Weyerhaeuser
Company
(
WY
) reported its financial results for the first quarter 2012 on
April 27. Earnings per share were 2 cents and excluded 6 cents (or
$32 million) after-tax gains from special items. Results surpassed
both the year-ago results and the Zacks Consensus Estimate, that
stood at a break-even level.
Revenue
Net sales from continuing operations in the quarter improved
roughly 5.1% year over year to $1,494 million. Revenue, however,
failed to meet the Zacks Consensus Estimate of $1,532 million.
In the first quarter, Timberland revenue increased 8.7% year
over year to $250 million and accounted for 16.7% of the total
revenue. Revenue from Wood Products was up 20.5% to $634 million
and represented 42.4% of total revenue.
Revenue generated from Cellulose Fibers, roughly 31.7% of total
revenue, decreased 6.5% to $473 million, while Real Estate with
about 9.1% of total revenue, decreased 14.4% to $137 million.
Margins
Cost of goods sold increased 9.6% year over year and represented
86.3% of total revenue. Selling, general and administrative
expenses were 10.0% of revenue and down 12.8% over the year-ago
quarter. Research and development expenses were flat year over year
at $7.0 million.
Operating income plummeted drastically to $101 million from $236
million in the year-ago quarter. Margins in the quarter stood at
6.8%.
Balance Sheet
Exiting the first quarter, Weyerhaeuser had cash and cash
equivalents (Forest Products and Real Estate) of approximately $728
million versus $953 million in the previous quarter. Long-term debt
was approximately $4,309 million down compared with $4,466 million
in the previous quarter.
Cash Flow
Net cash used by operating activities in the first quarter
decreased to $60 million from $87 million in the year-ago quarter.
Capital expenditure jumped 54.3% year over year to $54 million.
Cash dividends paid stood at $81 million while share repurchase
activities were nil in the quarter.
Outlook:
For the second quarter of 2012, management anticipates that
Timberlands earnings would be higher sequentially, attributable to
higher domestic prices for western logs and higher sales. However,
fuel costs and silviculture expenses are expected to be higher in
the quarter.
For the Wood Products segment, break-even results are
anticipated along with selling prices improvement for lumber and
higher volumes for all product lines.
For the Cellulose Fibers segment, management expects higher
selling prices for pulp, offset slightly by higher maintenance
costs to result in sequential improvement in earnings. For the Real
Estate segment, management anticipates that there could be
small loss from single-family homebuilding operations while
expecting slight profits to be generated in the segment.
Weyerhaeuser is one of the leading U.S. forest product
companies, primarily engaged in growing and harvesting timber;
manufacture, distribution, and sale of forest products; besides
real estate development and construction.The company faces
competition from
International Paper Co.
(
IP
) and
Louisiana-Pacific Corp.
(
LPX
).
We are currently maintaining a Neutral recommendation on
Weyerhaeuser.
INTL PAPER (
IP
): Free Stock Analysis Report
LOUISIANA PAC (
LPX
): Free Stock Analysis Report
WEYERHAEUSER CO (
WY
): Free Stock Analysis Report
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