Weyerhaeuser reports net earnings of $292M in Q4 2020
Weyerhaeuser Company recently reported fourth quarter net earnings of $292 million, or 39 cents per diluted share, on net sales of $2.1 billion. This compares with a net loss of $14 million, or two cents per diluted share, on net sales of $1.5 billion for the same period last year and net earnings of $283 million for the third quarter of 2020.
Excluding net after-tax charges of $69 million for special items, the company reported fourth quarter net earnings of $361 million, or 48 cents per diluted share. This compares with net earnings before special items of $23 million for the same period last year and $386 million for the third quarter of 2020.
Adjusted EBITDA for the fourth quarter of 2020 was $657 million compared with $260 million for the same period last year and $745 million for the third quarter of 2020.
For the full year 2020, Weyerhaeuser reported net earnings of $797 million, or $1.07 per diluted share, on net sales of $7.5 billion. This compares with a net loss of $76 million on net sales of $6.6 billion for the full year 2019.
Full year 2020 includes net after-tax charges of $165 million for special items. Excluding these items, the company reported net earnings of $962 million, or $1.29 per diluted share. This compares with net earnings before special items of $285 million for the full year 2019.
Adjusted EBITDA for full year 2020 was $2.2 billion compared with $1.3 billion for full year 2019.
“In 2020, each of our businesses delivered remarkable results in the face of unprecedented operating and market challenges,” said Devin W. Stockfish, president and chief executive officer. “Our teams delivered the highest wood products Adjusted EBITDA on record, achieved record low cost performance in lumber, and captured approximately $100 million of operational excellence improvements across our businesses, all while demonstrating an unwavering commitment to safety. In addition, we reduced gross debt by more than $900 million, implemented a new dividend framework, strategically upgraded our Oregon timberland holdings and launched a new sustainability strategy. As we embark on 2021, we are encouraged by the macroeconomic tailwinds that continue to bolster strong U.S. housing and repair and remodel markets, and we remain focused on creating value for shareholders through our unrivaled portfolio of assets, industry-leading operating performance and disciplined capital allocation.”
Q4 2020 performance
In the west, average sales realizations for domestic and Japan export logs increased from the third quarter, and export log sales volumes were significantly higher. Fee harvest volumes increased nine per cent as harvest operations fully resumed following third quarter wildfire activity. In the south, average log sales realizations were comparable to the third quarter, as higher average sawlog realizations were largely offset by lower realizations for fibre logs. Unit logging and hauling costs decreased, and log sales volumes were slightly lower.
Fourth quarter special items include a $182 million gain on the previously announced sale of certain southern Oregon timberlands, which was completed in November.
Q1 2021 outlook
Weyerhaeuser expects first quarter earnings and Adjusted EBITDA will be slightly higher than the fourth quarter. In the west, the company anticipates higher export log sales volumes, slightly lower average domestic log sales realizations, slightly higher unit logging and hauling costs, and seasonally lower road spending. In the south, the company expects higher fee harvest volumes and comparable average log sales realizations.
Q4 2020 performance
Sales volumes declined slightly across most product lines from the third quarter. Raw material costs increased significantly, primarily for western and Canadian logs and oriented strand board webstock. Per unit manufacturing costs increased for oriented strand board due to planned maintenance outages.
Average sales realizations for oriented strand board improved 27 per cent compared with the third quarter, as benchmark pricing remained near record levels. This was largely offset by a 10 per cent decrease in average lumber sales realizations.
Q1 2021 outlook
Excluding the effect of changes in average sales realizations for lumber and oriented strand board, the company expects first quarter earnings and Adjusted EBITDA will be significantly higher than the fourth quarter. The company expects improved manufacturing costs across product lines and slightly higher sales volumes, primarily for lumber and engineered wood products. To date, first quarter benchmark pricing for lumber and oriented strand board is significantly higher than the fourth quarter average.