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Weyerhaeuser (WY) Tops Q3 Earnings, Up Y/Y on Sales, Margins
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Weyerhaeuser Company (WY - Free Report) delivered a positive earnings surprise of 9.7% in third-quarter 2017. This is the third consecutive quarter of better-than-expected bottom-line results.
Earnings from continuing operations before special items in the quarter came in at 34 cents per share, topping the Zacks Consensus Estimate of 31 cents. Also, the bottom line surged 47.8% from the year-ago quarter tally of 23 cents.
Healthy Segmental Performance Drives Top Line
The company’s third-quarter net sales were $1,872 million, increasing 5.9% year over year as well as surpassing the Zacks Consensus Estimate of $1.82 billion.
The company operates through three business segments, results of which are detailed below:
Timberlands: The segment’s revenues (excluding intersegment sales) in the quarter came in at $491 million, up 1.4% year over year. It accounted for 26.2% of net sales.
Real Estate, Energy and Natural Resources: The segment’s revenues, accounting for 4.4% of net sales, were $82 million. The figure grew 70.8% from the year-ago tally.
Wood Products: The segment generated revenues (excluding intersegment sales) of $1,299 million, accounting for 69.4% of net sales. Compared with the year-ago quarter, the figure was up 10.4%.
Margins Improve
Weyerhaeuser’s cost of sales represented 73.4% of the quarter’s net sales versus 77.7% in the year-ago quarter. Gross margin grew 430 basis points (bps) to 26.6%.
Selling, general and administrative expenses comprised 5.2% of net sales, down from 6% in the year-ago quarter. Research and development expenses were $4 million.
Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) was $569 million, increasing 31.1% year over year. Adjusted EBITDA margin came in at 30.4% versus 25.4% in the year-ago quarter.
Balance Sheet & Cash Flow
Exiting the third quarter, Weyerhaeuser had cash and cash equivalents of $497 million, roughly 29.1% below $701 million in the preceding quarter end. Long-term debt was sequentially flat at $5,933 million.
In the quarter, the company’s net cash generated from operating activities was $323 million, down 6.9% from the year-ago quarter. Capital spending totaled $87 million, down from $120 million in the year-ago quarter.
During the quarter, the company paid dividends worth $233 million.
Outlook
For fourth-quarter 2017, Weyerhaeuser anticipates sequentially higher earnings and adjusted EBITDA from the Timberland segment. Results in the West will gain from rise in log sales realization and higher fee harvest volume, partially offset by higher road spending. In the South, favorable impact of higher fee harvest volumes is predicted to be more than offset by rise in forestry expenses.
For Real Estate, Energy and Natural Resources segment, the company anticipates sequentially higher earnings and adjusted EBITDA in the fourth quarter. It predicts adjusted EBITDA to be approximately $250 million in 2017.
For the Wood Products segment, the company predicts sequentially comparable earnings and adjusted EBITDA. For lumber and oriented strand board, higher average sales realizations will be partially offset by rise in log costs in the West. For engineered wood products, sales volume is predicted to fall sequentially while input costs and manufacturing costs per unit will increase.
Zacks Rank & Other Stocks to Consider
With a market capitalization of $26.3 billion, Weyerhaeuser currently carries a Zacks Rank #2 (Buy). Some other stocks worth considering in the industry are Louisiana-Pacific Corporation (LPX - Free Report) , Potlatch Corporation (PCH - Free Report) and Universal Forest Products, Inc. (UFPI - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can seethe complete list of today’s Zacks #1 Rank stocks here.
Louisiana-Pacific’s earnings estimates for 2017 and 2018 were revised upward over the last 60 days. Also, the company delivered an average positive earnings surprise of 1.16% in the last four quarters.
Potlatch Corporation pulled off an average positive earnings surprise of 43.58% over the trailing four quarters. Also, its earnings estimates for 2017 and 2018 were revised upward over the last 60 days.
Universal Forest Products performed well in the last quarter, with a positive earnings surprise of 14.69%. Also, its earnings estimates for 2017 and 2018 improved in the last 60 days.
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Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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Weyerhaeuser (WY) Tops Q3 Earnings, Up Y/Y on Sales, Margins
Weyerhaeuser Company (WY - Free Report) delivered a positive earnings surprise of 9.7% in third-quarter 2017. This is the third consecutive quarter of better-than-expected bottom-line results.
Earnings from continuing operations before special items in the quarter came in at 34 cents per share, topping the Zacks Consensus Estimate of 31 cents. Also, the bottom line surged 47.8% from the year-ago quarter tally of 23 cents.
Healthy Segmental Performance Drives Top Line
The company’s third-quarter net sales were $1,872 million, increasing 5.9% year over year as well as surpassing the Zacks Consensus Estimate of $1.82 billion.
The company operates through three business segments, results of which are detailed below:
Timberlands: The segment’s revenues (excluding intersegment sales) in the quarter came in at $491 million, up 1.4% year over year. It accounted for 26.2% of net sales.
Real Estate, Energy and Natural Resources: The segment’s revenues, accounting for 4.4% of net sales, were $82 million. The figure grew 70.8% from the year-ago tally.
Wood Products: The segment generated revenues (excluding intersegment sales) of $1,299 million, accounting for 69.4% of net sales. Compared with the year-ago quarter, the figure was up 10.4%.
Margins Improve
Weyerhaeuser’s cost of sales represented 73.4% of the quarter’s net sales versus 77.7% in the year-ago quarter. Gross margin grew 430 basis points (bps) to 26.6%.
Selling, general and administrative expenses comprised 5.2% of net sales, down from 6% in the year-ago quarter. Research and development expenses were $4 million.
Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) was $569 million, increasing 31.1% year over year. Adjusted EBITDA margin came in at 30.4% versus 25.4% in the year-ago quarter.
Balance Sheet & Cash Flow
Exiting the third quarter, Weyerhaeuser had cash and cash equivalents of $497 million, roughly 29.1% below $701 million in the preceding quarter end. Long-term debt was sequentially flat at $5,933 million.
In the quarter, the company’s net cash generated from operating activities was $323 million, down 6.9% from the year-ago quarter. Capital spending totaled $87 million, down from $120 million in the year-ago quarter.
During the quarter, the company paid dividends worth $233 million.
Outlook
For fourth-quarter 2017, Weyerhaeuser anticipates sequentially higher earnings and adjusted EBITDA from the Timberland segment. Results in the West will gain from rise in log sales realization and higher fee harvest volume, partially offset by higher road spending. In the South, favorable impact of higher fee harvest volumes is predicted to be more than offset by rise in forestry expenses.
For Real Estate, Energy and Natural Resources segment, the company anticipates sequentially higher earnings and adjusted EBITDA in the fourth quarter. It predicts adjusted EBITDA to be approximately $250 million in 2017.
For the Wood Products segment, the company predicts sequentially comparable earnings and adjusted EBITDA. For lumber and oriented strand board, higher average sales realizations will be partially offset by rise in log costs in the West. For engineered wood products, sales volume is predicted to fall sequentially while input costs and manufacturing costs per unit will increase.
Zacks Rank & Other Stocks to Consider
With a market capitalization of $26.3 billion, Weyerhaeuser currently carries a Zacks Rank #2 (Buy). Some other stocks worth considering in the industry are Louisiana-Pacific Corporation (LPX - Free Report) , Potlatch Corporation (PCH - Free Report) and Universal Forest Products, Inc. (UFPI - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Louisiana-Pacific’s earnings estimates for 2017 and 2018 were revised upward over the last 60 days. Also, the company delivered an average positive earnings surprise of 1.16% in the last four quarters.
Potlatch Corporation pulled off an average positive earnings surprise of 43.58% over the trailing four quarters. Also, its earnings estimates for 2017 and 2018 were revised upward over the last 60 days.
Universal Forest Products performed well in the last quarter, with a positive earnings surprise of 14.69%. Also, its earnings estimates for 2017 and 2018 improved in the last 60 days.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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