Q1 2013 Earnings Call
April 26, 2013 10:00 am ET
Kathryn F. McAuley - Vice President of Investor Relations
Patricia M. Bedient - Chief Financial Officer and Executive Vice President
Daniel S. Fulton - Chief Executive Officer, President, Director and Member of Executive Committee
Mark Wilde - Deutsche Bank AG, Research Division
Chip A. Dillon - Vertical Research Partners, LLC
Joshua A. Barber - Stifel, Nicolaus & Co., Inc., Research Division
George L. Staphos - BofA Merrill Lynch, Research Division
Gail S. Glazerman - UBS Investment Bank, Research Division
Alex Ovshey Ovshey - Goldman Sachs Group Inc., Research Division
Anthony Pettinari - Citigroup Inc, Research Division
Carly Mattson - Goldman Sachs Group Inc., Research Division
Mark A. Weintraub - The Buckingham Research Group Incorporated
Previous Statements by WY
» Weyerhaeuser Management Discusses Q4 2012 Results - Earnings Call Transcript
» Weyerhaeuser Management Discusses Q3 2012 Results - Earnings Call Transcript
» Weyerhaeuser Management Discusses Q2 2012 Results - Earnings Call Transcript
I would now like to turn the call over to Kathryn McAuley, Vice President of Investor Relations. Ms. McAuley, you may begin.
Kathryn F. McAuley
Thank you, Brent. Good morning. Thank you for joining us on Weyerhaeuser's First Quarter 2013 Earnings Conference Call. This call is being webcast at www.weyerhaeuser.com. The earnings release, analyst package and web slides for this call can be found at our website or by contacting April Meier at (253) 924-2937.
Please review the warning statements in our press release and on the presentation slides concerning the risks associated with forward-looking statements, as forward-looking statements will be made during this conference call. On the call, we will discuss non-GAAP financial measures. A GAAP reconciliation can be found on Chart 19.
Joining me this morning are Dan Fulton, President and Chief Executive Officer; and Patty Bedient, Executive Vice President and Chief Financial Officer. Before we review the first quarter earning material, Patty Bedient would like to make a few comments. Patty?
Patricia M. Bedient
Thanks, Kathy, and good morning, everybody. As we begin our financial reporting for 2013, I want to call your attention to some additional information that has been included in our earnings release presentation material. This information is intended to provide you with some further insight into our reported results. I'll briefly describe some of the changes we've made to our earnings release slide package, and then Kathy will follow with her normal comments on the first quarter performance.
We now present condensed income statements for both Weyerhaeuser Company and each of our business segments to assist you in comparing our quarter-over-quarter results. For Timberlands, we've provided additional detail on revenues from export log sales and the countries to which we sell those logs. This information is to help you understand the scale and diversity of our markets for our Western Timberlands. We've also included a quarterly detail of our nonstrategic timberland disposition.
To better explain the earnings of our Wood Products segment, we are reporting the quarterly EBITDA for each of our major business lines: Lumber, oriented strand board, engineered Wood Products and distribution.
In Cellulose Fibers, we've provided the total quarterly maintenance expense dollars in addition to our scheduled annual maintenance outage days. For Real Estate, we've included quarterly earnings from land and lot sales, as well as information on the number of lots we controlled at quarter end in each of our major geographies, similar to the information we report annually in our 10-K.
We hope these changes will help you in your understanding of Weyerhaeuser, and we look forward to your comments and suggestions. And thank you for those -- that have been provided in the past.
So now I'll turn the call back to Kathy for a discussion of our first quarter results. Kathy?
Kathryn F. McAuley
Thank you, Patty. As summarized on Chart 1, Weyerhaeuser reported first quarter 2013 net earnings of $144 million or $0.26 per diluted share on net sales of $2 billion.
Turning to our business segments. My comments reviewing the first quarter of 2013 refer to changes from the fourth quarter of 2012. Beginning with Timberlands, Charts 2, 3 and 4. Timberlands contributed $104 million to earnings, $9 million more than in Q4. Western log demand was strong in both export and domestic markets. Log price realizations increased 9%, and log sales volumes rose 7%. The fee harvest in the West was 6% higher.
Export log sales increased 15%, and this is illustrated on Chart 3. Southern log prices were slightly higher and volumes declined. Wet weather in the South resulted in an 11% decrease in fee harvest volumes. Earnings from Timberland dispositions, this is new data available on Chart 4, were $3 million in Q1. Dispositions were $20 million in Q4 2012.
Turning to Wood Products, Charts 5 and 6. Wood Products contributed $178 million to earnings, $140 million more than in the fourth quarter. EBITDA improved in all business lines. EBITDA by business line can be found on Chart 5.
The strong lumber and OSB demand experienced in the fourth quarter continued through the first quarter. OSB price realizations increased $69 or $0.24 -- 24% to $359 per thousand square feet. Lumber price realizations increased $74 or 20% to $444 per thousand board feet. Lumber sales volumes were flat and OSB volumes were 2% lower.
Sales volumes in Q4 were very high on a seasonal basis. Price and volumes increased for engineered Wood Products. Solid section prices were up 2% and sales volumes 19%. I-Joist prices rose 3% and production 16%. Operating rates increased across all product lines. Raw material costs were higher.
Cellulose Fibers, Charts 7 and 8. Cellulose Fibers contributed $31 million to earnings, $30 million less than in the fourth quarter. Scheduled maintenance costs increased to $62 million from $45 million, and the number of annual outage days doubled to 12. In addition to annually schedule maintenance outages, there were projects to lengthen the mill maintenance cycle from 12 to 18 months. Fiber costs increased due to wet weather in the South. Average pulp price realizations declined slightly. Pulp sales volumes increased 2%. Production decreased due to the scheduled maintenance outages.