Weyerhaeuser reports third quarter results

-- Net earnings of $255 million, or $0.34 per diluted share

-- Increased quarterly dividend by 6.3 percent to $0.34 per share

-- Repurchased $290 million of common shares during the third quarter

News provided by

Oct 26, 2018, 03:05 ET

SEATTLE, Oct. 26, 2018 /PRNewswire/ -- Weyerhaeuser Company (NYSE: WY) today reported third quarter net earnings of $255 million, or 34 cents per diluted share, on net sales of $1.9 billion. This compares with earnings of $130 million, or 17 cents per diluted share, on net sales of $1.9 billion for the same period last year.

View our earnings release and financial statements in a printer-friendly PDF.

Excluding a special tax benefit of $41 million, the company reported net earnings of $214 million, or 28 cents per diluted share for the third quarter. This compares with net earnings before special items of $259 million for the same period last year and $332 million for the second quarter of 2018. Adjusted EBITDA for the third quarter was $505 million compared with $569 million for the third quarter of last year and $637 million for the second quarter of 2018.

"In the third quarter, our business delivered solid operating performance despite significant headwinds from severe weather, trade policy and unusually volatile wood products markets," said Doyle R. Simons, president and chief executive officer. "During the quarter we demonstrated our ongoing commitment to disciplined capital allocation by increasing our quarterly dividend six percent, repurchasing $290 million of common shares, and announcing actions to reduce our pension liabilities. Going forward, we remain relentlessly focused on driving value for shareholders through industry-leading performance and disciplined capital allocation."

WEYERHAEUSER FINANCIAL HIGHLIGHTS	2018	2018	2017
(millions, except per share data)	Q2	Q3	Q3
Net sales	$2,065	$1,910	$1,872
Net earnings	$317	$255	$130
Net earnings per diluted share	$0.42	$0.34	$0.17
Weighted average shares outstanding, diluted	761	757	757
Net earnings before special items⁽¹⁾	$332	$214	$259
Net earnings per diluted share before special items	$0.44	$0.28	$0.34
Adjusted EBITDA⁽²⁾	$637	$505	$569

(1)	Second quarter 2018 special items include $15 million of net after-tax charges for product remediation. Third quarter 2018 after-tax special items include a $41 million tax benefit related to the previously announced $300 million contribution to our U.S. qualified pension plan. Third quarter 2017 after-tax special items include a $118 million charge for product remediation, $4 million for countervailing and antidumping duties on Canadian softwood lumber the company sold into the United States, $4 million for restructuring, impairments, and other charges, and $3 million for Plum Creek merger-related costs. Beginning first quarter 2018, countervailing and antidumping duties are no longer reported as a special item.

(2)	Adjusted EBITDA is a non-GAAP measure that management uses to evaluate the performance of the company. Adjusted EBITDA, as we define it, is operating income, adjusted for depreciation, depletion, amortization, basis of real estate sold, unallocated pension service costs and special items. Adjusted EBITDA excludes results from joint ventures. Adjusted EBITDA should not be considered in isolation from and is not intended to represent an alternative to our GAAP results. A reconciliation of Adjusted EBITDA to GAAP earnings is included within this release.

TIMBERLANDS

FINANCIAL HIGHLIGHTS	2018	2018
(millions)	Q2	Q3	Change
Net sales	$667	$653	($14)
Contribution to pre-tax earnings	$161	$126	($35)
Adjusted EBITDA	$240	$206	($34)

3Q 2018 Performance - In the West, average sales realizations for domestic and Chinese export logs declined, domestic and export log sales volumes decreased, and road and unit logging costs increased seasonally. In the South, slightly higher average sales realizations were more than offset by moderately lower sales volumes due to weather, increased unit logging costs and seasonally higher forestry spending.

4Q 2018 Outlook - Weyerhaeuser expects fourth quarter earnings and Adjusted EBITDA will be lower than the third quarter. In the West, the company anticipates lower average sales realizations, partially offset by moderately higher export log sales volumes. In the South, the company anticipates slightly higher fee harvest volumes and comparable average log sales realizations.

REAL ESTATE, ENERGY & NATURAL RESOURCES

FINANCIAL HIGHLIGHTS	2018	2018
(millions)	Q2	Q3	Change
Net sales	$58	$96	$38
Contribution to pre-tax earnings	$22	$36	$14
Adjusted EBITDA	$47	$86	$39

3Q 2018 Performance - Earnings and Adjusted EBITDA increased compared to the second quarter due to seasonally higher real estate sales and a large acre transaction in Montana which accounted for approximately half of the acres sold in the third quarter. Average land basis increased modestly due to the mix of properties sold.

4Q 2018 Outlook - Weyerhaeuser anticipates fourth quarter earnings and Adjusted EBITDA will be comparable to the third quarter. The company expects full year 2018 Adjusted EBITDA for the segment will be approximately $260 million.

WOOD PRODUCTS

FINANCIAL HIGHLIGHTS	2018	2018
(millions)	Q2	Q3	Change
Net sales	$1,525	$1,346	($179)
Contribution to pre-tax earnings	$329	$213	($116)
Pre-tax charge (benefit) for special items	$20	—	($20)
Contribution to pre-tax earnings before special items	$349	$213	($136)
Adjusted EBITDA	$385	$250	($135)

3Q 2018 Performance - Average sales realizations for lumber declined nine percent and average sales realizations for oriented strand board were 13 percent lower compared to the second quarter. Operating rates and sales volumes declined and unit manufacturing costs increased, primarily due to mill downtime related to severe weather in the U.S. South and a scheduled press replacement at our Grayling, Michigan oriented strand board mill. Canadian log costs also increased.

4Q 2018 Outlook - Weyerhaeuser anticipates fourth quarter earnings and Adjusted EBITDA will be significantly lower than the third quarter. Based on current pricing, the company anticipates average sales realizations for lumber and oriented strand board will be substantially lower than third quarter averages. This will be partially offset by lower Western and Canadian log costs, improved unit manufacturing costs for lumber, and higher sales volumes for oriented strand board due to completion of the Grayling press replacement.

ABOUT WEYERHAEUSER

Weyerhaeuser Company, one of the world's largest private owners of timberlands, began operations in 1900. We own or control 12.4 million acres of timberlands in the U.S. and manage additional timberlands under long-term licenses in Canada. We manage these timberlands on a sustainable basis in compliance with internationally recognized forestry standards. We are also one of the largest manufacturers of wood products. Our company is a real estate investment trust. In February 2016, we merged with Plum Creek Timber Company, Inc. In 2017, we generated $7.2 billion in net sales and employed approximately 9,300 people who serve customers worldwide. We are listed on the North American and World Dow Jones Sustainability Indices. Our common stock trades on the New York Stock Exchange under the symbol WY. Learn more at https://www.weyerhaeuser.com/.

EARNINGS CALL INFORMATION

Weyerhaeuser will hold a live conference call at 7 a.m. Pacific (10 a.m. Eastern) on October 26, 2018, to discuss third quarter results.

To access the live webcast and presentation online, go to the Investor Relations section on https://www.weyerhaeuser.com/ on October 26, 2018.

To join the conference call from within North America, dial 855-223-0757 (access code: 6699896) at least 15 minutes prior to the call. Those calling from outside North America should dial 574-990-1206 (access code: 6699896). Replays will be available for two weeks at 855-859-2056 (access code: 6699896) from within North America and at 404-537-3406 (access code: 6699896) from outside North America.

FORWARD LOOKING STATEMENTS

This report contains statements concerning our future results and performance that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may appear throughout this report. These forward-looking statements generally are identified by words such as "believe," "project," "expect," "anticipate," "estimate," "intend," "strategy," "future," "opportunity," "plan," "may," "should," "will," "would," and expressions such as "going forward", "will be," "will continue," "will likely result," and similar words and expressions. Forward-looking statements are based on our current expectations and assumptions and are not guarantees of future performance. The realization of our expectations and the accuracy of our assumptions are subject to a number of risks and uncertainties that could cause actual results to differ materially from the content of these forward-looking statements. These risks and uncertainties include, but are not limited to:

the effect of general economic conditions, including employment rates, interest rate levels, housing starts, general availability of financing for home mortgages and the relative strength of the U.S. dollar;
market demand for the company's products, including market demand for our timberland properties with higher and better uses, which is related to, among other factors, the strength of the various U.S. business segments and U.S. and international economic conditions;
changes in currency exchange rates, particularly the relative value of the U.S. dollar to the yen and the Canadian dollar, and the relative value of the euro to the yen;
restrictions on international trade, tariffs imposed on imports of our products and the availability and cost of shipping and transportation; economic activity in Asia, especially Japan and China;
performance of our manufacturing operations, including maintenance and capital requirements;
potential disruptions in our manufacturing operations;
the level of competition from domestic and foreign producers;
the successful execution of our internal plans and strategic initiatives, and cost reduction initiatives;
raw material availability and prices;
the effect of weather;
the risk of loss from fires, floods, windstorms, hurricanes, pest infestation and other natural disasters;
energy prices;
transportation and labor availability and costs;
federal tax policies;
the effect of forestry, land use, environmental and other governmental regulations;
legal proceedings;
performance of pension fund investments and related derivatives;
the effect of timing of employee retirements and changes in the market price of our common stock on charges for share-based compensation;
the accuracy of our estimates of costs and expenses related to contingent liabilities;
changes in accounting principles; and
other risks and uncertainties identified in our 2017 Annual Report on Form 10-K, which are incorporated herein by reference, as well as those set forth from time to time in our other public statements and other reports and filings with the SEC.

Forward-looking statements speak only as of the date they are made, and we undertake no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events, or otherwise.

For more information contact:
Analysts - Beth Baum, 206-539-3907
Media - Nancy Thompson, 919-861-0342



RECONCILIATION OF ADJUSTED EBITDA TO NET EARNINGS

We reconcile Adjusted EBITDA to net earnings for the consolidated company and to operating income for the business segments, as those are the most directly comparable U.S. GAAP measures for each.

The table below reconciles Adjusted EBITDA for the quarter ended June 30, 2018:

DOLLAR AMOUNTS IN MILLIONS	Timberlands		Real Estate & ENR		Wood Products		Unallocated Items		Total
Adjusted EBITDA by Segment:
Net earnings									$	317
Interest expense, net of capitalized interest									92
Income taxes									65
Net contribution to earnings	$	161	$	22	$	329	$	(38)	$	474
Non-operating pension and other postretirement benefit costs	—		—		—		13		13
Interest income and other	—		—		—		(11)		(11)
Operating income (loss)	161		22		329		(36)		476
Depreciation, depletion and amortization	79		3		36		1		119
Basis of real estate sold	—		22		—		—		22
Special items⁽¹⁾	—		—		20		—		20
Adjusted EBITDA	$	240	$	47	$	385	$	(35)	$	637

(1) Pre-tax special items included in Wood Products consist of net charges of $20 million for finalization of product remediation costs.


The table below reconciles Adjusted EBITDA for the quarter ended September 30, 2018:

DOLLAR AMOUNTS IN MILLIONS	Timberlands		Real Estate & ENR		Wood Products		Unallocated Items		Total
Adjusted EBITDA by Segment:
Net earnings									$	255
Interest expense, net of capitalized interest									93
Income taxes⁽¹⁾									(15)
Net contribution to earnings	$	126	$	36	$	213	$	(42)	$	333
Non-operating pension and other postretirement benefit costs	—		—		—		17		17
Interest income and other	—		—		—		(13)		(13)
Operating income (loss)	126		36		213		(38)		337
Depreciation, depletion and amortization	80		4		37		1		122
Basis of real estate sold	—		46		—		—		46
Adjusted EBITDA	$	206	$	86	$	250	$	(37)	$	505

(1) After tax special items included a $41 million tax benefit related to our $300 million pension contribution. There were no pre-tax special items in third quarter 2018.


The table below reconciles Adjusted EBITDA for the quarter ended September 30, 2017:

DOLLAR AMOUNTS IN MILLIONS	Timberlands		Real Estate & ENR		Wood Products		Unallocated Items		Total
Adjusted EBITDA by Segment:
Net earnings									$	130
Interest expense, net of capitalized interest									98
Income taxes									(27)
Net contribution to earnings	$	131	$	47	$	40	$	(17)	$	201
Non-operating pension and other postretirement benefit costs	—		—		—		16		16
Interest income and other	—		(1)		—		(11)		(12)
Operating income (loss)	131		46		40		(12)		205
Depreciation, depletion and amortization	89		4		37		2		132
Basis of real estate sold	—		24		—		—		24
Unallocated pension service costs	—		—		—		1		1
Special items⁽¹⁾	—		—		201		6		207
Adjusted EBITDA	$	220	$	74	$	278	$	(3)	$	569


(1)	Special items attributable to Wood Products includes: $190 million of product remediation charges, $6 million of restructuring, impairments and other charges and $5 million of retroactive and prospective countervailing and antidumping duties. Special items attributable to Unallocated Items include $6 million of Plum Creek merger-related costs.

Weyerhaeuser Company									Exhibit 99.2
Q3.2018 Analyst Package
Preliminary results (unaudited)

Consolidated Statement of Operations

in millions	Q1		Q2		Q3				Year-to-Date
	March 31, 2018		June 30, 2018		September 30, 2018		September 30, 2017		September 30, 2018		September 30, 2017
Net sales	$	1,865	$	2,065	$	1,910	$	1,872	$	5,840	$	5,373
Cost of products sold	1,348		1,447		1,452		1,374		4,247		3,982
Gross margin	517		618		458		498		1,593		1,391
Selling expenses	23		23		20		22		66		66
General and administrative expenses	78		80		78		75		236		238
Research and development expenses	2		2		2		4		6		12
Charges for integration and restructuring, closures and asset impairments	2		—		—		14		2		178
Charges (recoveries) for product remediation, net	(20)		20		—		190		—		240
Other operating costs (income), net	28		17		21		(12)		66		2
Operating income	404		476		337		205		1,217		655
Non-operating pension and other postretirement benefit costs	(24)		(13)		(17)		(16)		(54)		(46)
Interest income and other	12		11		13		12		36		30
Interest expense, net of capitalized interest	(93)		(92)		(93)		(98)		(278)		(297)
Earnings before income taxes	299		382		240		103		921		342
Income taxes	(30)		(65)		15		27		(80)		(31)
Net earnings	$	269	$	317	$	255	$	130	$	841	$	311


Per Share Information

	Q1		Q2		Q3				Year-to-Date
	March 31, 2018		June 30, 2018		September 30, 2018		September 30, 2017		September 30, 2018		September 30, 2017
Earnings per share, basic and diluted	$	0.35	$	0.42	$	0.34	$	0.17	$	1.11	$	0.41
Dividends paid per common share	$	0.32	$	0.32	$	0.34	$	0.31	$	0.98	$	0.93
Weighted average shares outstanding (in thousands):
Basic	756,815		757,829		754,986		753,535		756,531		752,301
Diluted	759,462		760,533		757,389		756,903		759,116		756,058
Common shares outstanding at end of period (in thousands)	756,700		757,646		749,199		753,051		749,199		753,051


Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization (Adjusted EBITDA)*

in millions	Q1		Q2		Q3				Year-to-Date
	March 31, 2018		June 30, 2018		September 30, 2018		September 30, 2017		September 30, 2018		September 30, 2017
Net earnings	$	269	$	317	$	255	$	130	$	841	$	311
Non-operating pension and other postretirement benefit costs	24		13		17		16		54		46
Interest income and other	(12)		(11)		(13)		(12)		(36)		(30)
Interest expense, net of capitalized interest	93		92		93		98		278		297
Income taxes	30		65		(15)		(27)		80		31
Operating income	404		476		337		205		1,217		655
Depreciation, depletion and amortization	120		119		122		132		361		394
Basis of real estate sold	12		22		46		24		80		48
Unallocated pension service costs	—		—		—		1		—		3
Special items	8		20		—		207		28		429
Adjusted EBITDA*	$	544	$	637	$	505	$	569	$	1,686	$	1,529

*Adjusted EBITDA is a non-GAAP measure that management uses to evaluate the performance of the company. Adjusted EBITDA, as we define it, is operating income adjusted for depreciation, depletion, amortization, basis of real estate sold, unallocated pension service costs, and special items. Adjusted EBITDA excludes results from joint ventures. Our definition of Adjusted EBITDA may be different from similarly titled measures reported by other companies. Adjusted EBITDA should not be considered in isolation from and is not intended to represent an alternative to our GAAP results.

Weyerhaeuser Company							Total Company Statistics
Q3.2018 Analyst Package
Preliminary results (unaudited)

Special Items Included in Net Earnings (Income Tax Affected)

in millions	Q1		Q2		Q3				Year-to-Date
	March 31, 2018		June 30, 2018		September 30, 2018		September 30, 2017		September 30, 2018		September 30, 2017
Net earnings	$	269	$	317	$	255	$	130	$	841	$	311
Plum Creek merger and integration-related costs	—		—		—		3		—		15
Restructuring, impairment and other charges	—		—		—		4		—		151
Environmental remediation charges (recoveries)	21		—		—		—		21		—
Countervailing and antidumping duties charges (credits)⁽¹⁾	—		—		—		4		—		12
Product remediation charges (recoveries), net	(15)		15		—		118		—		149
Tax adjustments⁽²⁾	—		—		(41)		—		(41)		—
Net earnings before special items	$	275	$	332	$	214	$	259	$	821	$	638


	Q1		Q2		Q3				Year-to-Date
	March 31, 2018		June 30, 2018		September 30, 2018		September 30, 2017		September 30, 2018		September 30, 2017
Net earnings per diluted share	$	0.35	$	0.42	$	0.34	$	0.17	$	1.11	$	0.41
Plum Creek merger and integration-related costs	—		—		—		—		—		0.02
Restructuring, impairment and other charges	—		—		—		0.01		—		0.20
Environmental remediation charges (recoveries)	0.03		—		—		—		0.03		—
Countervailing and antidumping duties charges (credits)⁽¹⁾	—		—		—		0.01		—		0.01
Product remediation charges (recoveries), net	(0.02)		0.02		—		0.15		—		0.20
Tax adjustments⁽²⁾	—		—		(0.06)		—		(0.06)		—
Net earnings per diluted share before special items	$	0.36	$	0.44	$	0.28	$	0.34	$	1.08	$	0.84

⁽¹⁾As of first quarter 2018, countervailing and antidumping duties are no longer reported as a special item.

⁽²⁾During third quarter 2018, we recorded a tax benefit related to our $300 million contribution to our U.S. qualified pension plan.



Selected Total Company Items

in millions	Q1		Q2		Q3				Year-to-Date
	March 31, 2018		June 30, 2018		September 30, 2018		September 30, 2017		September 30, 2018		September 30, 2017
Pension and postretirement costs:
Pension and postretirement service costs	$	10	$	8	$	10	$	9	$	28	$	26
Non-operating pension and other postretirement benefit costs	24		13		17		16		54		46
Total company pension and postretirement costs	$	34	$	21	$	27	$	25	$	82	$	72




Weyerhaeuser Company
Q3.2018 Analyst Package
Preliminary results (unaudited)
Consolidated Balance Sheet

in millions	March 31, 2018		June 30, 2018		September 30, 2018		December 31, 2017

ASSETS
Current assets:
Cash and cash equivalents	$	598	$	901	$	348	$	824
Receivables, less discounts and allowances	481		491		444		396
Receivables for taxes	24		23		140		14
Inventories	445		414		389		383
Prepaid expenses and other current assets	118		146		140		98
Current restricted financial investments held by variable interest entities	253		253		253		—
Total current assets	1,919		2,228		1,714		1,715
Property and equipment, net	1,573		1,597		1,672		1,618
Construction in progress	275		282		255		225
Timber and timberlands at cost, less depletion	12,888		12,790		12,727		12,954
Minerals and mineral rights, less depletion	306		302		297		308
Goodwill	40		40		40		40
Deferred tax assets	244		168		71		268
Other assets	278		279		289		316
Restricted financial investments held by variable interest entities	362		362		362		615
Total assets	$	17,885	$	18,048	$	17,427	$	18,059

LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt	$	—	$	—	$	—	$	62
Current debt (nonrecourse to the company) held by variable interest entities	209		209		511		209
Accounts payable	245		270		271		249
Accrued liabilities	457		543		491		645
Total current liabilities	911		1,022		1,273		1,165
Long-term debt	5,928		5,924		5,921		5,930
Long-term debt (nonrecourse to the company) held by variable interest entities	302		302		—		302
Deferred pension and other postretirement benefits	1,454		1,224		885		1,487
Other liabilities	299		295		291		276
Total liabilities	8,894		8,767		8,370		9,160
Total equity	8,991		9,281		9,057		8,899
Total liabilities and equity	$	17,885	$	18,048	$	17,427	$	18,059




Weyerhaeuser Company
Q3.2018 Analyst Package
Preliminary results (unaudited)
Consolidated Statements of Cash Flows

in millions	Q1		Q2		Q3				Year-to-Date
	March 31, 2018		June 30, 2018		September 30, 2018		September 30, 2017		September 30, 2018		September 30, 2017
Cash flows from operations:
Net earnings	$	269	$	317	$	255	$	130	$	841	$	311
Noncash charges earnings:
Depreciation, depletion and amortization	120		119		122		132		361		394
Basis of real estate sold	12		22		46		24		80		48
Deferred income taxes, net	10		15		86		3		111		9
Pension and other postretirement benefits	34		21		27		25		82		72
Share-based compensation expense	9		9		13		10		31		29
Charges for impairments of assets	1		—		—		6		1		153
Change in:
Receivables, less allowances	(83)		(18)		46		(35)		(55)		(113)
Receivables and payables for taxes	5		10		(124)		(63)		(109)		(116)
Inventories	(66)		30		27		11		(9)		4
Prepaid expenses	(5)		4		(6)		4		(7)		(9)
Accounts payable and accrued liabilities	(173)		103		(63)		129		(133)		184
Pension and postretirement benefit contributions and payments	(16)		(16)		(323)		(22)		(355)		(59)
Other	19		(19)		(19)		(31)		(19)		(60)
Net cash from operations	$	136	$	597	$	87	$	323	$	820	$	847
Cash flows from investing activities:
Capital expenditures for property and equipment	$	(61)	$	(83)	$	(94)	$	(87)	$	(238)	$	(213)
Capital expenditures for timberlands reforestation	(20)		(14)		(11)		(10)		(45)		(46)
Proceeds from sale of assets and operations	2		—		—		411		2		423
Other	3		24		(10)		(16)		17		28
Cash from (used in) investing activities	$	(76)	$	(73)	$	(115)	$	298	$	(264)	$	192
Cash flows from financing activities:
Cash dividends on common shares	$	(242)	$	(243)	$	(256)	$	(233)	$	(741)	$	(699)
Proceeds from issuance of long-term debt	—		—		—		225		—		225
Payments of long-term debt	(62)		—		—		(831)		(62)		(831)
Proceeds from borrowing on line of credit	—		—		—		100		—		100
Payments on line of credit	—		—		—		(100)		—		(100)
Proceeds from exercise of stock options	25		23		4		8		52		89
Repurchases of common shares	—		—		(273)		—		(273)		—
Other	(7)		(1)		—		6		(8)		(2)
Cash used in financing activities	$	(286)	$	(221)	$	(525)	$	(825)	$	(1,032)	$	(1,218)
Net change in cash and cash equivalents	$	(226)	$	303	$	(553)	$	(204)	$	(476)	$	(179)
Cash and cash equivalents at beginning of period	824		598		901		701		824		676
Cash and cash equivalents at end of period	$	598	$	901	$	348	$	497	$	348	$	497

Cash paid during the period for:
Interest, net of amount capitalized	$	105	$	67	$	113	$	123	$	285	$	315
Income taxes	$	17	$	41	$	22	$	23	$	80	$	129



Weyerhaeuser Company										Timberlands Segment
Q3.2018 Analyst Package
Preliminary results (unaudited)
Segment Statement of Operations
in millions		Q1.2018		Q2.2018		Q3.2018		Q3.2017			YTD.2018		YTD.2017
Sales to unaffiliated customers		$	505	$	482	$	468	$	491		$	1,455	$	1,446
Intersegment sales		228		185		185		179			598		544
Total net sales		733		667		653		670			2,053		1,990
Cost of products sold		526		485		505		517			1,516		1,512
Gross margin		207		182		148		153			537		478
Selling expenses		1		—		1		1			2		3
General and administrative expenses		23		25		23		24			71		71
Research and development expenses		2		1		2		3			5		10
Charges for integration and restructuring, closures and asset impairments		—		—		—		—			—		147
Other operating costs (income), net		(8)		(5)		(4)		(6)			(17)		(20)
Operating income and Net contribution to earnings		$	189	$	161	$	126	$	131		$	476	$	267


Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization*
in millions		Q1.2018		Q2.2018		Q3.2018		Q3.2017			YTD.2018		YTD.2017
Operating income		$	189	$	161	$	126	$	131		$	476	$	267
Depreciation, depletion and amortization		79		79		80		89			238		270
Special items		—		—		—		—			—		147
Adjusted EBITDA*		$	268	$	240	$	206	$	220		$	714	$	684
*See definition of Adjusted EBITDA (a non-GAAP measure) on page 1.


Segment Special Items Included in Net Contribution to Earnings (Pre-Tax)
in millions		Q1.2018		Q2.2018		Q3.2018		Q3.2017			YTD.2018		YTD.2017
Restructuring, impairment and other charges		$	—	$	—	$	—	$	—		$	—	$	(147)


Selected Segment Items
in millions		Q1.2018		Q2.2018		Q3.2018		Q3.2017			YTD.2018		YTD.2017
Total decrease (increase) in working capital⁽¹⁾		$	(40)	$	70	$	(32)	$	(3)		$	(2)	$	(45)
Cash spent for capital expenditures		$	(28)	$	(29)	$	(25)	$	(24)		$	(82)	$	(79)
⁽¹⁾Represents the change in prepaid assets, accounts receivable, accounts payable, accrued liabilities and log inventory for the Timberlands and Real Estate & ENR segments combined.


Segment Statistics⁽²⁾⁽³⁾
		Q1.2018		Q2.2018		Q3.2018		Q3.2017			YTD.2018		YTD.2017
Third Party Net Sales (millions)	Delivered logs:
	West	$	266	$	262	$	238	$	221		$	766	$	673
	South	157		158		157		155			472		451
	North	25		20		25		25			70		68
	Other	14		7		9		17			30		48
	Total delivered logs	462		447		429		418			1,338		1,240
	Stumpage and pay-as-cut timber	15		11		13		23			39		52
	Products from international operations	—		—		—		23			—		63
	Recreational and other lease revenue	14		15		15		16			44		45
	Other revenue	14		9		11		11			34		46
	Total	$	505	$	482	$	468	$	491		$	1,455	$	1,446
Delivered Logs Third Party Sales Realizations (per ton)	West	$	131.59	$	132.24	$	125.67	$	116.03		$	129.91	$	108.43
	South	$	34.83	$	34.55	$	34.88	$	34.24		$	34.75	$	34.40
	North	$	60.79	$	64.92	$	60.97	$	59.02		$	62.00	$	60.24
Delivered Logs Third Party Sales Volumes (tons, thousands)	West	2,019		1,984		1,897		1,910			5,900		6,210
	South	4,510		4,560		4,521		4,527			13,591		13,105
	North	404		313		414		428			1,131		1,135
	Other	317		81		154		424			552		1,226
Fee Harvest Volumes (tons, thousands)	West	2,443		2,360		2,305		2,230			7,108		7,539
	South	6,751		6,630		6,478		6,953			19,859		19,799
	North	549		423		537		565			1,509		1,570
	Other	—		—		—		569			—		1,384

⁽²⁾	The Western region includes Washington and Oregon. The Southern region includes Virginia, North Carolina, South Carolina, Florida, Georgia, Alabama, Mississippi, Louisiana, Arkansas, Texas and Oklahoma. The Northern region includes West Virginia, Maine, New Hampshire, Vermont, Michigan, Wisconsin and Montana. Other includes our Canadian operations and managed Twin Creeks operations (our management agreement for the Twin Creeks Venture began in April 2016 and terminated in December 2017).

⁽³⁾	Western logs are primarily transacted in MBF but are converted to ton equivalents for external reporting purposes.

Weyerhaeuser Company								Real Estate, Energy and Natural
Q3.2018 Analyst Package								Resources Segment
Preliminary results (unaudited)

Segment Statement of Operations

in millions		Q1.2018		Q2.2018		Q3.2018		Q3.2017		YTD.2018		YTD.2017
Net sales		$	51	$	58	$	96	$	82	$	205	$	181
Cost of products sold		19		30		54		31		103		67
Gross margin		32		28		42		51		102		114
General and administrative expenses		7		6		6		6		19		20
Other operating costs (income), net		—		—		—		(1)		—		(1)
Operating income		25		22		36		46		83		95
Interest income and other		—		—		—		1		—		1
Operating income and net contribution to earnings		$	25	$	22	$	36	$	47	$	83	$	96


Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization*

in millions		Q1.2018		Q2.2018		Q3.2018		Q3.2017		YTD.2018		YTD.2017
Operating income		$	25	$	22	$	36	$	46	$	83	$	95
Depreciation, depletion and amortization		4		3		4		4		11		11
Basis of real estate sold		12		22		46		24		80		48
Adjusted EBITDA*		$	41	$	47	$	86	$	74	$	174	$	154
*See definition of Adjusted EBITDA (a non-GAAP measure) on page 1.


Selected Segment Items

in millions		Q1.2018		Q2.2018		Q3.2018		Q3.2017		YTD.2018		YTD.2017
Cash spent for capital expenditures		$	—	$	—	$	—	$	(1)	$	—	$	(2)


Segment Statistics

		Q1.2018		Q2.2018		Q3.2018		Q3.2017		YTD.2018		YTD.2017
Net Sales (millions)	Real Estate	$	34	$	38	$	76	$	64	$	148	$	128
	Energy and Natural Resources	17		20		20		18		57		53
	Total	$	51	$	58	$	96	$	82	$	205	$	181
Acres Sold	Real Estate	21,771		16,290		61,681		35,749		99,742		59,009
Price per Acre	Real Estate	$	1,539	$	2,258	$	1,209	$	1,784	$	1,452	$	2,081




Weyerhaeuser Company										Wood Products Segment
Q3.2018 Analyst Package
Preliminary results (unaudited)

Segment Statement of Operations
in millions		Q1.2018		Q2.2018		Q3.2018		Q3.2017		YTD.2018		YTD.2017
Net sales		$	1,309	$	1,525	$	1,346	$	1,299	$	4,180	$	3,746
Cost of products sold		1,005		1,119		1,071		1,005		3,195		2,933
Gross margin		304		406		275		294		985		813
Selling expenses		21		22		18		20		61		60
General and administrative expenses		34		31		32		30		97		94
Research and development expenses		—		1		—		1		1		2
Charges for integration and restructuring, closures and asset impairments		2		—		—		8		2		11
Charges (recoveries) for product remediation, net		(20)		20		—		190		—		240
Other operating costs (income), net		(3)		3		12		5		12		17
Operating income and Net contribution to earnings		$	270	$	329	$	213	$	40	$	812	$	389


Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization*
in millions		Q1.2018		Q2.2018		Q3.2018		Q3.2017		YTD.2018		YTD.2017
Operating income		$	270	$	329	$	213	$	40	$	812	$	389
Depreciation, depletion and amortization		36		36		37		37		109		108
Special items		(20)		20		—		201		—		262
Adjusted EBITDA*		$	286	$	385	$	250	$	278	$	921	$	759
*See definition of Adjusted EBITDA (a non-GAAP measure) on page 1.


Segment Special Items Included in Net Contribution to Earnings (Pre-Tax)
in millions		Q1.2018		Q2.2018		Q3.2018		Q3.2017		YTD.2018		YTD.2017
Countervailing and antidumping duties (charges) credits⁽¹⁾		$	—	$	—	$	—	$	(5)	$	—	$	(16)
Restructuring, impairments, and other charges		—		—		—		(6)		—		(6)
Product remediation (charges) recoveries, net		20		(20)		—		(190)		—		(240)
Total		$	20	$	(20)	$	—	$	(201)	$	—	$	(262)
⁽¹⁾As of first quarter 2018, countervailing and antidumping duties are no longer reported as a special item.


Selected Segment Items
in millions		Q1.2018		Q2.2018		Q3.2018		Q3.2017		YTD.2018		YTD.2017
Total decrease (increase) in working capital⁽²⁾		$	(226)	$	3	$	71	$	150	$	(152)	$	141
Cash spent for capital expenditures		$	(52)	$	(68)	$	(79)	$	(71)	$	(199)	$	(176)
⁽²⁾ Represents the change in prepaid assets, accounts receivable, accounts payable, accrued liabilities and inventory for the Wood Products segment.


Segment Statistics
in millions, except for third party sales realizations		Q1.2018		Q2.2018		Q3.2018		Q3.2017		YTD.2018		YTD.2017
Structural Lumber (volumes presented in board feet)	Third party net sales	$	569	$	681	$	581	$	525	$	1,831	$	1,541
	Third party sales realizations	$	498	$	541	$	491	$	448	$	511	$	434
	Third party sales volumes⁽³⁾	1,140		1,261		1,184		1,172		3,585		3,548
	Production volumes	1,160		1,180		1,106		1,093		3,446		3,391
Engineered Solid Section (volumes presented in cubic feet)	Third party net sales	$	129	$	139	$	132	$	131	$	400	$	378
	Third party sales realizations	$	2,088	$	2,156	$	2,208	$	2,047	$	2,150	$	1,970
	Third party sales volumes⁽³⁾	6.2		6.4		6.0		6.4		18.6		19.2
	Production volumes	6.3		6.4		6.3		6.4		19.0		19.3
Engineered I-joists (volumes presented in lineal feet)	Third party net sales	$	78	$	92	$	91	$	93	$	261	$	251
	Third party sales realizations	$	1,585	$	1,630	$	1,668	$	1,529	$	1,629	$	1,512
	Third party sales volumes⁽³⁾	49		57		54		60		160		166
	Production volumes	56		52		46		58		154		161
Oriented Strand Board (volumes presented in square feet 3/8")	Third party net sales	$	232	$	277	$	215	$	243	$	724	$	671
	Third party sales realizations	$	314	$	367	$	321	$	328	$	335	$	295
	Third party sales volumes⁽³⁾	739		754		669		741		2,162		2,274
	Production volumes	734		747		665		744		2,146		2,256
Softwood Plywood (volumes presented in square feet 3/8")	Third party net sales	$	50	$	55	$	53	$	45	$	158	$	136
	Third party sales realizations	$	438	$	461	$	439	$	386	$	446	$	381
	Third party sales volumes⁽³⁾	115		118		122		117		355		358
	Production volumes	97		105		106		88		308		284
Medium Density Fiberboard (volumes presented in square feet 3/4")	Third party net sales	$	43	$	47	$	48	$	48	$	138	$	146
	Third party sales realizations	$	839	$	839	$	828	$	821	$	835	$	820
	Third party sales volumes⁽³⁾	51		55		59		58		165		177
	Production volumes	50		57		61		63		168		182
⁽³⁾Volumes include sales of internally produced products and products purchased for resale primarily through our distribution business.

Weyerhaeuser Company									Unallocated Items
Q3.2018 Analyst Package
Preliminary results (unaudited)

Unallocated items are gains or charges not related to or allocated to an individual operating segment. They include a portion of items such as share-based compensation expense, pension and postretirement costs, foreign exchange transaction gains and losses and the elimination of intersegment profit in inventory and LIFO.

Contribution to Earnings

in millions	Q1.2018		Q2.2018		Q3.2018		Q3.2017		YTD.2018		YTD.2017
Unallocated corporate function and variable compensation expense	$	(18)	$	(19)	$	(19)	$	(19)	$	(56)	$	(55)
Liability classified share-based compensation	—		(2)		4		(1)		2		(7)
Foreign exchange gains (losses)	(2)		2		(2)		3		(2)		—
Elimination of intersegment profit in inventory and LIFO	(21)		3		—		3		(18)		(6)
Charges for integration and restructuring, closures and asset impairments	—		—		—		(6)		—		(20)
Other	(39)		(20)		(21)		8		(80)		(8)
Operating income (loss)	(80)		(36)		(38)		(12)		(154)		(96)
Non-operating pension and other postretirement benefit (costs) credits	(24)		(13)		(17)		(16)		(54)		(46)
Interest income and other	12		11		13		11		36		29
Net contribution to earnings	$	(92)	$	(38)	$	(42)	$	(17)	$	(172)	$	(113)


Adjusted Earnings before Interest, Tax, Depreciation, Depletion and Amortization*

in millions	Q1.2018		Q2.2018		Q3.2018		Q3.2017		YTD.2018		YTD.2017
Operating income (loss)	$	(80)	$	(36)	$	(38)	$	(12)	$	(154)	$	(96)
Depreciation, depletion and amortization	1		1		1		2		3		5
Unallocated pension service costs	—		—		—		1		—		3
Special items	28		—		—		6		28		20
Adjusted EBITDA*	$	(51)	$	(35)	$	(37)	$	(3)	$	(123)	$	(68)
*See definition of Adjusted EBITDA (a non-GAAP measure) on page 1.


Unallocated Special Items Included in Net Contribution to Earnings (Pre-Tax)

in millions	Q1.2018		Q2.2018		Q3.2018		Q3.2017		YTD.2018		YTD.2017
Plum Creek merger and integration-related costs	$	—	$	—	$	—	$	(6)	$	—	$	(20)
Environmental remediation insurance (charges) recoveries	(28)		—		—		—		(28)		—
Total	$	(28)	$	—	$	—	$	(6)	$	(28)	$	(20)


Unallocated Selected Items

in millions	Q1.2018		Q2.2018		Q3.2018		Q3.2017		YTD.2018		YTD.2017
Cash spent for capital expenditures	$	(1)	$	—	$	(1)	$	(1)	$	(2)	$	(2)