higher silviculture expenses and higher harvest volumes will impact results in the South.
For Real Estate, Energy and Natural Resources segment, the company anticipates sequentially comparable earnings and adjusted EBITDA in the second quarter while predicts adjusted EBITDA to exceed $250 million in 2017.
For the Wood Products segment, the company predicts sequentially higher earnings and adjusted EBITDA on the back of higher average sales realizations and increased sales volume.
During the first quarter, the company completed its merger with Plum Creek Timber Company, Inc. In the quarters ahead, it anticipates realizing merger synergies.
Weyerhaeuser Company Price and Consensus
Weyerhaeuser Company Price and Consensus | Weyerhaeuser Company Quote
Zacks Rank & Stocks to Consider
With a market capitalization of $26.1 billion, Weyerhaeuser currently carries a Zacks Rank #2 (Buy). Some other stocks worth considering in the industry include Louisiana-Pacific Corp. (LPX - Free Report) , Universal Forest Products, Inc. (UFPI - Free Report) and Trex Co. Inc. (TREX - Free Report) . While Louisiana-Pacific sports a Zacks Rank #1 (Strong Buy), both Universal Forest Products and Trex Co. carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Louisiana-Pacific Corp.’s financial performance was impressive, with an average positive earnings surprise of 66.28% for the last four quarters. Also, earnings estimates for 2017 were revised upward over the last 60 days.
Universal Forest Products reported an average positive earnings surprise of 2.35% over the trailing four quarters. Earnings estimates for 2017 and 2018 were revised upward over the last 60 days.
Trex Co. performed well in the last four quarters, with an average positive earnings surprise of 10.47%. Also, its earnings estimates for 2017 improved in the last 60 days.
Zacks' Hidden Trades
While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them?
Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors.
Click here for Zacks' secret trade>>