WEYERHAEUSER CO

RESULTS OFOPERATIONS

In reviewing our results of operations, it is important to understand these terms:

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CONSOLIDATED RESULTS

Summary of Financial Results

Net sales decreased $2,510 million — 25 percent — primarily due to a $2,301 million decrease in Wood Products net sales to unaffiliated customers attributable to decreased sales realizations and sales volumes across most product lines, as well as a $204 million decrease in Timberlands net sales to unaffiliated customers attributable to decreased log sales realizations in the Western region.

Costs of sales decreased $572 million — 9 percent — primarily due to decreased sales volumes across most product lines and decreased raw material prices within our Wood Products segment, as well as decreased third-party log purchases within our Timberlands segment.

Operating Income

Operating income decreased $1,894 million — 61 percent — primarily due to a $1,938 million decrease in consolidated gross margin (see discussion of components above), partially offset by an $84 million gain on sale of timberlands (refer to Note 4: Timberland Acquisitions and Divestitures).

Net Earnings

Net earnings decreased $1,041 million — 55 percent — primarily due to the $1,894 million decrease in operating income discussed above.

This decrease was partially offset by:

TIMBE RLANDS

We report sales volumes and annual production data for our Timberlands segment in Our Business/What We Do/Timberlands.

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Net Sales and Net Contribution to Earnings for Timberlands

(1)

Other products include sales of seeds and seedlings from our nursery operations and wood chips.

Net Sales — Unaffiliated Customers

Net sales to unaffiliated customers decreased $204 million — 11 percent — primarily due to a $210 million decrease in Western log sales primarily attributable to a 20 percent decrease in sales realizations, partially offset by a $10 million increase in stumpage and pay-as-cut timber sales.

Intersegment Sales

Intersegment sales increased $11 million — 2 percent — primarily due to a 9 percent increase in sales volumes, partially offset by a 6 percent decrease in sales realizations.

Costs of sales decreased $50 million — 3 percent — primarily due to decreased Western third-party log purchases, partially offset by increased logging and hauling costs and increased sales volumes.

Operating income and net contribution to earnings decreased $40 million — 8 percent — primarily due to the change in the components of gross margin, as discussed above, partially offset by an $84 million gain on sale of timberlands recorded in fourth quarter 2023.

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REAL ESTATE, ENERGY AND NATURAL RESOURCES

We report acres sold and average price per acre for our Real Estate, Energy and Natural Resources segment in Our Business/What We Do/Real Estate, Energy and Natural Resources.

Net Sales and Net Contribution to Earnings for Real Estate, Energy and Natural Resources

The volume of real estate sales is a function of many factors, including the general state of the economy, demand in local real estate markets, the ability of buyers to obtain financing, the number of competing properties listed for sale, the seasonal nature of sales, the plans of adjacent landowners, our expectations of future price appreciation, the timing of harvesting activities and the availability of government and not-for-profit funding. In any period, the average price per acre sold will vary based on the location and physical characteristics of parcels sold.

Net sales decreased $5 million — 1 percent — primarily attributable to lower prices in our Energy and Natural Resources business, partially offset by an increase in acres sold.

Costs of sales increased $13 million — 12 percent — primarily attributable to an increase in acres sold.

Operating income and net contribution to earnings decreased $7 million — 3 percent — primarily attributable to the change in the components of gross margin, as discussed above, partially offset by a $10 million noncash impairment charge related to the planned divestiture of legacy coal assets in 2022 with no similar activity in 2023.

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WOOD PRODUCTS

We report sales volumes and annual production data for our Wood Products segment in Our Business/What We Do/Wood Products.

Net Sales and Net Contribution to Earnings for Wood Products

(1)

Other products produced sales include wood chips, other byproducts and third-party residual log sales from our Canadian Forestlands operations.

Net sales decreased $2,301 million — 29 percent — primarily due to:

Costs of sales decreased $467 million — 9 percent — primarily due to decreased sales volumes across most product lines, as well as decreased raw material prices.

Operating income and net contribution to earnings decreased $1,827 million — 72 percent — primarily due to the change in the components of gross margin, as discussed above.

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UNALLOCATED ITEMS

Unallocated items are gains or charges not related to, or allocated to, an individual operating segment. They include all or a portion of items such as:

Net Charge to Earnings for Unallocated Items

Net charge to earnings decreased by $240 million — 56 percent — primarily due to a $209 million decrease in non-operating pension and other post-employment benefit costs attributable to a $205 million pension settlement charge recorded in fourth quarter 2022 (refer to Note 8: Pension and Other Post-Employment Benefit Plans), as well as a $51 million increase in interest income and other attributable to interest earned on short-term investments held for a portion of the year in 2023 and an increase in the interest rate on our cash and investment accounts.

INTEREST EXPENSE

Our net interest expense incurred for the last two years was:

Interest expense increased by $10 million compared to 2022 primarily due to the May 2023 issuance of debt securities that increased our weighted average outstanding debt.

Refer to Note 11: Long-Term Debt, Net for further information.