WEYERHAEUSER CO

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

CONSOLIDATED RESULTS

Summary of Financial Results

Net sales decreased $219 million — 3 percent — primarily due to a $264 million decrease in Wood Products net sales attributable to decreased sales realizations across most product lines, as well as an $18 million decrease in Timberlands net sales to unaffiliated customers attributable to decreased log sales realizations and volumes in the Western region. These decreases were partially offset by a $63 million increase in Real Estate, Energy and Natural Resources net sales attributable to an increase in average price per acre sold.

Costs of sales increased $69 million — 1 percent — primarily due to increased sales volumes for structural lumber, oriented strand board and softwood plywood within our Wood Products segment, partially offset by a decrease in acres sold in our Real Estate, Energy and Natural Resources segment and decreased Western sales volumes in our Timberlands segment.

Operating Income

Operating income increased $46 million — 7 percent — primarily due to:

These changes were partially offset by:

Refer to the breakout of these items in Note 17: Other Operating Costs, Net.

Net Earnings

Net earnings decreased $72 million — 18 percent — primarily due to a $178 million increase in non-operating and other post-employment benefit costs, primarily attributable to a $145 million noncash pension settlement charge (refer to: Note 8: Pension and Other Post-Employment Benefit Plans), as well as a $31 million decrease in interest income and other. These changes were partially offset by a $95 million decrease in tax expense (refer to Income Taxes) and the $46 million increase in operating income discussed above.

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TIMBE RLANDS

We report sales volumes and fee harvest volumes for our Timberlands segment in Our Business/What We Do/Timberlands.

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 $18 million — 1 percent — primarily due to a $48 million decrease in Western log sales attributable to a 4 percent decrease in sales volumes and a 3 percent decrease in sales realizations. This decrease was partially offset by a $10 million increase in Southern log sales attributable to a 1 percent increase in sales volumes, as well as a $9 million increase in stumpage and pay-as-cut timber sales attributable to increased sales realizations and sales volumes.

Intersegment Sales

Intersegment sales increased $38 million — 7 percent — primarily due to a 3 percent increase in sales realizations, as well as a 3 percent increase in sales volumes.

Costs of sales decreased $22 million — 1 percent — primarily due to decreased Western sales volumes, partially offset by increased Southern sales volumes.

Net Contribution to Earnings

Net contribution to earnings increased $306 million — 109 percent — primarily due to a $266 million increase in gain on sale of timberlands (refer to Note 4: Timberland Acquisitions and Divestitures), as well as the change in the components of gross margin, as discussed above.

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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 (Real Estate & ENR) 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 will vary based on the location and physical characteristics of parcels sold.

Net sales increased $63 million — 16 percent — primarily due to an increase in average price per acre sold and an increase in right-of-way easements and royalty income from our Energy and Natural Resources business, partially offset by a decrease in acres sold.

Costs of sales decreased $35 million — 23 percent — primarily due to a decrease in acres sold.

Operating Income and Net Contribution to Earnings

Operating income and net contribution to earnings increased $99 million — 46 percent — primarily due to the change in the components of gross margin, as discussed above.

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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 $264 million — 5 percent — primarily due to:

These decreases were partially offset by a $131 million increase in structural lumber sales attributable to a 5 percent increase in sales volumes and a 1 percent increase in sales realizations, as well as a $5 million increase in other products produced sales attributable to an increase in wood chip sales volumes.

Costs of sales increased $158 million — 3 percent — primarily due to increased sales volumes for structural lumber, oriented strand board and softwood plywood.

Operating Income and Net Contribution to Earnings

Operating income and net contribution to earnings decreased $402 million — 88 percent — primarily due to the change in the components of gross margin, as discussed above, as well as a $25 million product remediation recovery recorded in second quarter 2024. These changes were partially offset by a $10 million noncash impairment charge related to the indefinite curtailment of our New Bern lumber mill recorded in third quarter 2024 and a $29 million gain related to the sale of our Princeton lumber mill recorded in third quarter 2025 (refer to the breakout of these items in Note 17: Other Operating Costs, Net).

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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 increased by $166 million — 65 percent — primarily due to:

These changes were partially offset by a $48 million decrease in other, net, primarily attributable to a $30 million increase in insurance recoveries, as well as a $7 million increase in the benefit from elimination of intersegment profit in inventory and LIFO.

INTEREST EXPENSE

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

Interest expense increased by $4 million compared to 2024 primarily due to $3 million of debt extinguishment costs incurred in conjunction with the partial redemption of our $750 million 4.75 percent senior unsecured notes due in May 2026, as well as a series of debt issuances and retirements in 2025 that increased our outstanding debt, partially offset by a decrease in our weighted average interest rate.

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