Weyerhaeuser Co. (WY) reported its financial results for the fourth quarter and the fiscal year 2010 on February 4. Adjusted net income in the quarter was $52 million, or 10 cents per share compared with a net loss of $109 million, or 52 cents per share in the corresponding quarter of 2009. Earnings per share (EPS) surpassed the Zacks Consensus Estimate of 5 cents.
Earnings per share in the quarter exclude income tax adjustments of approximately $177 million, $31 million gain on sale of rail roads and $89 million charges for closures, restructuring and impairments.
For the fiscal year 2010, adjusted net income came in at $160 million or 50 cents per share, above the Zacks Consensus Estimate of 42 cents per share.
Revenue
Net sales were $1,664 million, flat sequentially and up 14.4% year over year based on stronger forest products revenue. Results were above the Zacks Consensus Estimate of $1,575 million.
For the fiscal year 2010, revenue totaled $6,552 million, up compared with $5,528 million in the previous year and above the Zacks Consensus Estimate of $6,466 million.
In the fourth quarter, Timberland revenue increased 32.7% year over year to $207 million and accounted for 12.4% of the total revenue. Revenue from Wood Products was up 12.2% to $572 million and represented 34.4% of total revenue.
Revenue generated from Cellulose Fibers, roughly 30.7% of total revenue, increased 25.2% to $511 million, while Real Estate, roughly 18.3% of total revenue, declined 9.5% to $305 million. Finally, revenue from corporate and other sources, 4.1% of total revenue, was $69 million.
On the same day, the company also announced to have completed selling roughly 82,000 acres of timberlands in southwestern Washington to the Hancock Timber Resource Group for approximately $200 million. This will add $150 million to the first quarter of 2011 earnings.
Costs of products sold increased 3.1% year over year and represented 81.9% of total revenue. Selling, general and administrative expenses were 10.7% of revenue and up 6.0% year over year. Research and development expenses were 23.1% and were 0.6% of total revenue.
Operating income was $53 million versus a loss of $178 million in the year-ago quarter. Margin stood at 3.2%.
Balance Sheet
Exiting the fourth quarter, Weyerhaeuser had cash and cash equivalents (Forest Products and Real Estate) of approximately $1,467 million versus $1,368 million in the previous quarter. Long-term debt was approximately $5,060 million versus $5,100 in the previous quarter.
Net cash flow from operating activities in the quarter was approximately $219 million versus $114 million in the year-ago quarter. Capital expenditure increased to $79 million from $55 million in the previous-year quarter.
In the fiscal year, net cash flow from operating activities was $744 million and capital expenditure was $194 million.
Weyerhaeuser is one of the leading U.S. forest product companies, primarily engaged in growing and harvesting timber; manufacture, distribution, and sale of forest products; and real estate development and construction.
We are currently maintaining a Neutral recommendation on Weyerhaeuser, which is supported by Zacks # 3(Hold) Rank.
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