WEYERHAEUSER CO

Previous wording

This report contains statements concerning our future results and performance that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include, without limitation, statements relating to: our expected future financial and operating performance; our plans, strategies, intentions and expectations; our capital structure and the sufficiency of our liquidity position to meet future cash requirements; our cash dividend framework, including our target percentage return to shareholders of Adjusted Funds Available for Distribution, including expected supplemental cash dividends and/or future share repurchases; compliance with covenants in our debt agreements; our expectations concerning our contingent liabilities and the sufficiency of related reserves and accruals including, but not limited to, cost estimates of future litigation and environmental remediation; our provision for income taxes; expected capital expenditures; expected returns on pension plan assets; expected market and general economic conditions, including related influencing factors such as the trajectory of U.S. housing construction activity, repair and remodel activity, inflation trends and interest rates; our expected lumber production operating rates in fourth quarter 2024; our expectations about our future opportunities in emerging carbon credit and carbon capture and storage markets and assumptions used in valuing incentive compensation and related expense.

Current wording

This report contains statements concerning our future results and performance that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include, without limitation, statements relating to: our expected future financial and operating performance; our plans, strategies, intentions and expectations; our capital structure and the sufficiency of our liquidity position to meet future cash requirements; our cash dividend framework, including our target percentage return to shareholders of Adjusted Funds Available for Distribution, including expected supplemental cash dividends and/or future share repurchases; compliance with covenants in our debt agreements; our expectations concerning our contingent liabilities and the sufficiency of related reserves and accruals including, but not limited to, cost estimates of future litigation and environmental remediation; our provision for income taxes; expected capital expenditures; estimated returns on pension plan assets; expected market and general economic conditions, including related influencing factors such as the trajectory of U.S. housing construction activity, repair and remodel activity, inflation trends and interest rates; our expectations about our future opportunities in emerging carbon credit and carbon capture and storage markets; assumptions used in valuing incentive compensation and related expense and the expected effects of U.S. international trade policy.

Previous wording

restrictions on international trade and tariffs imposed on imports or exports;

Current wording

U.S. trade policy and resulting restrictions on international trade and tariffs imposed on imports or exports;

Previous wording

Our market conditions and the strength of the broader U.S. economy are, and will continue to be, influenced by the trajectory of activity in the U.S. housing and repair and remodel segments, inflation trends and interest rates. The demand for sawlogs within our Timberlands segment is directly affected by domestic production of wood-based building products. The strength of the U.S. housing market, particularly new residential construction, strongly affects demand in our Wood Products segment, as does repair and remodeling activity. Seasonal weather patterns impact the level of construction activity in the U.S., which in turn affects demand for our logs and wood products. Our Timberlands segment, specifically the Western region, is also affected by export demand and trade policy. Japanese housing starts are a key driver of export log demand in Japan. The demand for pulpwood from our Timberlands segment is directly affected by the production of pulp, paper and oriented strand board (OSB), as well as the demand for biofuels, such as wood-burning pellets made from pulpwood. Our Timberlands segment is also influenced by the availability of harvestable timber. In general, Western log markets are highly tensioned by available supply, while Southern log markets have more available supply. However, additional mill capacity being added in the U.S. South has led to tightening of markets in certain geographies. Our Real Estate, Energy and Natural Resources segment is affected by a variety of factors, including the general state of the economy, local real estate market conditions, the level of construction activity in the U.S. and evolution of emerging renewable energy and carbon-related markets.

Current wording

Our market conditions and the strength of the broader U.S. economy are, and will continue to be, influenced by the trajectory of activity in the U.S. housing and repair and remodel segments, inflation trends and interest rates. The demand for sawlogs within our Timberlands segment is directly affected by domestic production of wood-based building products. The strength of the U.S. housing market, particularly new residential construction, strongly affects demand in our Wood Products segment, as does repair and remodeling activity. Seasonal weather patterns impact the level of construction activity in the U.S., which in turn affects demand for our logs and wood products. Our Timberlands segment, particularly the Western region, is also affected by export demand and trade policy. Japanese housing starts are a key driver of export log demand in Japan. The demand for pulpwood from our Timberlands segment is directly affected by the production of pulp, paper and oriented strand board (OSB), as well as the demand for biofuels, such as wood-burning pellets made from pulpwood. Our Timberlands segment is also influenced by the availability of harvestable timber. In general, Western log markets are highly tensioned by available supply, while Southern log markets have more available supply. However, additional mill capacity being added in the U.S. South has led to tightening of markets in certain geographies. Our Real Estate, Energy and Natural Resources segment is affected by a variety of factors, including the general state of the economy, local real estate market conditions, the level of construction activity in the U.S. and evolution of emerging renewable energy and carbon-related markets.

Previous wording

Over the past year, home sales and building activity moderated in part due to continued elevated mortgage interest rates, reduced affordability and general macroeconomic conditions. Specifically, multi-family construction has been hampered by a large supply of recently completed projects as well as higher interest rates and other factors constraining the underwriting of proposed projects. In contrast, new single-family home construction has remained resilient, as existing homeowners continued to be constrained by the lock-in effect of lower mortgage rates. On a seasonally adjusted annual basis, as reported by the U.S. Census Bureau, housing starts for third quarter 2024 averaged 1.3 million units, a 1.1 percent decrease from second quarter 2024. Single-family starts averaged 1.0 million units in third quarter 2024, a 4.1 percent decrease from second quarter 2024. Multi-family starts averaged 363 thousand units in third quarter 2024, which was a 7.9 percent increase from second quarter 2024. Single-family construction is the primary driver for our business as compared to multi-family due to the amount of wood products used. Sales of newly built, single-family homes averaged a seasonally adjusted annual rate of 724 thousand units for third quarter 2024, an increase of 4.5 percent from second quarter 2024, supported by builder mortgage rate buydowns and other incentives. Over the medium to long-term, we expect a favorable U.S. housing construction market supported by strong demographics in the key home buying age cohorts, a decade of under building and historically low housing inventory.

Current wording

Home sales and building activity have continued at a moderated pace in response to elevated mortgage interest rates, reduced affordability and lower consumer confidence. New single-family home construction remained generally resilient in the first quarter, as existing homeowners continued to be constrained by the lock-in effect of lower mortgage rates compared to current rates, keeping inventories of existing homes relatively low. Multi-family construction remains more muted given the elevated supply of recently completed projects in conjunction with higher interest rates and other factors constraining the underwriting of proposed projects. On a seasonally adjusted annual basis, as reported by the U.S. Census Bureau, housing starts for first quarter 2025 averaged 1.4 million units, a 0.1 percent increase from fourth quarter 2024. Single-family starts averaged 1.0 million units in first quarter 2025, a 0.5 percent decrease from fourth quarter 2024. Multi-family starts averaged 381 thousand units in first quarter 2025, a 1.8 percent increase from fourth quarter 2024. Single-family construction is the primary driver for our business as compared to multi-family due to the amount of wood products used. Sales of newly built, single-family homes averaged a seasonally adjusted annual rate of 684 thousand units for first quarter 2025, an increase of 1.6 percent from fourth quarter 2024, supported by a moderate decrease in mortgage rates in March. Notwithstanding current macroeconomic uncertainty and potential impacts to housing demand, we expect a favorable U.S. housing construction market over the medium to long-term, supported by strong demographics in the key home buying age cohorts, a decade of under building and historically low housing inventory.

Previous wording

Repair and remodeling expenditures increased by 1.8 percent from second quarter 2024 to third quarter 2024 according to the Census Bureau Advance Retail Spending report. While there continues to be steady demand due to growing home equity and the lock-in effect of having lower mortgage rates compared to current rates, many homeowners have become more cautious in discretionary spending on large projects. Additionally, some repair and remodeling activity was accelerated during the pandemic which has had some impact on the level of spending. This softness has been reflected in both the do-it-yourself (DIY) and professionally built segments. Over the longer term, we expect this sector to resume pre-pandemic growth trends with healthy household balance sheets, elevated home equity and an aging U.S. housing stock, with a median age of 42 years.

Current wording

Repair and remodeling expenditures decreased by 1.6 percent from fourth quarter 2024 to first quarter 2025 according to the Census Bureau Advance Retail Spending report. While there continues to be steady demand due to growing home equity and the previously mentioned lock-in effect, many homeowners have been more cautious in discretionary spending on large projects. This softness has been reflected in both the do-it-yourself (DIY) and professionally built segments. Over the longer term, we expect this sector to return to historical growth trends driven by recent deferrals in repair and remodel spending, elevated home equity and an aging U.S. housing stock, with a median age of 45 years.

Previous wording

Currency exchange rates, available supply from other countries and trade policy affect our export businesses. During third quarter 2024, end use demand in export markets moderated. In Japan, total housing starts decreased 4.0 percent year to date through August compared to the same period in 2023, while the key Post and Beam segment saw a 5.0 percent decrease. Lumber imports to Japan from Europe increased, which placed some pressure on log sales. China’s weaker end-use demand for logs and lumber led to a decrease in pricing for logs from the West.

Current wording

Currency exchange rates, available supply from other countries and trade policy affect our export businesses. During first quarter 2025, end use demand in export markets moderated. In Japan, total housing starts decreased 1.1 percent year to date through February compared to the same period in 2024, while the key Post and Beam segment saw a 2.1 percent decrease. The slowing demand was partially offset by a decrease in lumber imports to Japan from Europe and reduced inventories of European lumber in the Japanese market. In China, log demand moderated in the quarter in response to reduced consumption during the Lunar New Year holiday. In early March, Chinese regulators announced an immediate suspension of log imports from the U.S.

Previous wording

Interest rates affect our business primarily through their impact on mortgage rates and housing affordability, their general impact on the economy and their influence on our capital management activities. Actions by the U.S. Federal Reserve, the overall condition of the economy and fluctuations in financial markets are all factors that influence long-term interest rates. 30-year mortgage rates, which are correlated with long-term interest rates, decreased from 6.9 percent in second quarter 2024 to 6.1 percent in third quarter 2024, according to economic data from Freddie Mac. Many builders have been able to offset higher mortgage rates through discounts, mortgage rate buydowns and modifying product offerings such as home sizes and finishes. Higher rates have also locked-in many existing homeowners from selling, reducing inventories of existing homes for sale which has led to increased demand for available new homes.

Current wording

Interest rates affect our business primarily through their impact on mortgage rates and housing affordability, their general impact on the economy and their influence on our capital management activities. Actions by the U.S. Federal Reserve, the overall condition of the economy and fluctuations in financial markets are all factors that influence long-term interest rates. 30-year mortgage rates, which are correlated with long-term interest rates, decreased from 6.9 percent in fourth quarter 2024 to 6.7 percent in first quarter 2025, according to economic data from Freddie Mac. Many builders have been able to offset higher mortgage rates through discounts, mortgage rate buydowns and modifying product offerings such as home sizes and finishes. Higher rates have also locked-in many existing homeowners from selling, thereby reducing inventories of existing homes for sale which has led to demand for available new homes.

Previous wording

Increased inflation affects the cost of our operations across each of our business segments, including costs for raw materials, transportation, energy and labor. The Consumer Price Index increased at an annual rate of 2.4 percent as of September 2024 compared to 3.0 percent in June 2024. This rate is markedly down from its peak of over 9.0 percent in June 2022. While we can offset some of the impacts of inflation through our sales activities, operational excellence initiatives and procurement practices, not all costs associated with inflation can be fully mitigated or passed on to the consumer.

Current wording

Increased inflation affects the cost of our operations across each of our business segments, including costs for raw materials, transportation, energy and labor. The Consumer Price Index increased at an annual rate of 2.4 percent as of March 2025 compared to 2.9 percent in December 2024. This rate is markedly down from its peak of over 9.0 percent in June 2022. While we can offset some of the impacts of inflation through our sales activities, operational excellence initiatives and procurement practices, not all costs associated with inflation can be fully mitigated or passed on to the customer.

Previous wording

The condition of the labor market affects all of our businesses as it relates to our ability to attract and retain employees and contractors. The unemployment rate remained flat at 4.1 percent from second quarter 2024 to third quarter 2024.

Current wording

The condition of the labor market affects all of our businesses as it relates to our ability to attract and retain employees and contractors. The unemployment rate increased slightly from 4.1 percent in fourth quarter 2024 to 4.2 percent in first quarter 2025.

Previous wording

Costs of sales decreased $7 million – 2 percent – primarily due to decreased sales volumes.

Current wording

Net sales decreased $33 million – 2 percent – primarily due to a $15 million decrease in Wood Products net sales attributable to decreased sales realizations across most product lines, partially offset by increased structural lumber sales, as well as a $13 million decrease in Real Estate & ENR net sales attributable to a decrease in acres sold.

Previous wording

Costs of sales decreased $153 million – 3 percent – primarily due to decreased sales volumes across most product lines in Wood Products, as well as decreased sales volumes in our Timberlands segment, partially offset by an increase in acres sold in Real Estate, Energy and Natural Resources.

Current wording

Costs of sales decreased $13 million – 1 percent – primarily due to a decrease in acres sold in our Real Estate & ENR segment, as well as decreased Western sales volumes and export log freight costs in our Timberlands segment, partially offset by increased structural lumber sales volumes in our Wood Products segment.

Previous wording

Operating income and net contribution to earnings decreased $5 million – 9 percent – primarily due to the change in the components of gross margin, as discussed above.

Current wording

Operating income decreased $17 million – 9 percent – primarily due to a $20 million decrease in consolidated gross income (see discussion of components above).

Previous wording

Operating income and net contribution to earnings decreased $21 million – 27 percent – primarily due to the change in the components of gross margin, as discussed above.

Current wording

Net earnings decreased $31 million – 27 percent – primarily due to the $17 million decrease in operating income discussed above, as well as an $11 million decrease in interest income and other and an $8 million increase in non-operating pension and other post-employment benefit costs. These changes were partially offset by a $4 million decrease in income tax expense.

Previous wording

Net sales to unaffiliated customers decreased $23 million – 6 percent – primarily due to an $18 million decrease in Western log sales attributable to a 7 percent decrease in sales volumes and a 4 percent decrease in sales realizations, as well as a $6 million decrease in Southern log sales attributable to a 3 percent decrease in sales volumes.

Current wording

Net sales to unaffiliated customers decreased $5 million – 1 percent – primarily due to a $7 million decrease in Western log sales attributable to a 2 percent decrease in sales volumes and sales realizations. This decrease was partially offset by a $1 million increase in Northern log sales attributable to a 10 percent increase in sales volumes, partially offset by a 3 percent decrease in sales realizations.

Previous wording

Net contribution to earnings decreased $84 million – 28 percent – primarily due to the change in the components of gross margin, as discussed above.

Current wording

Operating income and net contribution to earnings increased $22 million – 28 percent – primarily due to the change in the components of gross margin, as discussed above.

Previous wording

Net sales increased $19 million – 7 percent – primarily due to an increase in acres sold, partially offset by a decrease in average price per acre sold.

Current wording

Net sales decreased $13 million – 12 percent – primarily due to a decrease in acres sold, partially offset by an increase in average price per acre sold.

Previous wording

These decreases were partially offset by a $42 million increase in oriented strand board sales attributable to a 10 percent increase in sales realizations, partially offset by a 4 percent decrease in sales volumes.

Current wording

a $27 million decrease in oriented strand board sales attributable to a 12 percent decrease in sales realizations, partially offset by a 1 percent increase in sales volumes;

Previous wording

a $41 million decrease in engineered solid section sales attributable to a 13 percent decrease in sales volumes, as well as a 6 percent decrease in sales realizations;

Current wording

a $16 million decrease in engineered solid section sales attributable to a 6 percent decrease in sales realizations, as well as a 2 percent decrease in sales volumes;

Previous wording

a $76 million decrease in complementary building products sales attributable to decreased sales volumes across most products;

Current wording

a $16 million decrease in complementary building products sales attributable to decreased sales volumes across most products;

Previous wording

a $23 million decrease in Timberlands net sales to unaffiliated customers attributable to decreased sales volumes and sales realizations and

Current wording

an $11 million decrease in engineered I-joist sales attributable to a 5 percent decrease in sales volumes and sales realizations and

Previous wording

a $27 million decrease in engineered I-joists sales attributable to a 14 percent decrease in sales volumes, as well as an 8 percent decrease in sales realizations;

Current wording

a $7 million decrease in medium density fiberboard sales attributable to an 18 percent decrease in sales volumes, as well as a 2 percent decrease in sales realizations.

Previous wording

a $244 million decrease in structural lumber sales attributable to an 11 percent decrease in sales realizations, as well as a 4 percent decrease in sales volumes;

Current wording

These decreases were partially offset by a $63 million increase in structural lumber sales attributable to an 8 percent increase in sales realizations and a 5 percent increase in sales volumes.

Previous wording

Net sales decreased $341 million – 17 percent – primarily due to:

Current wording

Operating income and net contribution to earnings decreased $22 million – 17 percent – primarily due to the change in the components of gross margin, as discussed above.

Previous wording

Net charge to earnings increased $59 million – 48 percent – primarily due to a $15 million increase in unallocated corporate function and variable compensation expense and a $12 million decrease in interest income and other, primarily attributable to a decrease in our cash and short-term investment accounts.

Current wording

Net charge to earnings increased $32 million – 48 percent – primarily due to:

Previous wording

Interest expense decreased by $3 million compared to third quarter 2023 and decreased by $5 million compared to year-to-date 2023 primarily due to a series of debt issuances and retirements during 2023 that decreased our average outstanding debt.

Current wording

Interest expense decreased by $1 million compared to first quarter 2024 primarily due to debt retirements and a debt issuance in first quarter 2025 that slightly decreased our average outstanding debt and weighted average interest rate.

Previous wording

Our provision for income taxes is primarily driven by earnings generated by our TRSs. Income tax expense decreased by $63 million compared to year-to-date 2023 primarily due to a decrease in our TRS earnings in 2024, as well as a decrease in our estimated annual effective tax rate.

Current wording

Our provision for income taxes is primarily driven by earnings generated by our TRSs. Income tax expense decreased by $4 million compared to first quarter 2024 primarily due to a decrease in our overall earnings in first quarter 2025.

Previous wording

We are committed to maintaining an appropriate capital structure that provides financial flexibility and enables us to protect the interests of our shareholders and meet our obligations to our lenders, while also maintaining access to all major financial markets. As of September 30, 2024, we had $877 million in cash and cash equivalents and $1.5 billion of availability on our line of credit, which expires in March 2028. We believe we have sufficient liquidity to meet our cash requirements for the foreseeable future.

Current wording

We are committed to maintaining an appropriate capital structure that provides financial flexibility and enables us to protect the interests of our shareholders and meet our obligations to our lenders, while also maintaining access to all major financial markets. As of March 31, 2025, we had $560 million in cash and cash equivalents and $1.5 billion of availability on our line of credit, which expires in March 2028. We believe we have sufficient liquidity to meet our cash requirements for the foreseeable future.

Previous wording

Net cash from operations decreased $355 million primarily due to decreased cash flows from our business operations, as well as an $11 million increase in cash paid for income taxes.

Current wording

Net cash from operations decreased $54 million primarily due to decreased cash inflows from our business operations, as well as an $11 million increase in cash paid for income taxes.

Previous wording

We anticipate our capital expenditures for 2024 to be approximately $420 million. The amount we spend on capital expenditures could change.

Current wording

We anticipate our capital expenditures for 2025 to be approximately $440 million, excluding the investment in our Monticello engineered wood products facility. The amount we spend on capital expenditures could change.

Previous wording

Net cash from financing activities decreased $103 million primarily due to a $743 million decrease in net proceeds from issuance of long-term debt, partially offset by a $537 million decrease in cash used for payments of dividends, as well as a $118 million decrease in cash used for payments of long-term debt.

Current wording

a $299 million increase in net proceeds from issuance of long-term debt,

Previous wording

The decrease in dividends paid is primarily due to a supplemental dividend of $0.14 per share based on 2023 financial results for a total of $102 million paid in first quarter 2024 in comparison to a supplemental dividend of $0.90 per share based on 2022 financial results for a total of $660 million paid in first quarter 2023.

Current wording

The decrease in dividends paid is primarily due to a supplemental dividend of $0.14 per share based on 2023 financial results for a total of $102 million paid in first quarter 2024.

Previous wording

We repurchased 820,706 common shares for approximately $26 million (including transaction fees) during third quarter 2024 and 3,962,220 common shares for approximately $125 million (including transaction fees) during year-to-date 2024 under the 2021 Repurchase Program. During third quarter 2023, we repurchased 757,510 common shares for approximately $25 million (including transaction fees) and 3,562,944 common shares for approximately $110 million (including transaction fees) during year-to-date 2023 under the 2021 Repurchase Program. There were 11,564 unsettled shares (less than $1 million) as of September 30, 2024 and 13,866 unsettled shares (approximately $1 million) as of December 31, 2023. Refer to Note 4: Net Earnings Per Share and Share Repurchases for further information.

Current wording

We repurchased 845,049 common shares for approximately $25 million (including transaction fees) during first quarter 2025 under the 2021 Repurchase Program. During first quarter 2024, we repurchased 1,472,369 common shares for approximately $49 million (including transaction fees) under the 2021 Repurchase Program. There were no unsettled shares as of March 31, 2025 and 12,436 unsettled shares (less than $1 million) as of December 31, 2024. Refer to Note 4: Net Earnings Per Share and Share Repurchases for further information.

Previous wording

We use Adjusted EBITDA as a key performance measure to evaluate the performance of the consolidated company and our business segments. This measure should not be considered in isolation from, and is not intended to represent an alternative to, our results reported in accordance with U.S. generally accepted accounting principles (U.S. GAAP). However, we believe Adjusted EBITDA provides meaningful supplemental information for investors about our operating performance, better facilitates period to period comparisons and is widely used by analysts, lenders, rating agencies and other interested parties. Our definition of Adjusted EBITDA may be different from similarly titled measures reported by other companies. Adjusted EBITDA, as we define it, is operating income adjusted for depreciation, depletion, amortization, basis of real estate sold and special items.

Current wording

We use Adjusted EBITDA as a key performance measure to evaluate the performance of the consolidated company and our business segments. This measure should not be considered in isolation from, and is not intended to represent an alternative to, our results reported in accordance with U.S. generally accepted accounting principles (U.S. GAAP). However, we believe Adjusted EBITDA provides meaningful supplemental information for investors about our operating performance, better facilitates period to period comparisons and is widely used by analysts, lenders, rating agencies and other interested parties. Our definition of Adjusted EBITDA may be different from similarly titled measures reported by other companies, including those in our industry. Adjusted EBITDA, as we define it, is operating income adjusted for depreciation, depletion, amortization, basis of real estate sold and special items.

Previous wording

We use Adjusted Funds Available for Distribution (Adjusted FAD) to evaluate the company’s liquidity and measure cash generated during the period (net of capital expenditures and significant non-recurring items) that is available for dividends, repurchases of common shares, debt reduction, acquisitions and other discretionary and nondiscretionary capital allocation activities. Adjusted FAD should not be considered in isolation from, and is not intended to represent an alternative to, our results reported in accordance with U.S. GAAP. However, we believe the measure provides meaningful supplemental information for our investors about our liquidity. Adjusted FAD, as we define it, is net cash from operations adjusted for capital expenditures and significant non-recurring items. Our definition of Adjusted FAD may be different from similarly titled measures reported by other companies, including those in our industry. We reconcile Adjusted FAD to net cash from operations, as that is the most directly comparable U.S. GAAP measure.

Current wording

We use Adjusted Funds Available for Distribution (Adjusted FAD) to evaluate the company’s liquidity and measure cash generated during the period (net of capital expenditures and significant non-recurring items) that is available for dividends, repurchases of common shares, debt reduction, acquisitions and other discretionary and nondiscretionary capital allocation activities. Adjusted FAD should not be considered in isolation from, and is not intended to represent an alternative to, our results reported in accordance with U.S. GAAP. However, we believe the measure provides meaningful supplemental information for investors about our liquidity. Adjusted FAD, as we define it, is net cash from operations adjusted for capital expenditures and significant non-recurring items. Our definition of Adjusted FAD may be different from similarly titled measures reported by other companies, including those in our industry. We reconcile Adjusted FAD to net cash from operations, as that is the most directly comparable U.S. GAAP measure.

Previous wording

There have been no significant changes during year-to-date 2024 to the critical accounting estimates presented in our 2023 Annual Report on Form 10-K.

Current wording

There have been no material changes during first quarter 2025 to the critical accounting estimates presented in our 2024 Annual Report on Form 10-K.