WY's 4Q Beats Estimate - Analyst Blog

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Weyerhaeuser Company ( WY ) reported its financial results for the fourth quarter and fiscal year 2011 on February 3. Earnings per share were 14 cents and excluded 2 cents (or $12 million) from after-tax charges for special items. Results surpassed the Zacks Consensus Estimate of 6 cents and earnings of 10 cents reported in the year-ago quarter.

For the fiscal year 2011, earnings per share came in at 33 cents versus 50 cents in 2010 and the Zacks Consensus Estimate of 25 cents.

Revenue

Net sales from continuing operations in the quarter increased 6.5% year over year to $1,615 million. Revenue was below the Zacks Consensus Estimate of $1,624 million.

In the fourth quarter, Timberland revenue increased 32.4% year over year to $274 million and accounted for 17% of the total revenue. Revenue from Wood Products was up 11.3% to $542 million and represented 33.6% of total revenue.

Revenue generated from Cellulose Fibers, roughly 32.4% of total revenue, increased 2.3% to $523 million, while Real Estate with about 17.1% of total revenue, decreased 9.5% to $276 million.

For the fiscal year 2011, total revenue surged 4.4% year over year to $6,216 million but down from the Zacks Consensus Estimate of $6,486 million.

Margins

Cost of goods sold increased 7.8% year over year and represented 81.5% of total revenue. Selling, general and administrative expenses were 9.2% of revenue and down 12.9% over the year-ago quarter. Research and development expenses soared to $9.0 million from $10 million in the year-ago quarter.

Operating income increased drastically to $131 million from $54 million in the year-ago quarter. Margin stood at 8.1%.

Balance Sheet

Exiting the fourth quarter, Weyerhaeuser had cash and cash equivalents (Forest Products and Real Estate) of approximately $953 million versus $971 million in the previous quarter. Long-term debt was approximately $4,466 million versus $4,499 million in the previous quarter.

Cash Flow

Net cash flow from operating activities in the fourth quarter plummeted 35% year over year to $147 million while capital expenditure decreased 3.8% to $76 million. In the fiscal year 2011, the company paid dividends amounting to $323 million and repurchased shares worth $37 million.

Outlook: For the first quarter of 2012, management anticipates that Timberlands earnings would be higher sequentially, attributable to higher selling prices and fee harvest volumes for western logs. However, fuel costs and silviculture expenses are expected to be higher.

For the Wood Products segment, the company expects smaller losses due to expectation of slightly higher lumber and oriented strand board selling prices. Volumes across all product lines are expected to be high. Unit manufacturing costs are expected to decline.

For the Cellulose Fibers segment, management expects lower selling prices for pulp and higher maintenance costs. For the Real Estate segment, management anticipates loss from single-family homebuilding operations due to a decline in home closing volume and lower margins.

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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: IP , LPX , WY

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