Weyerhaeuser (WY) Q3 Earnings & Sales Top, Fall Y/Y, Stock Down

Weyerhaeuser Company WY reported third-quarter 2022 results, wherein earnings and revenues beat the Zacks Consensus Estimate but decreased from the year-ago period.

Shares of this largest private owner of timberlands dropped 2.5% in the after-hour trading session on Oct 27, 2022, after the earnings release.

The quarter performance reflects lower fee harvest volumes, domestic sales volumes, lower export sales realizations and volumes given due to softening demand and a reduction in export activity resulting from the work stoppage that commenced in mid-September.

Looking forward, Devin W. Stockfish, president and chief executive officer of Weyerhaeuser, said, “Although near-term market conditions have moderated, we maintain a constructive longer-term outlook for the demand fundamentals that support our businesses. Looking ahead, our balance sheet is exceptionally strong, and we are well positioned to navigate through a range of market conditions. We remain focused on serving our customers and driving long-term value for our shareholders through an unmatched portfolio of assets, industry-leading performance and disciplined capital allocation.”

Weyerhaeuser Company Price, Consensus and EPS Surprise

Weyerhaeuser Company Price, Consensus and EPS Surprise

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

Inside the Headlines

For the third quarter, the company reported adjusted earnings of 42 cents per share, beating the consensus mark of 41 cents by 2.4%. The bottom line, however, decreased from the year-ago adjusted figure of 60 cents per share.

Net sales for the quarter came in at $2,276 million, surpassing the consensus mark of $2,269 million by 0.3%. The figure, however, decreased 2.9% from $2,345 million reported in the prior-year quarter.

Adjusted EBITDA came in at $583 million, down from $746 million in the year-ago period.

Segment Details

Timberlands: Net sales (including inter-segment sales of $133 million) from the segment came in at $574 million, up 4% from the year-ago figure of $552 million. Adjusted EBITDA came in at $168 million, up from $165 million in the year-ago quarter.

Real Estate, Energy and Natural Resources: For the third quarter, the segment’s net sales amounted to $68 million, down from $69 million a year ago. Adjusted EBITDA came in at $60 million, reflecting no change from the year-ago level.

Wood Products: For the third quarter, segment sales totaled $1,767 million, down from $1,853 million in the prior-year period. Adjusted EBITDA came in at $395 million, down from $565 million a year ago.

Financial Highlights

As of Sep 30, 2022, Weyerhaeuser had cash and cash equivalents of $1.92 billion, up from $1.88 billion at 2021-end. Long-term debt was $4.94 billion at quarter-end, down from $5.099 billion at 2021-end.

Net cash from operations was $562 million for third-quarter 2022, down from $659 million in the year-ago period.

Outlook

For fourth-quarter 2022, the company expects earnings (before special items) and adjusted EBITDA in the Timberland segment to be significant sequentially. In the West, the company expects fee harvest volumes to decline from the third quarter and expects lower sales volumes due to work stoppage.

Sales realizations are expected to be lower owing to lower demand, and per-unit log and haul costs are expected to be lower sequentially. Fee harvest volumes, forestry and road costs in the South are expected to be slightly higher, and sales realizations to be in-line sequentially.

In the Real Estate, Energy and Natural Resources segment, Weyerhaeuser expects earnings and adjusted EBITDA to be lower sequentially owing to the timing and mix of real estate sales. Also, lower royalty income from Energy and Natural Resources business adds to the negatives. Meanwhile, WY continues to expect an adjusted EBITDA of $325 million for 2022. It expects EBITDA, as a percentage of real estate sales, to be 35% to 40% for 2022.

Within the Wood Products segment, the company predicts earnings and adjusted EBITDA to decline sequentially.

Zacks Rank

Weyerhaeuser currently carries a Zacks Rank #3 (Hold).

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

A Few Recent Construction Releases

United Rentals, Inc. URI reported third-quarter 2022 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. The company has been gaining from the sustained demand in its end markets and the strength of its core rental business.

URI also lifted its full-year guidance for total revenues and adjusted EBITDA, given broad-based end-market activity, contractor backlogs, customer sentiment and solid visibility.

Otis Worldwide Corporation OTIS reported mixed results in third-quarter 2022. Its earnings surpassed the Zacks Consensus Estimate and rose on a year-over-year basis. However, sales declined from the year-ago quarter’s figure and lagged the consensus mark.

For 2022, OTIS expects adjusted net sales to be within $13.4-$13.5 billion, lower than the $13.6-$13.8 billion projected earlier. Adjusted earnings per share are anticipated to be $3.11-$3.15, suggesting 5-7% year-over-year growth. This is down from the prior projection of $3.17-$3.21 per share.

PulteGroup Inc. PHM reported unimpressive results in third-quarter 2022. Quarterly earnings and revenues missed their respective Zacks Consensus Estimate thanks to prevailing industry headwinds. Nonetheless, the metrics increased on a year-over-year basis.

For fourth-quarter 2022, PHM expects ASP within $560,000-$570,000, indicating an increase from $490,000 registered a year ago. It expects home deliveries to be 8,000, indicating a decline from 8,611 homes delivered a year ago. The decrease reflects the challenging sales environment, higher cancelation rates and the ongoing impact of Hurricane Ian on Florida operations.

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