Weyerhaeuser Company ( WY - Analyst Report ) reported earnings per share, before special items, of 26 cents in the first quarter 2013, up from earnings of just 2 cents reported in the year-ago quarter and above the Zacks Consensus Estimate of 22 cents. Results, however, remained stable sequentially.

Revenue

Weyerhaeuser reporetd 30.6% year over year increase in its net sales from continuing operations that settled at $1,951 million and also surpassed the Zacks Consensus Estimate of $1,879 million.

Considering the segments, Timberland revenue increased 17.2% year over year to $293 million and accounted for 15.0% of the total revenue. Revenue from Wood Products was up 55.8% to $988 million and represented 50.6% of total revenue.

Revenue generated from Cellulose Fibers, roughly 24.3% of total revenue, decreased 0.2% to $474 million, while Real Estate with about 10.0% of total revenue, increased 43.1% to $196 million.

Margins

Cost of goods sold in the first quarter increased 18.8% year over year and represented 78.6% of total revenue. Selling, general and administrative expenses were 8.7% of revenue and increased 12.7% over the year-ago quarter. Research and development expenses were about $7 million, flat year over year.

Operating income improved to $256 million versus $101 million in the first quarter of 2012. Margins in the quarter stood at 13.1%.

Balance Sheet

Exiting the first quarter 2013, cash and cash equivalents (Forest Products and Real Estate) of Weyerhaeuser fell 28.8% to $639 million from $898 million in the previous quarter. Long-term debt was approximately $3,951 million, flat sequentially.

Cash Flow

Weyerhaeuser used net cash from operating activities of $61 million in the first quarter 2013 versus $60 million in the year-ago quarter. Capital expenditure went down 35.2% year over year to $35 million. Cash dividends paid in the quarter amounted to $93 million while share repurchase activities were nil in the quarter.

Outlook: For the second quarter of 2013, for the Timberlands segment, management of Weyerhaeuser anticipates that earnings would be comparable sequentially. Selling prices for Western logs are expected to improve, offset by higher silviculture expenses.

For the Wood Products segment, comparable earnings are expected. Sales volumes are predicted to improve while lumber and oriented strand board prices are likely to fall. Raw material costs are expected to rise.

For the Cellulose Fibers segment, Weyerhaeuser anticipates higher earnings attributable to lower maintenance and fiber and energy costs as well as higher pulp price realization.

For the Real Estate segment, Weyerhaeuser anticipates meager profits from single-family homebuilding operations. Home closings are expected to increase while selling expenses are likely to escalate.

Weyerhaeuser is one of the leading U.S. forest product companies, primarily engaged in growing and harvesting timber; manufacture, distribution, and sale of forest products; in addition to real estate development and construction.

The stock currently carries a Zacks Rank #1 (Strong Buy). Other stocks to watch out for in the industry are Universal Forest Products Inc. ( UFPI - Analyst Report ) , Louisiana-Pacific Corp. ( LPX - Snapshot Report ) and Potlatch Corporation ( PCH - Snapshot Report ) , all bearing a Zacks Rank #1 (Strong Buy).