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Weyerhaeuser (WY) Q1 Earnings Top, Sales Miss, Mixed Q2 Views

Weyerhaeuser Company WY reported mixed first-quarter 2023 results, wherein its earnings handily beat the Zacks Consensus Estimate but net sales missed the same marginally.

On a year-over-year basis, the top and bottom lines declined. The quarter’s performance reflects strong execution across the businesses, offset by macroeconomic headwinds, supply chain disruptions and dynamic market conditions.

WY’s shares inched up 0.2% in the after-hours trading session on Apr 27, after the earnings release. Notably, the world's leading private owner of timberlands increased its base dividend by 5.6% to 19 cents per share (76 cents annually) from 18 cents (72 cents).

Devin W. Stockfish, president and chief executive officer of Weyerhaeuser, said, “Looking forward, we remain constructive on the longer-term demand fundamentals that will drive growth for our businesses, notwithstanding the current macroeconomic headwinds. Our financial position is exceptionally strong and we remain focused on driving operational excellence across our unmatched portfolio of assets and enhancing shareholder value through disciplined capital allocation."

Inside the Headlines

The company reported adjusted earnings of 21 cents per share, beating the consensus mark of 12 cents by 75% but decreasing 84% from the year-ago reported figure of $1.31 cents.

Net sales for the quarter came in at $1.88 billion, missing the consensus mark of $1.895 billion by 0.7% and declining 39.6% from the $3.11 billion reported in the prior-year quarter.

Adjusted EBITDA came in at $395 million, significantly down from $1,497 million in the year-ago period.

Segment Details

Timberlands: Net sales (including inter-segment sales of $142 million) from the segment came in at $604 million, down from the year-ago figure of $626 million. Adjusted EBITDA came in at $188 million, down from $247 million in the year-ago quarter.

Real Estate, Energy and Natural Resources: For the reported quarter, the segment’s net sales amounted to $101 million, down from $128 million a year ago. Adjusted EBITDA came in at $89 million, reflecting a decline from $116 million reported in the year-ago level.

Wood Products: For the first quarter, segment sales totaled $1,318 million, down from $2,519 million in the prior-year period. Adjusted EBITDA came in at $148 million, significantly down from $1,233 million a year ago.

Financial Highlights

As of Mar 31, 2023, Weyerhaeuser had cash and cash equivalents of $797 million, down from $1.88 billion at 2022-end and $1.2 billion at March 2022-end. Long-term debt was $4.07 billion at quarter-end, in line with 2022-end and down from $5.05 billion at March 2022-end.

Net cash from operations was $126 million for first-quarter and $957 million in the respective year-ago period.

Q2 Outlook

For the Timberland segment, the company expects earnings (before special items) and adjusted EBITDA to be $20 million low sequentially. In the West, it anticipates moderately lower sales realizations, partially offset by significantly low per-unit log and haul costs as well as slightly high fee harvest volumes. In the South, sales realizations and per-unit log and haul costs are likely to be slightly low, while fee harvest volumes are projected to be comparable. Forestry and road costs in the South and North are expected to be seasonally higher.

In the Real Estate, Energy and Natural Resources segment, Weyerhaeuser expects earnings to be sequentially comparable. Adjusted EBITDA is likely to be $20 million lower than first-quarter, thanks to the timing and mix of sales.

Within the Wood Products segment, the company predicts earnings and adjusted EBITDA to be moderately higher, sequentially (excluding the effect of changes in average sales realizations for lumber and oriented strand board or OSB). WY anticipates comparable sales volumes, slightly lower fiber costs and moderately higher unit manufacturing costs for OSB. Sales volumes are likely to be significantly higher and raw material costs are projected to be moderately low for most engineered wood products, partially offset by slightly lower sales.

Zacks Rank & Recent Construction Releases

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.

Otis Worldwide Corporation OTIS started 2023 on a solid note. The company’s first-quarter 2023 earnings and sales surpassed the Zacks Consensus Estimate. Its quarterly results reflected 10th consecutive quarters of organic sales growth, along with solid Service performance, contributing to mid-single digit adjusted earnings per share growth.

Otis remains focused on strong portfolio growth and generating a solid New Equipment backlog. It also intends to expand operating margins, return cash to shareholders through a capital-allocation strategy and pursue additional progress toward ESG goals.

United Rentals, Inc. URI reported first-quarter 2023 results. Its earnings missed the Zacks Consensus Estimate, but revenues beat the same. Nonetheless, on a year-over-year basis, earnings and revenues increased, courtesy of sustained demand in its end markets and the strength of its core rental business.

URI also reaffirmed its 2023 guidance, given broad-based end-market activity, contractor backlogs, customer sentiment and solid visibility. Also, it unveiled a quarterly dividend of $1.48 per share with an annualized yield of approximately 0.4%. The company also repurchased $250 million of stock under its existing $1.25 billion share repurchase program.

Masco Corporation MAS reported better-than-expected results for first-quarter 2023. The top and bottom lines surpassed the Zacks Consensus Estimate. The company has been benefiting from strong pricing actions and operational improvements.

On the other hand, MAS’ adjusted earnings and net sales declined on a year-over-year basis due to supply-chain challenges and inflation headwinds.

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