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; future 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; the expected cost, productivity and timing of the completion of a new wood products manufacturing facility; 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 and the potential impacts of U.S. trade policy; our expectations about our future opportunities in emerging carbon credit and carbon capture and storage markets and our 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; future 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; the expected timing of operational start-up and productivity of, and fourth quarter capital expenditure investment in, our new wood products manufacturing facility; 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 and the potential impacts of U.S. trade policy; our expectations about our future opportunities in emerging carbon credit and carbon capture and storage markets and our assumptions used in valuing incentive compensation and related expense.

Previous wording

Housing market conditions have remained mixed, with lower home sales and relatively steady building activity. Elevated mortgage interest rates, reduced affordability and weaker consumer confidence remain key factors influencing housing demand. Existing home inventory remains constrained in many markets due to the continued lock-in effect among homeowners with below-market mortgage rates. Inventories of unsold new homes have declined after reaching a cyclical peak in 2025. On a seasonally adjusted annual basis, as reported by the U.S. Census Bureau, housing starts for second quarter 2026 averaged 1.3 million units, a 5.0 percent decrease from first quarter 2026. Single-family starts averaged 902 thousand units in second quarter 2026, a 4.5 percent decrease from first quarter 2026. Multi-family starts averaged 445 thousand units in second quarter 2026, a 6.0 percent decrease from first quarter 2026. Single-family construction is a primary driver of our business compared to multi-family construction due to the amount of wood products used per unit. Sales of newly built single-family homes averaged a seasonally adjusted annual rate of 631 thousand units for second quarter 2026, a 1.4 percent increase from first quarter 2026, as builders continue to provide incentives to help offset affordability constraints and elevated buyer financing costs. Notwithstanding current macroeconomic uncertainty and potential impacts on housing demand, we continue to expect favorable long-term fundamentals for the U.S. housing construction market, supported by strong demographic trends, a prolonged period of underbuilding, and the need for additional housing supply.

Current wording

Housing market conditions have moderated, with lower home sales and slower building activity. Elevated mortgage interest rates, reduced affordability and weaker consumer confidence remain key factors influencing housing demand. Existing home inventory remains constrained in many markets due to the continued lock-in effect among homeowners with below-market mortgage rates. Inventories of unsold new homes have declined after reaching a cyclical peak in 2025. On a seasonally adjusted annual basis, as reported by the U.S. Census Bureau, housing starts for third quarter 2026 averaged 1.3 million units, a 3.9 percent decrease from second quarter 2026. Single-family starts averaged 878 thousand units in third quarter 2026, a 2.6 percent decrease from second quarter 2026. Multi-family starts averaged 415 thousand units in third quarter 2026, a 6.5 percent decrease from second quarter 2026. Single-family construction is a primary driver of our business compared to multi-family construction due to the amount of wood products used per unit. Sales of newly built single-family homes averaged a seasonally adjusted annual rate of 668 thousand units for third quarter 2026, a 2.4 percent increase from second quarter 2026, as builders leverage incentives to help offset affordability constraints and elevated buyer financing costs. Notwithstanding current macroeconomic uncertainty and potential impacts on housing demand, we continue to expect favorable long-term fundamentals for the U.S. housing construction market, supported by strong demographic trends, a prolonged period of underbuilding, and the need for additional housing supply.

Previous wording

Repair and remodeling expenditures increased 1.1 percent from first quarter 2026 to second quarter 2026, according to the Census Bureau Advance Retail Spending report. While there continues to be underlying demand due to growing home equity and the lock-in effect of lower mortgage rates compared to current rates, many homeowners have been more cautious in discretionary spending on large projects. Professionally built segments have continued to outpace do-it-yourself (DIY) activity, though both remain restrained due to subdued consumer confidence and elevated interest rates. Slower sales of existing homes have also contributed to muted activity as there is often an increase in upgrades and repairs before and after the sale of a home. Over the longer term, we expect this sector to return to historical growth trends driven by recent deferrals in repair and remodel spending, higher levels of home equity and an aging U.S. housing stock, with a median age of 46 years.

Current wording

Repair and remodeling expenditures increased 0.4 percent from second quarter 2026 to third quarter 2026, according to the Census Bureau Advance Retail Spending report. While there continues to be underlying demand due to growing home equity and the lock-in effect of lower mortgage rates compared to current rates, many homeowners have been more cautious in discretionary spending on large projects. Professionally built segments have continued to outpace do-it-yourself (DIY) activity, though both remain restrained due to subdued consumer confidence and elevated interest rates. Slower sales of existing homes have also contributed to muted activity as there is often an increase in upgrades and repairs before and after the sale of a home. Over the longer term, we expect this sector to return to historical growth trends driven by recent deferrals in repair and remodel spending, higher levels of home equity and an aging U.S. housing stock, with a median age of 46 years.

Previous wording

Currency exchange rates, available supply from other countries and trade policy affect our export businesses. In Japan, total housing starts decreased 2.7 percent year-to-date through May compared to the same period in 2025, while the key Post and Beam segment saw a 4.4 percent increase, partly reflecting a backlog of permit applications following more stringent building requirements that took effect April 1, 2025. Slowing demand has been partially offset by reduced lumber imports from Europe and lower inventories of European lumber in the Japanese market, while higher energy costs have had some negative impact on Japanese producers. In China, during fourth quarter 2025 regulators lifted the March 4, 2025 suspension of log imports from the U.S. As a result, Weyerhaeuser continues to re-establish its log export program to strategic customers in China.

Current wording

Currency exchange rates, available supply from other countries and trade policy affect our export businesses. In Japan, total housing starts increased 2.3 percent year-to-date through August compared to the same period in 2025, while the key Post and Beam segment saw an 8.2 percent increase, partly reflecting slight easing of the backlog of permit applications following more stringent building requirements that took effect April 1, 2025. Log demand continues to be influenced by reduced lumber imports from Europe and lower inventories of European lumber in the Japanese market, while higher energy costs have had some negative impact on Japanese producers. In China, during fourth quarter 2025 regulators lifted the March 4, 2025 suspension of log imports from the U.S. As a result, Weyerhaeuser continues to re-establish its log export program to strategic customers in China.

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 generally correlated with long-term interest rates, increased from 6.4 percent in first quarter 2026 to 6.5 percent in second quarter 2026, 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 discouraged many existing homeowners from selling, reducing inventories of existing homes for sale and supporting 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 generally correlated with long-term interest rates, increased from 6.5 percent in second quarter 2026 to 7.0 percent in third quarter 2026, according to economic data from Freddie Mac. Many builders have worked to offset higher mortgage rates through discounts, mortgage rate buydowns and modifying product offerings such as home sizes and finishes. Higher rates have also discouraged many existing homeowners from selling, reducing inventories of existing homes for sale and supporting 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 3.5 percent as of June 2026 compared to 3.3 percent as of March 2026. This rate is markedly down from prior periods of elevated inflation, although conflict in the Middle East has contributed to higher energy and fuel prices. While we can offset some of our costs that are affected by 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.

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 3.7 percent as of September 2026 compared to 3.5 percent as of June 2026. This rate is markedly down from prior periods of elevated inflation, although conflict in the Middle East has contributed to higher energy and fuel prices. While we can offset some of our costs that are affected by 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 decreased from 4.3 percent in first quarter 2026 to 4.2 percent in second quarter 2026. In May 2026, Weyerhaeuser finalized a new collective bargaining agreement (CBA) with members of the International Association of Machinists and Aerospace Workers union covering approximately 1,200 Wood Products and Timberlands employees across four lumber mills and a portion of our Western Timberlands operations in Washington and Oregon. The new agreement was finalized prior to the expiration date of the prior CBA, thus avoiding a work stoppage.

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 remained flat from second quarter 2026 at 4.2 percent in third quarter 2026.

Previous wording

Net sales decreased $17 million – 1 percent – primarily due to a $14 million decrease in Strategic Land Solutions net sales attributable to decreases in acres sold and average price per acre sold for our Climate Solutions business, as well as a $6 million decrease in Timberlands net sales to unaffiliated customers attributable to decreased Southern log sales volumes. These changes were partially offset by a $3 million increase in Wood Products net sales.

Current wording

Net sales increased $145 million – 8 percent – primarily due to a $157 million increase in Wood Products net sales attributable to increased sales realizations for structural lumber and sales volumes for complementary building products. This increase was partially offset by an $8 million decrease in Timberlands net sales to unaffiliated customers attributable to decreased Western log sales volumes and a $4 million decrease in Strategic Land Solutions net sales attributable to a decrease in average price per acre sold for our Real Estate business.

Previous wording

Operating income increased $45 million – 25 percent – primarily due to a $71 million increase in gain on sale of timberlands, partially offset by a $14 million decrease in consolidated gross margin (see discussion of components above).

Current wording

These changes were partially offset by a $53 million increase in consolidated gross margin (see discussion of components above).

Previous wording

Net earnings increased $148 million – 87 percent – primarily due to the $113 million increase in operating income discussed above and a $28 million increase in income tax benefit.

Current wording

Net earnings decreased $19 million – 24 percent – primarily due to the $23 million decrease in operating income discussed above and a $5 million decrease in income tax benefit, partially offset by an $8 million decrease in interest expense.

Previous wording

Net sales decreased $53 million – 1 percent – primarily due to a $120 million decrease in Wood Products net sales attributable to decreased sales realizations for oriented strand board and lower sales volumes for structural lumber, as well as a $32 million decrease in Timberlands net sales to unaffiliated customers attributable to lower Western and Southern log sales. These decreases were partially offset by a $99 million increase in Strategic Land Solutions net sales attributable to a $94 million conservation easement sale in our Climate Solutions business.

Current wording

Net sales increased $92 million – 2 percent – primarily due to a $95 million increase in Strategic Land Solutions net sales attributable to a $94 million conservation easement sale in our Climate Solutions business, as well as a $37 million increase in Wood Products net sales attributable to increased sales realizations for structural lumber and increased sales volumes and realizations for complementary building products. These increases were partially offset by a $40 million decrease in Timberlands net sales to unaffiliated customers attributable to decreased Western log sales.

Previous wording

Costs of sales decreased $22 million – 1 percent – primarily due to decreased sales volumes for structural lumber and engineered I-joists in our Wood Products segment, partially offset by an increase in Western and Southern freight costs in our Timberlands segment.

Current wording

Costs of sales increased $70 million – 2 percent – primarily due to an increase in Western and Southern freight costs in our Timberlands segment, as well as increased sales volumes for complementary building products, engineered solid section and softwood plywood in our Wood Products segment.

Previous wording

Net earnings increased $75 million – 86 percent – primarily due to the $45 million increase in operating income discussed above and a $27 million increase in income tax benefit.

Current wording

Net earnings increased $129 million – 52 percent – primarily due to the $90 million increase in operating income discussed above, as well as a $23 million increase in income tax benefit and a $14 million decrease in non-operating pension and other post-employment benefit costs.

Previous wording

Net sales to unaffiliated customers decreased $32 million – 4 percent – primarily due to a $23 million decrease in Western log sales attributable to a 6 percent decrease in sales realizations and a 1 percent decrease in sales volumes, as well as a $13 million decrease in Southern log sales attributable to a 5 percent decrease in sales volumes, partially offset by a 1 percent increase in sales realizations.

Current wording

Net sales to unaffiliated customers decreased $8 million – 2 percent – primarily due to a $9 million decrease in Western log sales attributable to a 12 percent decrease in sales volumes, partially offset by a 7 percent increase in sales realizations, as well as a $7 million decrease in stumpage and pay-as-cut timber sales attributable to decreased sales realizations and sales volumes. These decreases were partially offset by a $9 million increase in Southern log sales attributable to a 3 percent increase in sales realizations and sales volumes.

Previous wording

Costs of sales increased $18 million – 4 percent – primarily due to increased Western sales volumes, as well as an increase in Western and Southern freight costs.

Current wording

Costs of sales increased $9 million – 2 percent – primarily due to increased Southern sales volumes, as well as an increase in Western and Southern freight costs.

Previous wording

Net sales to unaffiliated customers decreased $6 million – 2 percent – primarily due to a $9 million decrease in Southern log sales attributable to a 6 percent decrease in sales volumes, partially offset by a 1 percent increase in sales realizations.

Current wording

Net sales to unaffiliated customers decreased $40 million – 4 percent – primarily due to a $32 million decrease in Western log sales attributable to a 5 percent decrease in sales volumes and a 2 percent decrease in sales realizations, as well as a $9 million decrease in stumpage and pay-as-cut timber sales attributable to decreased sales realizations and sales volumes.

Previous wording

Costs of sales increased $18 million – 2 percent – primarily due to an increase in Western and Southern freight costs, partially offset by decreased sales volumes.

Current wording

Costs of sales increased $27 million – 2 percent – primarily due to an increase in Western and Southern freight costs, partially offset by decreased sales volumes.

Previous wording

Operating income and net contribution to earnings increased $42 million – 48 percent – primarily due to a $71 million increase in gain on sale of timberlands, partially offset by the change in the components of gross margin, as discussed above.

Current wording

Operating income and net contribution to earnings increased $42 million – 16 percent – primarily due to a $129 million increase in gain on sale of timberlands, partially offset by the change in the components of gross margin, as discussed above.

Previous wording

Intersegment sales decreased $5 million – 3 percent – primarily due to a 10 percent decrease in sales realizations, partially offset by a 7 percent increase in sales volumes.

Current wording

Operating income and net contribution to earnings decreased $2 million – 3 percent – primarily due to the change in the components of gross margin, as discussed above.

Previous wording

Net sales increased $99 million – 40 percent – primarily due to a $94 million conservation easement sale in our Climate Solutions business, increases in acres sold and average price per acre sold for our Real Estate business, as well as increases in right-of-way easements, royalty income, and mineral asset sales for our Natural Resources business.

Current wording

Net sales increased $95 million – 27 percent – primarily due to a $94 million conservation easement sale in our Climate Solutions business, an increase in acres sold for our Real Estate business and increases in royalty income and mineral asset sales for our Natural Resources business. These changes were partially offset by a decrease in acres sold in our Climate Solutions business and a decrease in average price per acre sold for our Real Estate business.

Previous wording

Costs of sales decreased $6 million – 8 percent – primarily due to a decrease in acres sold for our Climate Solutions business, partially offset by an increase in acres sold for our Real Estate business.

Current wording

Costs of sales decreased $8 million – 8 percent – primarily due to a decrease in acres sold for our Climate Solutions business, partially offset by an increase in acres sold for our Real Estate business.

Previous wording

a $10 million increase in structural lumber sales attributable to a 12 percent increase in sales realizations, partially offset by a 9 percent decrease in sales volumes and

Current wording

a $120 million increase in structural lumber sales attributable to a 26 percent increase in sales realizations, partially offset by a 2 percent decrease in sales volumes;

Previous wording

a $42 million increase in complementary building products sales attributable to an increase in sales volumes and realizations across most products;

Current wording

a $21 million increase in complementary building products sales primarily attributable to increased sales volumes for steel and decking;

Previous wording

a $6 million increase in softwood plywood sales attributable to a 9 percent increase in sales realizations and a 4 percent increase in sales volumes.

Current wording

a $13 million increase in softwood plywood sales attributable to a 26 percent increase in sales realizations and a 5 percent increase in sales volumes;

Previous wording

a $12 million increase in engineered solid section sales attributable to a 7 percent increase in sales volumes;

Current wording

a $9 million increase in engineered solid section sales attributable to a 9 percent increase in sales volumes, partially offset by a 3 percent decrease in sales realizations;

Previous wording

a $25 million decrease in oriented strand board sales attributable to a 14 percent decrease in sales realizations, partially offset by a 2 percent increase in sales volumes;

Current wording

a $6 million increase in engineered I-joist sales attributable to a 14 percent increase in sales volumes, partially offset by a 4 percent decrease in sales realizations and

Previous wording

a $6 million decrease in medium density fiberboard sales attributable to a 9 percent decrease in sales volumes and a 2 percent decrease in sales realizations.

Current wording

These increases were partially offset by a $15 million decrease in other products produced sales primarily attributable to a decrease in wood chip sales realizations and volumes and a $2 million decrease in medium density fiberboard sales attributable to a 1 percent decrease in sales realizations.

Previous wording

Net sales decreased $120 million – 5 percent – primarily due to:

Current wording

Costs of sales increased $65 million – 5 percent – primarily due to increased sales volumes for complementary building products, engineered I-joists, engineered solid section and softwood plywood.

Previous wording

Operating income and net contribution to earnings decreased $39 million – 26 percent – primarily due to the change in the components of gross margin, as discussed above, partially offset by a $28 million product remediation insurance recovery recorded in first quarter 2026 (refer to Note 13: Other Operating Costs, Net).

Current wording

Net contribution to earnings increased $51 million – 268 percent – primarily due to the change in the components of gross margin, as discussed above, partially offset by a $29 million gain related to the sale of our Princeton lumber mill recorded in third quarter 2025 (refer to Note 13: Other Operating Costs (Income), Net).

Previous wording

a $39 million decrease in structural lumber sales attributable to a 7 percent decrease in sales volumes, partially offset by a 4 percent increase in sales realizations;

Current wording

an $81 million increase in structural lumber sales attributable to an 11 percent increase in sales realizations, partially offset by a 5 percent decrease in sales volumes;

Previous wording

a $24 million increase in complementary building products sales primarily attributable to increased sales volumes and realizations for steel;

Current wording

a $63 million increase in complementary building products sales primarily attributable to increased sales volumes and realizations for steel;

Previous wording

a $4 million increase in softwood plywood sales attributable to a 3 percent increase in sales realizations and a 2 percent increase in sales volumes.

Current wording

a $17 million increase in softwood plywood sales attributable to a 10 percent increase in sales realizations and a 3 percent increase in sales volumes and

Previous wording

a $6 million increase in engineered solid section sales attributable to a 6 percent increase in sales volumes, partially offset by a 4 percent decrease in sales realizations and

Current wording

a $15 million increase in engineered solid section sales attributable to a 7 percent increase in sales volumes, partially offset by a 4 percent decrease in sales realizations.

Previous wording

an $86 million decrease in oriented strand board sales attributable to a 20 percent decrease in sales realizations;

Current wording

an $81 million decrease in oriented strand board sales attributable to a 14 percent decrease in sales realizations;

Previous wording

a $19 million decrease in other products produced sales attributable to a decrease in wood chip sales realizations and volumes and a decrease in residual log sales volumes and

Current wording

a $34 million decrease in other products produced sales primarily attributable to a decrease in wood chip sales realizations and volumes and a decrease in residual log sales volumes;

Previous wording

a $6 million decrease in engineered I-joist sales attributable to a 5 percent decrease in sales volumes and a 2 percent decrease in sales realizations and

Current wording

a $16 million decrease in engineered I-joist sales attributable to a 5 percent decrease in sales realizations and a 1 percent decrease in sales volumes and

Previous wording

a $5 million decrease in medium density fiberboard sales attributable to a 13 percent decrease in sales volumes and a 4 percent decrease in sales realizations.

Current wording

an $8 million decrease in medium density fiberboard sales attributable to a 5 percent decrease in sales volumes and a 1 percent decrease in sales realizations.

Previous wording

Operating income increased $113 million – 32 percent – primarily due to a $129 million increase in gain on sale of timberlands, as well as a $28 million product remediation recovery recorded in first quarter 2026, partially offset by a $31 million decrease in consolidated gross margin (see discussion of components above).

Current wording

Net contribution to earnings increased $12 million – 9 percent – primarily due to the change in the components of gross margin, as discussed above, as well as a $28 million product remediation insurance recovery recorded in first quarter 2026, partially offset by 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 13: Other Operating Costs (Income), Net).

Previous wording

a $3 million increase in unallocated corporate function and variable compensation expense and

Current wording

a $9 million increase in unallocated corporate function and variable compensation expense.

Previous wording

Net charge to earnings increased $7 million – 9 percent – primarily due to an $8 million increase in the charge for elimination of intersegment profit in inventory and LIFO.

Current wording

Net charge to earnings increased $55 million – 28 percent – primarily due to a $27 million increase in other, net, primarily attributable to a $28 million decrease in insurance recoveries, as well as a $22 million increase in the charge for elimination of intersegment profit in inventory and LIFO.