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Weyerhaeuser's (WY) Q3 Earnings & Revenues Top Estimates

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Weyerhaeuser Company (WY - Free Report) reported third-quarter 2021 results, wherein earnings and revenues surpassed the respective Zacks Consensus Estimate despite weather-related operational disruptions, continued supply-chain challenges and the ongoing pandemic. Both the metrics improved on a year-over-year basis buoyed by operational excellence initiatives, solid momentum in U.S. housing, and robust repair and remodel demand. The company remains optimistic about its performance due to continued strength in residential construction, a stable financial position and funds available for distribution.

Devin W. Stockfish, president and chief executive officer of Weyerhaeuser stated, “Year to date, we have generated more than $3.4 billion of Adjusted EBITDA and $2.4 billion of Adjusted Funds Available for Distribution. We expect this record cash flow generation to result in a significant supplemental dividend payment to shareholders in the first quarter of 2022. We are bullish on the underlying demand fundamentals for U.S. housing and growth opportunities for our businesses and remain intently focused on delivering superior shareholder value.”

Inside the Headlines

For the third quarter, the company reported adjusted earnings of 60 cents per share, beating the consensus mark of 56 cents. The bottom line also increased 15.4% from the year-ago adjusted figure of 52 cents per share.

Net sales for the quarter came in at $2,345 million, surpassing the consensus mark of $2,268 million. The figure also rallied 11.1% from $2,110 million reported in the prior-year quarter.

For the third quarter, adjusted EBITDA came in at $746 million, up from $745 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

Segment Details

Timberlands: Net sales (including inter-segment sales of $129 million) in the segment came in to $552 million, up 22.1% from the year-ago figure of $452 million.

In the West, fee-harvest volumes were lower sequentially, and per unit log and haul costs increased as Western harvest activity shifted to higher-elevation units. Export-sales realizations increased from the second quarter. In the South, sales-realizations for saw logs and fiber logs improved, and fee-harvest volumes increased slightly. Per unit log and haul costs; and forestry, and road costs grew slightly sequentially.  

Adjusted EBITDA came in at $165 million, up from $130 million in the year-ago quarter.

Real Estate, Energy and Natural Resources: For the third quarter, the segment’s net sales amounted to $69 million, unchanged year over year. Also, adjusted EBITDA came in line with the year-ago figure of $60 million. Sequentially, earnings and adjusted EBITDA were down due to lower real estate sales. The number of real estate acres sold decreased due to the timing of real estate transactions, partially offset by an increase in the average price per acre due to the mix of properties sold.

Wood Products: For the third quarter, segment sales totaled $1,853 million, up 9.3% from $1,696 million in the prior-year period. Adjusted EBITDA came in at $565 million, down from $615 million a year ago.

During the third quarter, sales realizations for lumber and oriented strand board or OSB plummeted 52% and 24%, respectively, on a sequential basis. Meanwhile, sales realizations improved across most engineered wood products or EWP on benefits from the previously announced price increases for solid section and I-joist products. Raw material costs for Wood Products increased mainly for OSB web stock, resin and veneer.

Financial Highlights

As of Sep 30, 2021, Weyerhaeuser had cash and cash equivalents of $2,326 million, up from $495 million at 2020-end and $1,777 million at the end of Jun 30, 2021. The long-term debt was $5,100 million at quarter-end, which was down from $5,325 million at 2020 end. However, the company’s debt was flat sequentially.

Net cash from operations was $659 million for the quarter compared to $608 million in the year-ago period.

Outlook

For fourth-quarter 2021, the company expects earnings and adjusted EBITDA in the Timberland segment to be comparable to the third quarter. In the West, it expects slightly higher fee-harvest volumes, as well as lower per unit log and haul costs, as salvage-related harvest will decline. The company anticipates domestic-sales realizations to be moderately lower compared to the third quarter. In the South, the company expects marginally higher fee-harvest volumes owing to improving weather conditions and marginally higher sales realizations.

In the Real Estate, Energy and Natural Resources segment, Weyerhaeuser anticipates earnings and adjusted EBITDA to be less than the third quarter due to the timing of transactions. For 2021, it continues to expect adjusted EBITDA at $290 million .

The company predicts earnings and adjusted EBITDA to be higher than the third quarter within the Wood Products segment. For the fourth quarter, it expects increased sales volumes mostly for OSB. It expects lower raw material costs for OSB web stock.

Zacks Rank

Weyerhaeuser currently carries a Zacks Rank #4 (Sell).

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

Construction Stocks to Bet on

Better-ranked stocks in the Zacks Construction sector include Tri Pointe Homes Inc. (TPH - Free Report) , Jacobs Engineering Group Inc. (J - Free Report) and Toll Brothers Inc. (TOL - Free Report) . While Tri Pointe sports a Zacks Rank #1, the other two stocks carry a Zacks Rank #2.

Earnings for Tri Pointe, Jacobs and Toll Brothers are expected to grow 80.2%, 13.9% and 80%, respectively, for the current year.