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Weyerhaeuser (WY) Q4 Earnings Beat, Adjusted EBITDA Falls

Weyerhaeuser Company’s WY shares inched up 0.21% in the after-hour trading session on Jan 26 after it reported fourth-quarter 2022 results. Although its earnings beat the Zacks Consensus Estimate, the same declined from the year-ago period's levels.

The quarter’s performance reflects strong execution across the businesses, which was offset by macroeconomic headwinds, supply chain disruptions and dynamic market conditions.

On an impressive note, the company unveiled a 90 cents per share supplemental dividend.

Pertaining to the result, Devin W. Stockfish, president and chief executive officer of Weyerhaeuser, said, “Our teams drove continued improvements across each of the value levers of our investment thesis in 2022. Notably, we grew our timberlands holdings through a strategic acquisition in the Carolinas, captured additional operational excellence improvements, announced our first two carbon capture and storage agreements and joined the Climate Pledge. We also increased our base dividend by 5.9 percent, repurchased $550 million of our shares and refinanced $900 million of debt. Entering 2023, 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 shareholders through our unrivaled portfolio, industry-leading performance, strong ESG foundation and disciplined capital allocation.”

Inside the Headlines

In the fourth quarter, the company reported adjusted earnings of 24 cents per share, beating the consensus mark of 18 cents by 33.3%. The bottom line, however, decreased 51% from the year-ago reported figure of 49 cents per share.

Weyerhaeuser Company Price, Consensus and EPS Surprise

 

Weyerhaeuser Company Price, Consensus and EPS Surprise
Weyerhaeuser Company Price, Consensus and EPS Surprise

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

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Net sales for the quarter came in at $1,823 million, missing the consensus mark of $1,883 million by 3.2% and declining 17.4% from $2,206 million reported in the prior-year quarter.

Adjusted EBITDA came in at $369 million, down 45.3% from $674 million in the year-ago period.

Segment Details

Timberlands: Net sales (including inter-segment sales of $111 million) from the segment came in at $548 million, down from the year-ago figure of $565 million. Adjusted EBITDA came in at $150 million, down from $176 million in the year-ago quarter.

Real Estate, Energy and Natural Resources: For the reported quarter, the segment’s net sales amounted to $55 million, down from $59 million a year ago. Adjusted EBITDA came in at $46 million, reflecting a decline from $49 million reported in the year-ago level.

Wood Products: For the fourth quarter, segment sales totaled $1,331 million, down from $1,718 million in the prior-year period. Adjusted EBITDA came in at $197 million, significantly down from $517 million a year ago.

2022 Highlights

For the full year 2022, adjusted earnings came in at $3.02 per share, reflecting a decrease of 10.4% from $3.37 reported in 2021. Revenues were $10.18 billion versus $10.2 billion reported a year ago. The adjusted EDITDA of $3.65 billion increased by 10.7% from 2021.

Financial Highlights

As of Dec 31, 2022, Weyerhaeuser had cash and cash equivalents of $1.58 billion, up from $1.88 billion at 2021-end. Long-term debt was $4.07 billion at quarter-end, down from $5.099 billion at 2021-end.

Net cash from operations was $167 million for fourth-quarter and $$2,832 million for 2022, down from $494 million and $3,159 million reported in the respective year-ago period.

Q1 Outlook

For first-quarter 2023, the company expects earnings (before special items) and adjusted EBITDA in the Timberland segment to be slightly higher sequentially. In the West, the company expects fee harvest volumes to be significantly high from the fourth-quarter 2022.

Domestic sales realizations are expected to be significantly low owing to lower demand and per-unit log and haul costs are expected to be moderately lower sequentially. Fee harvest volumes, forestry and road costs and sales realizations in the South and North are expected to be slightly lower.

In the Real Estate, Energy and Natural Resources segment, Weyerhaeuser expects earnings to be $10 million higher sequentially. Adjusted EBITDA is likely to be $35 million higher than fourth-quarter 2022 thanks to the timing and mix of sales.

Within the Wood Products segment, the company predicts earnings and adjusted EBITDA to be moderately high sequentially (excluding the effect of changes in average sales realizations for lumber and oriented strand board).

2023 Guidance

For the year, fee harvest volume is approximately 35 million tons. South and West is likely to be moderately higher year over year, while North is expected to be slightly up from prior year. Real Estate, Energy and Natural Resources segment’s adjusted EBITDA is anticipated to be $300 million.

Interest expense is projected at nearly $270 million, the tax rate is expected to be in the range of 12-14% (excluding special items) and capital expenditure of $440 million compared with 2022.

Zacks Rank

Currently, WY carries a Zacks Rank #5 (Strong Sell).

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

A Few Recent Releases

KB Home KBH reported lackluster results in fourth-quarter fiscal 2022 (ended Nov 30, 2022). Both earnings and revenues lagged the Zacks Consensus Estimate.

On a year-over-year basis, both metrics increased on the back of measures undertaken to stimulate additional sales during the seasonally slower time frame.

RPM International Inc. RPM reported tepid results in second-quarter fiscal 2023 (ended Nov 30, 2022). Its earnings met the Zacks Consensus Estimate and sales missed the same. On a year-over-year basis, both metrics grew on strong segmental sales.

During the quarter, the company introduced the MAP 2025 operating improvement program and is ahead of targets so far in the fiscal second quarter.

Acuity Brands, Inc. AYI reported mixed first-quarter fiscal 2023 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. Earnings beat the consensus mark in four consecutive quarters, while revenues missed the estimate after beating the same for the third straight quarter.

Nevertheless, earnings and revenues increased on a year-over-year basis. The upside was backed by product vitality and service in its lighting and space businesses.

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