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Weyerhaeuser (WY) Q2 Earnings Top, Sales Miss, Fall Y/Y
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Weyerhaeuser Company (WY - Free Report) reported mixed second-quarter 2023 results, wherein its earnings handily beat the Zacks Consensus Estimate but net sales missed the same marginally. On a year-over-year basis, the top and bottom lines declined.
WY’s shares were down 1.9% in the after-hours trading session on Jul 27, after the earnings release.
Meanwhile, in July, Weyerhaeuser made a significant acquisition, purchasing 22,000 acres of timberlands in Mississippi for around $60 million. These timberlands are known for their high productivity and have been strategically chosen due to their proximity to Weyerhaeuser's current operations. The acquisition is expected to bring about immediate synergies and create additional opportunities for real estate and natural climate solutions.
Inside the Headlines
The company reported adjusted earnings of 32 cents per share, beating the consensus mark of 21 cents by 52.4% but decreasing 69.8% from the year-ago reported figure of $1.06 cents.
Net sales for the quarter were $1,997 million, missing the consensus mark of $2,028 million by 1.5% and declining 32.8% from the $2,973 million reported in the prior-year quarter. Net sales, however, grew 6.2% sequentially.
Adjusted EBITDA came in at $469 million, significantly down from $1,205 million in the year-ago period but an improvement from $395 million in the first quarter of 2023.
Weyerhaeuser Company Price, Consensus and EPS Surprise
Timberlands: Net sales (including inter-segment sales of $150 million) from the segment was $567 million, down from the year-ago figure of $671 million. Meanwhile, we expected segment sales to decline 9.6% year over year to $606.4 million in the quarter.
Adjusted EBITDA came in at $172 million, down from $219 million in the year-ago quarter.
Real Estate, Energy and Natural Resources: For the reported quarter, the segment’s net sales amounted to $80 million, down from $117 million a year ago. Our model predicted segment sales to decline 9.7% year over year to $105.6 million.
Adjusted EBITDA came in at $70 million, reflecting a decline from $107 million reported in the year-ago level.
Wood Products: For the second quarter, segment sales totaled $1,500 million, down from $2,341 million in the prior-year period. We expected segment sales to decline 37.6% year over year to $1,461.2 million in the quarter.
Adjusted EBITDA came in at $270 million, significantly down from $912 million a year ago.
Financial Highlights
As of Jun 30, 2023, Weyerhaeuser had cash and cash equivalents of $1,095 million, down from $1,581 million at 2022-end but up from $797 million at March 2023-end. Long-term debt was $4,817 million at the quarter-end, up from $4,071 million at 2022-end and from $4,072 million at March 2023-end.
Net cash from operations was $496 million for the second quarter, down from $1,146 million a year ago but up from $126 million in the prior quarter.
Q3 Outlook
For the Timberland segment, the company expects earnings (before special items) and adjusted EBITDA to be $25 million low sequentially. In the West, it anticipates moderately lower sales realizations and fee harvest volumes, partially offset by improved per-unit log and haul costs. For the Southern region, the company expects slightly lower sales realizations, with fee harvest volumes and per unit log and haul costs expected to remain on par from the second quarter.
In the Real Estate, Energy and Natural Resources segment, Weyerhaeuser expects earnings to be sequentially higher. Adjusted EBITDA is likely to be approximately $20 million higher than the second quarter, thanks to the timing and mix of sales. The company still expects 2023 adjusted EBITDA of approximately $300 million and expects basis as a percentage of real estate sales to be 35% to 40% for the year.
Within the Wood Products segment, Weyerhaeuser projects a substantial increase in third-quarter earnings and adjusted EBITDA compared to the second quarter, primarily driven by improved average sales prices for lumber and oriented strand board or OSB. However, when excluding the impact of these factors, the company foresees that its third-quarter financial results will be slightly lower than those of the second quarter.
Regarding lumber, the company expects a moderate rise in sales volumes, along with a decline in log costs and slightly reduced unit manufacturing costs. As for OSB, Weyerhaeuser anticipates comparable sales volumes and fiber costs but slightly higher unit manufacturing costs. Turning to engineered wood products, the company foresees a slight increase in sales volumes. However, it expects slightly lower sales realizations and faces higher raw material costs, primarily attributable to oriented strand board webstock.
Masco Corporation (MAS - Free Report) reported strong earnings for second-quarter 2023. The bottom line surpassed the Zacks Consensus Estimate and increased from the prior year. Strong pricing actions and operational efficiency helped it deliver solid results.
Masco’s quarterly net sales topped the consensus mark but declined on a year-over-year basis. The benefits received from pricing actions were more than offset by lower volumes.
Otis Worldwide Corporation’s (OTIS - Free Report) second-quarter 2023 earnings and sales surpassed the Zacks Consensus Estimate. Its quarterly results reflected 11th consecutive quarters of organic sales growth and solid operating margin expansion contributing to mid-single digit adjusted earnings per share growth.
The company remains focused on strong portfolio growth and generating a solid New Equipment backlog. It also intends to expand operating margins, return cash to shareholders through a capital-allocation strategy and pursue additional progress toward ESG goals.
Armstrong World Industries, Inc. (AWI - Free Report) reported mixed results for second-quarter 2023, wherein earnings surpassed the Zacks Consensus Estimate, but net sales missed the same. Both metrics increased on a year-over-year basis.
AWI’s results were backed by robust growth in operating income and adjusted EBITDA, as well as expanded margins, fueled by positive performances from both the Mineral Fiber and Architectural Specialties segments. The company remain focused on advancing digital and healthy spaces initiatives and pursuing attractive, bolt-on acquisitions.
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Weyerhaeuser (WY) Q2 Earnings Top, Sales Miss, Fall Y/Y
Weyerhaeuser Company (WY - Free Report) reported mixed second-quarter 2023 results, wherein its earnings handily beat the Zacks Consensus Estimate but net sales missed the same marginally. On a year-over-year basis, the top and bottom lines declined.
WY’s shares were down 1.9% in the after-hours trading session on Jul 27, after the earnings release.
Meanwhile, in July, Weyerhaeuser made a significant acquisition, purchasing 22,000 acres of timberlands in Mississippi for around $60 million. These timberlands are known for their high productivity and have been strategically chosen due to their proximity to Weyerhaeuser's current operations. The acquisition is expected to bring about immediate synergies and create additional opportunities for real estate and natural climate solutions.
Inside the Headlines
The company reported adjusted earnings of 32 cents per share, beating the consensus mark of 21 cents by 52.4% but decreasing 69.8% from the year-ago reported figure of $1.06 cents.
Net sales for the quarter were $1,997 million, missing the consensus mark of $2,028 million by 1.5% and declining 32.8% from the $2,973 million reported in the prior-year quarter. Net sales, however, grew 6.2% sequentially.
Adjusted EBITDA came in at $469 million, significantly down from $1,205 million in the year-ago period but an improvement from $395 million in the first quarter of 2023.
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 $150 million) from the segment was $567 million, down from the year-ago figure of $671 million. Meanwhile, we expected segment sales to decline 9.6% year over year to $606.4 million in the quarter.
Adjusted EBITDA came in at $172 million, down from $219 million in the year-ago quarter.
Real Estate, Energy and Natural Resources: For the reported quarter, the segment’s net sales amounted to $80 million, down from $117 million a year ago. Our model predicted segment sales to decline 9.7% year over year to $105.6 million.
Adjusted EBITDA came in at $70 million, reflecting a decline from $107 million reported in the year-ago level.
Wood Products: For the second quarter, segment sales totaled $1,500 million, down from $2,341 million in the prior-year period. We expected segment sales to decline 37.6% year over year to $1,461.2 million in the quarter.
Adjusted EBITDA came in at $270 million, significantly down from $912 million a year ago.
Financial Highlights
As of Jun 30, 2023, Weyerhaeuser had cash and cash equivalents of $1,095 million, down from $1,581 million at 2022-end but up from $797 million at March 2023-end. Long-term debt was $4,817 million at the quarter-end, up from $4,071 million at 2022-end and from $4,072 million at March 2023-end.
Net cash from operations was $496 million for the second quarter, down from $1,146 million a year ago but up from $126 million in the prior quarter.
Q3 Outlook
For the Timberland segment, the company expects earnings (before special items) and adjusted EBITDA to be $25 million low sequentially. In the West, it anticipates moderately lower sales realizations and fee harvest volumes, partially offset by improved per-unit log and haul costs. For the Southern region, the company expects slightly lower sales realizations, with fee harvest volumes and per unit log and haul costs expected to remain on par from the second quarter.
In the Real Estate, Energy and Natural Resources segment, Weyerhaeuser expects earnings to be sequentially higher. Adjusted EBITDA is likely to be approximately $20 million higher than the second quarter, thanks to the timing and mix of sales. The company still expects 2023 adjusted EBITDA of approximately $300 million and expects basis as a percentage of real estate sales to be 35% to 40% for the year.
Within the Wood Products segment, Weyerhaeuser projects a substantial increase in third-quarter earnings and adjusted EBITDA compared to the second quarter, primarily driven by improved average sales prices for lumber and oriented strand board or OSB. However, when excluding the impact of these factors, the company foresees that its third-quarter financial results will be slightly lower than those of the second quarter.
Regarding lumber, the company expects a moderate rise in sales volumes, along with a decline in log costs and slightly reduced unit manufacturing costs. As for OSB, Weyerhaeuser anticipates comparable sales volumes and fiber costs but slightly higher unit manufacturing costs. Turning to engineered wood products, the company foresees a slight increase in sales volumes. However, it expects slightly lower sales realizations and faces higher raw material costs, primarily attributable to oriented strand board webstock.
Zacks Rank
Currently, WY sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Recent Construction Releases
Masco Corporation (MAS - Free Report) reported strong earnings for second-quarter 2023. The bottom line surpassed the Zacks Consensus Estimate and increased from the prior year. Strong pricing actions and operational efficiency helped it deliver solid results.
Masco’s quarterly net sales topped the consensus mark but declined on a year-over-year basis. The benefits received from pricing actions were more than offset by lower volumes.
Otis Worldwide Corporation’s (OTIS - Free Report) second-quarter 2023 earnings and sales surpassed the Zacks Consensus Estimate. Its quarterly results reflected 11th consecutive quarters of organic sales growth and solid operating margin expansion contributing to mid-single digit adjusted earnings per share growth.
The company remains focused on strong portfolio growth and generating a solid New Equipment backlog. It also intends to expand operating margins, return cash to shareholders through a capital-allocation strategy and pursue additional progress toward ESG goals.
Armstrong World Industries, Inc. (AWI - Free Report) reported mixed results for second-quarter 2023, wherein earnings surpassed the Zacks Consensus Estimate, but net sales missed the same. Both metrics increased on a year-over-year basis.
AWI’s results were backed by robust growth in operating income and adjusted EBITDA, as well as expanded margins, fueled by positive performances from both the Mineral Fiber and Architectural Specialties segments. The company remain focused on advancing digital and healthy spaces initiatives and pursuing attractive, bolt-on acquisitions.