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Weyerhaeuser's (WY) Q3 Earnings Miss Estimates, Sales Beat

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Weyerhaeuser Company (WY - Free Report) reported mixed third-quarter 2019 results, wherein earnings missed the Zacks Consensus Estimate, while net sales beat the same.

The company’s reported earnings (before special items) of 8 cents missed the consensus mark of 10 cents by 20%. Moreover, the bottom line was significantly down from the year-ago figure of 28 cents.

Net sales during the quarter came in at $1,671 million, beating the consensus mark of $1,665 million by 0.4%. However, the reported figure was down 12.5% from $1,910 million in the prior-year quarter. Its two major segments reported significantly lower net sales on a year-over-year basis.

Segments Details

The company currently operates through three business segments, namely Timberlands; Real Estate, Energy and Natural Resources; and Wood Products.

Timberlands’ net sales (including inter-segment sales of $125 million) during the quarter came in at $523 million, declining 10.9% from the year-ago figure of $587 million. Lower average sales realizations for domestic and export logs, and seasonally lower domestic sales volumes in the West led to the decline. Average sales realizations also decreased sequentially in the South.

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) came in at $154 million, reflecting a decline of 25.2% from $206 million a year ago.

Net sales in Real Estate, Energy and Natural Resources were $69 million, decreasing 28.1% from $96 million reported in the year-ago period. Adjusted EBITDA also declined 30.2% to $60 million from $86 million a year ago.

Sales in the Wood Products segment totaled $1,204 million, representing a decrease of 11.1% from $1,355 million in the prior-year quarter. Adjusted EBITDA came in at $123 million, decreasing 50.8% from the year-ago figure of $250 million.

Weyerhaeuser Company Price, Consensus and EPS Surprise

Weyerhaeuser Company Price, Consensus and EPS Surprise

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

Operating Highlights

During the quarter, gross profit plunged more than 40% to $272 million from $458 million a year ago. Adjusted EBITDA was $308 million in the quarter, decreasing 39% from $505 million a year ago.

Financial Highlights

As of Sep 30, 2019, Weyerhaeuser had cash and cash equivalents of $153 million, down from $334 million at 2018-end. Long-term debt was $6,150 million versus $5,419 million at the end of 2018.

In the reported quarter, cash provided from operating activities was $292 million versus $87 million a year ago.

Q4 Guidance

For the fourth quarter, the company expects sequentially comparable earnings but anticipates adjusted EBITDA to be marginally lower at the Timberland segment.

Geographically, in the West, the company expects seasonally lower road and unit logging costs, and moderately higher average domestic sales realizations to be partially offset by reduced log sales volumes. In the South, the company anticipates lower fee harvest volumes and slightly lower average log sales realizations.

In the Real Estate, Energy and Natural Resources segment, it anticipates sequentially lower earnings and adjusted EBITDA for the fourth quarter. For full-year 2019, the segment’s adjusted EBITDA will be roughly $270 million.

In the Wood Products segment, it predicts earnings (before special items) and adjusted EBITDA to be down on a sequential basis but up on a year-over-year basis. Weyerhaeuser expects seasonally lower sales volumes across most product categories, higher Western log costs, and a modest improvement in other operating costs.

Zacks Rank

Weyerhaeuser — which shares space with Louisiana-Pacific Corporation (LPX - Free Report) and Trex Company, Inc. (TREX - Free Report) in the Zacks Building Products - Wood industry — currently carries a Zacks Rank #3 (Hold).

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

Peer Release

Universal Forest Products, Inc. (UFPI - Free Report) reported mixed results in third-quarter 2019, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. This marked the third straight quarter of earnings beat and the second consecutive quarter of revenue miss.

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