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Weyerhaeuser's (WY) Q2 Earnings & Net Sales Miss Estimates
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Weyerhaeuser Company’s (WY - Free Report) shares dropped slightly by 0.2% in the after-hours trading session on Jul 25 after it reported weak results for second-quarter 2024.
The company’s earnings and net sales missed the Zacks Consensus Estimate. On a year-over-year basis, both metrics declined due to the challenging lumber market affected by lower sales.
Yet, during the second quarter, Weyerhaeuser demonstrated resilience despite ongoing challenges in the lumber market. Key driving factors included significant improvement in adjusted EBITDA across all business segments compared with the first quarter of 2024. A major highlight was the announcement of high-quality timberland acquisitions, which align with its multi-year growth targets and reinforce its strategic expansion.
Looking ahead, WY remains optimistic about the long-term demand fundamentals that support its businesses. The company’s robust portfolio of assets, relentless focus on operational excellence and innovation, and disciplined capital allocation uniquely position WY to navigate various market conditions effectively.
Weyerhaeuser Company Price, Consensus and EPS Surprise
The company reported adjusted earnings of 21 cents per share, which missed the Zacks Consensus Estimate of 22 cents. The bottom line, however, decreased 34.3% from the year-ago reported figure of 32 cents per share.
Net sales for the quarter were $1.94 billion, which missed the consensus mark of $2.01 billion by 3.5% and declined 2.9% from $1.99 billion reported in the year-ago quarter.
Adjusted EBITDA was $410 million, down 12.6% from $469 million in the year-ago period.
Segment Details
Timberlands: Net sales (including inter-segment sales of $146 million) from the segment were $555 million, down from the year-ago figure of $567 million. Meanwhile, we expected segment sales to decline 5.3% year over year to $537.2 million in the quarter. Adjusted EBITDA was $147 million, down from $172 million in the year-ago quarter.
Real Estate, Energy and Natural Resources: For the reported quarter, the segment’s net sales amounted to $109 million, up from $80 million a year ago. The reported figure is in line with our expectation of $109.7 million for the quarter. Adjusted EBITDA was $102 million, indicating growth from $70 million reported in the year-ago period.
Wood Products: In the second quarter, the segment’s sales totaled $1.4 billion, down from $1.5 billion in the year-ago period. We expected segment sales to decline to $1.49 billion in the quarter from the year ago. Adjusted EBITDA was $225 million, down from $270 million a year ago.
Financial Highlights
As of Jun 30, 2024, Weyerhaeuser had cash and cash equivalents of $997 million, down from $1.16 billion at the end of 2023. Long-term debt was $4.86 billion at the second-quarter end, down from $5.07 billion at 2023-end.
Net cash from operations was $432 million for the second quarter of 2024, down from $496 million reported in the year-ago period.
Other Updates
Weyerhaeuser has announced strategic timberland acquisitions in Alabama, covering 84,300 acres for $244 million. The first transaction, valued at $48 million, closed in the second quarter of 2024, with the remaining acquisitions expected to close in the second half of the year, subject to customary conditions. These mature and highly productive timberlands are strategically located to enhance Weyerhaeuser's existing operations, delivering immediate synergies.
The acquisitions are projected to generate industry-leading cash flow and high harvest volumes per acre within the company’s Southern Timberlands business. Including these deals, Weyerhaeuser has invested approximately $775 million toward its goal of expanding its Timberlands portfolio through $1 billion of disciplined investments by the end of 2025.
Q3 Outlook
For third-quarter 2024, for Timberland, Weyerhaeuser expects earnings and adjusted EBITDA to be approximately $20-30 million less than the second quarter. In the West, the company forecasts slightly lower fee harvest volumes, moderately lower sales volumes (mainly for export), moderately lower sales realizations, and reduced per unit log and haul costs. In the South, the company anticipates moderately higher fee harvest volumes, with sales realizations and per unit log and haul costs remaining similar. Forestry and road costs are projected to be seasonally higher in both the West and South.
In the Real Estate, Energy and Natural Resources segment, Weyerhaeuser expects third-quarter earnings to be about $10 million lower and adjusted EBITDA to be around $30 million lower than the second quarter, primarily due to the timing and mix of real estate sales. The company now projects 2024 adjusted EBITDA to be approximately $330 million, an increase of $10 million from its previous outlook, and maintains its expectation that the basis as a percentage of real estate sales will be 35% to 45% for 2024.
Within the Wood Products segment, Weyerhaeuser expects its third-quarter earnings before special items and adjusted EBITDA to decline from the second quarter, excluding the impact of changes in average sales realizations for lumber and oriented strand board (OSB). Specifically, for lumber, the company expects decreased sales volumes, slightly reduced log costs, and higher unit manufacturing costs.
For OSB, it anticipates steady sales volumes, slightly increased fiber costs, and moderately higher unit manufacturing costs. In the engineered wood products segment, the company foresees stable sales volumes, lower raw material costs, and moderately reduced sales realizations, particularly for plywood and medium-density fiberboard. For distribution, the company expects slightly weaker results compared to the second quarter.
Zacks Rank & Recent Construction Releases
Weyerhaeuser currently carries a Zacks Rank #5 (Strong Sell).
United Rentals, Inc. (URI - Free Report) reported mixed second-quarter 2024 results. The company’s EPS surpassed the Zacks Consensus Estimate, but revenues missed the same. Nonetheless, both metrics registered improvement on a year-over-year basis.
United Rentals achieved record highs in revenues, adjusted EBITDA, and EPS. The company's performance aligns with its expectations for the year, driven by the successful integration of Yak. This acquisition enhances URI's strategy to expand its specialty rental business, enhance its one-stop-shop offerings, and leverage opportunities for both secular growth and cross-selling.
KBR, Inc. (KBR - Free Report) reported mixed second-quarter 2024 results, with earnings surpassing the Zacks Consensus Estimate and revenues missing the same. The top and bottom lines increased on a year-over-year basis.
KBR performed well across key metrics and expects this trend to continue for the rest of the year. Driven by robust performance in its core business, KBR raised its adjusted EBITDA and cash flow guidance for 2024.
Otis Worldwide Corporation (OTIS - Free Report) reported mixed results in the second quarter of 2024. Its adjusted earnings topped the Zacks Consensus Estimate and grew year over year. The company reported better-than-expected earnings in the trailing seven quarters. However, quarterly net sales missed the consensus mark and declined on a year-over-year basis.
Otis expects net sales between $14.3 billion and $14.5 billion compared with the prior mentioned $14.5-$14.8 billion. Organic sales growth is projected to be 1-3%, down from the prior stated 3-5%. Organic New Equipment sales are expected to be down in the mid-single digits, and organic Service sales are expected to be 6-7%.
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Weyerhaeuser's (WY) Q2 Earnings & Net Sales Miss Estimates
Weyerhaeuser Company’s (WY - Free Report) shares dropped slightly by 0.2% in the after-hours trading session on Jul 25 after it reported weak results for second-quarter 2024.
The company’s earnings and net sales missed the Zacks Consensus Estimate. On a year-over-year basis, both metrics declined due to the challenging lumber market affected by lower sales.
Yet, during the second quarter, Weyerhaeuser demonstrated resilience despite ongoing challenges in the lumber market. Key driving factors included significant improvement in adjusted EBITDA across all business segments compared with the first quarter of 2024. A major highlight was the announcement of high-quality timberland acquisitions, which align with its multi-year growth targets and reinforce its strategic expansion.
Looking ahead, WY remains optimistic about the long-term demand fundamentals that support its businesses. The company’s robust portfolio of assets, relentless focus on operational excellence and innovation, and disciplined capital allocation uniquely position WY to navigate various market conditions effectively.
Weyerhaeuser Company Price, Consensus and EPS Surprise
Weyerhaeuser Company price-consensus-eps-surprise-chart | Weyerhaeuser Company Quote
Inside the Headlines
The company reported adjusted earnings of 21 cents per share, which missed the Zacks Consensus Estimate of 22 cents. The bottom line, however, decreased 34.3% from the year-ago reported figure of 32 cents per share.
Net sales for the quarter were $1.94 billion, which missed the consensus mark of $2.01 billion by 3.5% and declined 2.9% from $1.99 billion reported in the year-ago quarter.
Adjusted EBITDA was $410 million, down 12.6% from $469 million in the year-ago period.
Segment Details
Timberlands: Net sales (including inter-segment sales of $146 million) from the segment were $555 million, down from the year-ago figure of $567 million. Meanwhile, we expected segment sales to decline 5.3% year over year to $537.2 million in the quarter. Adjusted EBITDA was $147 million, down from $172 million in the year-ago quarter.
Real Estate, Energy and Natural Resources: For the reported quarter, the segment’s net sales amounted to $109 million, up from $80 million a year ago. The reported figure is in line with our expectation of $109.7 million for the quarter. Adjusted EBITDA was $102 million, indicating growth from $70 million reported in the year-ago period.
Wood Products: In the second quarter, the segment’s sales totaled $1.4 billion, down from $1.5 billion in the year-ago period. We expected segment sales to decline to $1.49 billion in the quarter from the year ago. Adjusted EBITDA was $225 million, down from $270 million a year ago.
Financial Highlights
As of Jun 30, 2024, Weyerhaeuser had cash and cash equivalents of $997 million, down from $1.16 billion at the end of 2023. Long-term debt was $4.86 billion at the second-quarter end, down from $5.07 billion at 2023-end.
Net cash from operations was $432 million for the second quarter of 2024, down from $496 million reported in the year-ago period.
Other Updates
Weyerhaeuser has announced strategic timberland acquisitions in Alabama, covering 84,300 acres for $244 million. The first transaction, valued at $48 million, closed in the second quarter of 2024, with the remaining acquisitions expected to close in the second half of the year, subject to customary conditions. These mature and highly productive timberlands are strategically located to enhance Weyerhaeuser's existing operations, delivering immediate synergies.
The acquisitions are projected to generate industry-leading cash flow and high harvest volumes per acre within the company’s Southern Timberlands business. Including these deals, Weyerhaeuser has invested approximately $775 million toward its goal of expanding its Timberlands portfolio through $1 billion of disciplined investments by the end of 2025.
Q3 Outlook
For third-quarter 2024, for Timberland, Weyerhaeuser expects earnings and adjusted EBITDA to be approximately $20-30 million less than the second quarter. In the West, the company forecasts slightly lower fee harvest volumes, moderately lower sales volumes (mainly for export), moderately lower sales realizations, and reduced per unit log and haul costs. In the South, the company anticipates moderately higher fee harvest volumes, with sales realizations and per unit log and haul costs remaining similar. Forestry and road costs are projected to be seasonally higher in both the West and South.
In the Real Estate, Energy and Natural Resources segment, Weyerhaeuser expects third-quarter earnings to be about $10 million lower and adjusted EBITDA to be around $30 million lower than the second quarter, primarily due to the timing and mix of real estate sales. The company now projects 2024 adjusted EBITDA to be approximately $330 million, an increase of $10 million from its previous outlook, and maintains its expectation that the basis as a percentage of real estate sales will be 35% to 45% for 2024.
Within the Wood Products segment, Weyerhaeuser expects its third-quarter earnings before special items and adjusted EBITDA to decline from the second quarter, excluding the impact of changes in average sales realizations for lumber and oriented strand board (OSB). Specifically, for lumber, the company expects decreased sales volumes, slightly reduced log costs, and higher unit manufacturing costs.
For OSB, it anticipates steady sales volumes, slightly increased fiber costs, and moderately higher unit manufacturing costs. In the engineered wood products segment, the company foresees stable sales volumes, lower raw material costs, and moderately reduced sales realizations, particularly for plywood and medium-density fiberboard. For distribution, the company expects slightly weaker results compared to the second quarter.
Zacks Rank & Recent Construction Releases
Weyerhaeuser currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
United Rentals, Inc. (URI - Free Report) reported mixed second-quarter 2024 results. The company’s EPS surpassed the Zacks Consensus Estimate, but revenues missed the same. Nonetheless, both metrics registered improvement on a year-over-year basis.
United Rentals achieved record highs in revenues, adjusted EBITDA, and EPS. The company's performance aligns with its expectations for the year, driven by the successful integration of Yak. This acquisition enhances URI's strategy to expand its specialty rental business, enhance its one-stop-shop offerings, and leverage opportunities for both secular growth and cross-selling.
KBR, Inc. (KBR - Free Report) reported mixed second-quarter 2024 results, with earnings surpassing the Zacks Consensus Estimate and revenues missing the same. The top and bottom lines increased on a year-over-year basis.
KBR performed well across key metrics and expects this trend to continue for the rest of the year. Driven by robust performance in its core business, KBR raised its adjusted EBITDA and cash flow guidance for 2024.
Otis Worldwide Corporation (OTIS - Free Report) reported mixed results in the second quarter of 2024. Its adjusted earnings topped the Zacks Consensus Estimate and grew year over year. The company reported better-than-expected earnings in the trailing seven quarters. However, quarterly net sales missed the consensus mark and declined on a year-over-year basis.
Otis expects net sales between $14.3 billion and $14.5 billion compared with the prior mentioned $14.5-$14.8 billion. Organic sales growth is projected to be 1-3%, down from the prior stated 3-5%. Organic New Equipment sales are expected to be down in the mid-single digits, and organic Service sales are expected to be 6-7%.