Weyerhaeuser Co. (WY) reported its financial results for the second quarter 2011 on July 29. Earnings per share were 6 cents and excluded 4 cents (or $22 million) of after-tax charges for special items.
This is in comparison with 20 cents earnings reported in the year-ago comparable quarter. The results were also below the Zacks Consensus Estimate of 9 cents. Including the one-time gain, reported earnings per share in the quarter were 2 cents.
Adjusted net income in the quarter was $32 million compared with $42 million in the year-ago quarter.
Revenue
Net sales from continuing operations in the quarter plummeted 1.9% year over year to $1,610 million. Revenue earnings were below the Zacks Consensus Estimate of $1,759 million.
In the second quarter, Timberland revenue increased 28.0% year over year to $288 million and accounted for 17.9% of the total revenue. Revenue from Wood Products was down 11.0% to $702 million and represented 43.6% of total revenue.
Revenue generated from Cellulose Fibers, roughly 32.7% of total revenue, increased 12.4% to $526 million, while Real Estate, about 11.9% of total revenue, went down 25.7% to $191 million. Finally, revenue from corporate and other sources, 4.1% of total revenue, was $66 million.
Cost of goods sold increased 2.2% year over year and represented 83.4% of total revenue. Selling, general and administrative expenses were 9.0% of revenue and down 10.5% over the year-ago quarter. Research and development expenses were down 12.5% and were 0.4% of total revenue.
Operating income was $127 million versus $155 million in the year-ago quarter. Margin stood at 7.9%.
Balance Sheet
Exiting the second quarter, Weyerhaeuser had cash and cash equivalents (Forest Products and Real Estate) of approximately $881 million versus $1,463 million in the previous quarter. Long-term debt was approximately $4,510 million compared with $5,058 million in the previous quarter.
Net cash flow from operating activities in the quarter was approximately $116 million versus $189 million in the year-ago quarter. Capital expenditure increased 21.9% to $39 million versus $32 million in the year-ago quarter.
In the quarter, the company paid dividends amounting to $80 million.
Outlook: For the third quarter of 2011, management anticipates Timberlands earnings to be lower than the second quarter based on lower selling prices and harvest volumes for western logs as well as higher silviculture and road expenses.
For the Wood Products segment, sequentially, comparable earnings are expected in the third quarter, while earnings at Cellulose Fibers are expected to be higher sequentially. Real Estate earnings would probably be modestly higher.
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