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Weyerhaeuser's (WY) Q2 Earnings Miss, Revenues Top Estimates

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Weyerhaeuser Company (WY - Free Report) reported mixed second-quarter 2021 results, wherein earnings missed the Zacks Consensus Estimate but revenues beat the same. Both the metrics improved on a year-over-year basis buoyed by operational excellence initiatives, solid momentum in U.S. housing, and solid repair and remodel demand. The company remains optimistic about strong performance going forward on the back of persistent strength in residential construction, solid financial position and funds available for distribution.

Devin W. Stockfish, president and chief executive officer of Weyerhaeuser stated, “In the second quarter, our teams again delivered the company’s strongest quarterly results on record, surpassing lastquarter’s Adjusted EBITDA record by over 40 percent,”

He further added, “we are excited for the opportunity to return significant cash to shareholders through the variable supplemental component of our new dividend framework.”

Inside the Headlines

For the second quarter, the company reported adjusted earnings of $1.37 per share, missing the consensus mark of $1.38. Nevertheless, the bottom line increased from the year-ago adjusted figure of 11 cents per share.

Net sales for the quarter came in at $3,144 million, surpassing the consensus mark of $2,917 million. The figure also rallied 92.8% from $1,631 million reported in the prior-year quarter.

For the second quarter, adjusted EBITDA came in at $1,573 million, up from $386 million in the year-ago period.

Weyerhaeuser Company Price, Consensus and EPS Surprise

Weyerhaeuser Company Price, Consensus and EPS Surprise

Weyerhaeuser Company price-consensus-eps-surprise-chart | Weyerhaeuser Company Quote

Segments Details

Timberlands: Net sales (including inter-segment sales of $136 million) in the segment came in at $541 million, up 12.7% from the year-ago figure of $480 million.

In the West, export sales realizations increased significantly from the first quarter. Meanwhile, the company shifted additional volume to the export market to meet higher demand, mainly from China. This resulted in modestly higher export sales volumes. Fee harvest volumes were in line sequentially, as the company continued salvage operations. Domestic sales realizations were lower as salvage activity continued to yield a greater mix of smaller diameter logs. In the South, fee harvest volumes grew, and sales realizations for sawlogs and fiber logs were modestly higher than first-quarter 2021.

Adjusted EBITDA came in at $180 million, up from $140 million in the year-ago quarter.

Real Estate, Energy and Natural Resources: For the second quarter, the segment’s net sales amounted to $110 million, up 69.2% year over year. Also, adjusted EBITDA came in at $91 million, up 59.6% year over year. The upside was mainly due to higher production of construction materials in Energy & Natural Resources.

Wood Products: For the second quarter, the segment sales totaled $2,629 million, up 117.8% from $1,207 million in the prior-year period. Adjusted EBITDA came in at $1,386 million, up 600% from the year-ago figure of $198 million.

During the second quarter, sales realizations for lumber and oriented strand board or OSB advanced 25% and 48%, respectively, on a sequential basis. Raw material costs for Wood Products increased from the prior-year quarter, primarily for Canadian logs, OSB webstock, resin and veneer.

Financial Highlights

As of Jun 30, 2021, Weyerhaeuser had cash and cash equivalents of $1,777 million, up from $495 million at 2020-end. Long-term debt was $5,100 million at quarter-end, which was down from $5,325 million at 2020-end.

Net cash from operations was $1,308 million for the quarter compared with $391 million in the year-ago period.

Outlook

For third-quarter 2021, the company expects earnings and adjusted EBITDA in the Timberland segment to be lower than the second quarter. In the West, it expects slightly lower fee harvest volumes, and seasonally higher forestry as well as road expenses. In the South, the company expects higher fee harvest volumes, comparable average sales realizations, and per unit log and haul costs. It anticipates moderately higher export sales realizations and slightly lower domestic sales realizations. In the South, fee harvest volumes will likely be considerably higher than the second quarter.

In the Real Estate, Energy and Natural Resources segment, Weyerhaeuser anticipates earnings and adjusted EBITDA to be up sequentially in third-quarter 2021. Adjusted EBITDA is expected to be in line sequentially. For 2021, it expects adjusted EBITDA to be $290 million (up from $255 million expected earlier).

Within the Wood Products segment, the company predicts earnings and adjusted EBITDA to be significantly lower on a sequential basis. For the third quarter, it expects increased sales volumes and improved unit manufacturing costs for lumber and OSB. It also expects higher raw material costs.

Zacks Rank

Weyerhaeuser — which shares space with Louisiana-PacificCorporation (LPX - Free Report) , PotlatchDeltic Corporation (PCH - Free Report) and UFP Industries, Inc. (UFPI - Free Report) in the Zacks Building Products - Wood industry — currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.