WEYERHAEUSER CO - Quarter Report: 2023 September (Form 10-Q)

10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO ______

COMMISSION FILE NUMBER: 1-4825

WEYERHAEUSER COMPANY

(Exact name of registrant as specified in its charter)


Washington		91-0470860
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

220 Occidental Avenue South Seattle, Washington		98104-7800
(Address of principal executive offices)		(Zip Code)

(206) 539-3000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, par value $1.25 per share

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of October 23, 2023, 730,001 thousand shares of the registrant’s common stock ($1.25 par value) were outstanding.

TABLE OF CONTENTS


PART I	FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS:
	CONSOLIDATED STATEMENT OF OPERATIONS	1
	CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME	2
	CONSOLIDATED BALANCE SHEET	3
	CONSOLIDATED STATEMENT OF CASH FLOWS	4
	CONSOLIDATED STATEMENT OF CHANGES IN EQUITY	5
	INDEX FOR NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	6
	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	7
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)	14
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	26
ITEM 4.	CONTROLS AND PROCEDURES	27

PART II	OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	27
ITEM 1A.	RISK FACTORS	27
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	27
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES – NOT APPLICABLE
ITEM 4.	MINE SAFETY DISCLOSURES – NOT APPLICABLE
ITEM 5.	OTHER INFORMATION	28
ITEM 6.	EXHIBITS	29
	SIGNATURES	30

PART I – FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

WEYERHAEUSER COMPANY

CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)


	QUARTER ENDED						YEAR-TO-DATE ENDED
DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES	SEPTEMBER 2023			SEPTEMBER 2022			SEPTEMBER 2023			SEPTEMBER 2022
Net sales (Note 3)	$	2,022		$	2,276		$	5,900		$	8,361
Costs of sales		1,520			1,694			4,560			5,130
Gross margin		502			582			1,340			3,231
Selling expenses		22			24			66			70
General and administrative expenses		107			100			316			294
Other operating costs, net (Note 13)		20			1			50			19
Operating income		353			457			908			2,848
Non-operating pension and other post-employment benefit costs (Note 6)		(12	)		(12	)		(33	)		(38	)
Interest income and other		24			9			54			9
Interest expense, net of capitalized interest		(72	)		(67	)		(208	)		(204	)
Loss on debt extinguishment (Note 8)		—			—			—			(276	)
Earnings before income taxes		293			387			721			2,339
Income taxes (Note 14)		(54	)		(77	)		(101	)		(470	)
Net earnings	$	239		$	310		$	620		$	1,869

Earnings per share, basic and diluted (Note 4)	$	0.33		$	0.42		$	0.85		$	2.51
Weighted average shares outstanding (in thousands) (Note 4):
Basic		731,046			740,058			732,069			743,990
Diluted		731,742			740,975			732,542			745,081

See accompanying Notes to Consolidated Financial Statements.

WEYERHAEUSER COMPANY

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(UNAUDITED)


	QUARTER ENDED						YEAR-TO-DATE ENDED
DOLLAR AMOUNTS IN MILLIONS	SEPTEMBER 2023			SEPTEMBER 2022			SEPTEMBER 2023		SEPTEMBER 2022
Net earnings	$	239		$	310		$	620	$	1,869
Other comprehensive income (loss):
Foreign currency translation adjustments		(7	)		(53	)		—		(62	)
Changes in unamortized actuarial loss, net of tax expense of $3, $11, $7 and $40		9			32			23		122
Changes in unamortized net prior service credit, net of tax benefit (expense) of $0, $0, $1 and ($1)		—			1			1		1
Total other comprehensive income (loss)		2			(20	)		24		61
Total comprehensive income	$	241		$	290		$	644	$	1,930

See accompanying Notes to Consolidated Financial Statements.

WEYERHAEUSER COMPANY

CONSOLIDATED BALANCE SHEET

(UNAUDITED)


DOLLAR AMOUNTS IN MILLIONS, EXCEPT PAR VALUE	SEPTEMBER 30, 2023			DECEMBER 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	1,173		$	1,581
Short-term investments (Note 9)		668			—
Receivables, net		443			357
Receivables for taxes		18			42
Inventories (Note 5)		528			550
Prepaid expenses and other current assets		186			216
Total current assets		3,016			2,746
Property and equipment, less accumulated depreciation of $3,854 and $3,710		2,106			2,171
Construction in progress		311			222
Timber and timberlands at cost, less depletion		11,521			11,604
Minerals and mineral rights, less depletion		203			214
Deferred tax assets		8			8
Other assets		385			375
Total assets	$	17,550		$	17,340
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt (Note 8)	$	861		$	982
Accounts payable		288			247
Accrued liabilities (Note 7)		537			511
Total current liabilities		1,686			1,740
Long-term debt, net (Note 8)		4,818			4,071
Deferred tax liabilities		113			96
Deferred pension and other post-employment benefits (Note 6)		349			344
Other liabilities		356			340
Total liabilities		7,322			6,591
Commitments and contingencies (Note 10)
Equity:
Common shares: $1.25 par value; authorized 1,360 million shares; issued and outstanding: 730,128 thousand shares at September 30, 2023 and 732,794 thousand shares at December 31, 2022		913			916
Other capital		7,609			7,691
Retained earnings		1,929			2,389
Accumulated other comprehensive loss (Note 11)		(223	)		(247	)
Total equity		10,228			10,749
Total liabilities and equity	$	17,550		$	17,340

See accompanying Notes to Consolidated Financial Statements.

WEYERHAEUSER COMPANY

CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)


	YEAR-TO-DATE ENDED
DOLLAR AMOUNTS IN MILLIONS	SEPTEMBER 2023			SEPTEMBER 2022
Cash flows from operations:
Net earnings	$	620		$	1,869
Noncash charges (credits) to earnings:
Depreciation, depletion and amortization		374			360
Basis of real estate sold		80			77
Pension and other post-employment benefits (Note 6)		50			65
Share-based compensation expense (Note 12)		26			25
Loss on debt extinguishment (Note 8)		—			276
Other		(4	)		17
Change in:
Receivables, net		(77	)		81
Receivables and payables for taxes		51			15
Inventories		23			(30	)
Prepaid expenses and other current assets		(5	)		(7	)
Accounts payable and accrued liabilities		43			(23	)
Pension and post-employment benefit contributions and payments		(16	)		(19	)
Other		(20	)		(41	)
Net cash from operations		1,145			2,665
Cash flows from investing activities:
Capital expenditures for property and equipment		(209	)		(207	)
Capital expenditures for timberlands reforestation		(42	)		(38	)
Acquisition of timberlands (Note 15)		(70	)		(286	)
Purchase of short-term investments		(664	)		—
Other		3			1
Net cash from investing activities		(982	)		(530	)
Cash flows from financing activities:
Cash dividends on common shares		(1,076	)		(1,485	)
Net proceeds from issuance of long-term debt (Note 8)		743			881
Payments on long-term debt (Note 8)		(118	)		(1,203	)
Repurchases of common shares (Note 4)		(109	)		(402	)
Other		(11	)		(5	)
Net cash from financing activities		(571	)		(2,214	)
Net change in cash, cash equivalents and restricted cash		(408	)		(79	)
Cash, cash equivalents and restricted cash at beginning of period		1,581			1,999
Cash, cash equivalents and restricted cash at end of period	$	1,173		$	1,920
Cash paid during the period for:
Interest, net of amount capitalized of $5 and $5	$	190		$	211
Income taxes, net of refunds	$	40		$	446

See accompanying Notes to Consolidated Financial Statements.

WEYERHAEUSER COMPANY

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(UNAUDITED)


	QUARTER ENDED						YEAR-TO-DATE ENDED
DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES	SEPTEMBER 2023			SEPTEMBER 2022			SEPTEMBER 2023			SEPTEMBER 2022
Common shares:
Balance at beginning of period	$	914		$	927		$	916		$	934
Issued for exercise of stock options and vested units		—			—			2			2
Repurchases of common shares (Note 4)		(1	)		(5	)		(5	)		(14	)
Balance at end of period		913			922			913			922
Other capital:
Balance at beginning of period		7,624			7,954			7,691			8,181
Issued for exercise of stock options		1			1			3			14
Repurchases of common shares (Note 4)		(24	)		(140	)		(105	)		(390	)
Share-based compensation		9			8			26			25
Other transactions, net		(1	)		1			(6	)		(6	)
Balance at end of period		7,609			7,824			7,609			7,824
Retained earnings:
Balance at beginning of period		1,828			2,333			2,389			2,131
Net earnings		239			310			620			1,869
Dividends on common shares		(138	)		(133	)		(1,080	)		(1,490	)
Balance at end of period		1,929			2,510			1,929			2,510
Accumulated other comprehensive loss:
Balance at beginning of period		(225	)		(398	)		(247	)		(479	)
Other comprehensive income (loss)		2			(20	)		24			61
Balance at end of period (Note 11)		(223	)		(418	)		(223	)		(418	)
Total equity:
Balance at end of period	$	10,228		$	10,838		$	10,228		$	10,838

Dividends paid per common share	$	0.19		$	0.18		$	1.47		$	1.99

See accompanying Notes to Consolidated Financial Statements.

INDEX FOR NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1:	BASIS OF PRESENTATION	7

NOTE 2:	BUSINESS SEGMENTS	7

NOTE 3:	REVENUE RECOGNITION	8

NOTE 4:	NET EARNINGS PER SHARE AND SHARE REPURCHASES	8

NOTE 5:	INVENTORIES	9

NOTE 6:	PENSION AND OTHER POST-EMPLOYMENT BENEFIT PLANS	10

NOTE 7:	ACCRUED LIABILITIES	10

NOTE 8:	LONG-TERM DEBT AND LINE OF CREDIT	10

NOTE 9:	FAIR VALUE OF FINANCIAL INSTRUMENTS	11

NOTE 10:	LEGAL PROCEEDINGS, COMMITMENTS AND CONTINGENCIES	11

NOTE 11:	ACCUMULATED OTHER COMPREHENSIVE LOSS	12

NOTE 12:	SHARE-BASED COMPENSATION	12

NOTE 13:	OTHER OPERATING COSTS, NET	13

NOTE 14:	INCOME TAXES	13

NOTE 15:	TIMBERLAND ACQUISITIONS	13

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FOR THE QUARTERS AND YEAR-TO-DATE PERIODS ENDED SEPTEMBER 30, 2023 AND 2022

NOTE 1: BASIS OF PRESENTATION

Our consolidated financial statements provide an overall view of our results of operations, financial condition and cash flows. They include our accounts and the accounts of entities we control, including majority-owned domestic and foreign subsidiaries. They do not include our intercompany transactions and accounts, which are eliminated. Throughout these Notes to Consolidated Financial Statements, unless specified otherwise, references to “Weyerhaeuser,” “we,” “the company” and “our” refer to the consolidated company.

The accompanying unaudited Consolidated Financial Statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of our financial position, results of operations and cash flows for the interim periods presented. Except as otherwise disclosed in these Notes to Consolidated Financial Statements, such adjustments are of a normal, recurring nature. The Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission pertaining to interim financial statements. Certain information and footnote disclosures normally included in our annual Consolidated Financial Statements have been condensed or omitted. These quarterly Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2022. Results of operations for interim periods should not necessarily be regarded as indicative of the results that may be expected for the full year.

NOTE 2: BUSINESS SEGMENTS

We are principally engaged in growing and harvesting timber; manufacturing, distributing and selling products made from trees; maximizing the value of our acreage through the sale of higher and better use (HBU) properties; and monetizing the value of surface and subsurface assets through leases and royalties. Our business segments are organized based primarily on products and services which include:

●

Timberlands – Logs, timber, recreational leases and other products;

●

Real Estate, Energy and Natural Resources (Real Estate & ENR) – Real Estate (sales of timberlands) and ENR (rights to explore for and extract hard minerals, construction materials, natural gas production, and wind and solar); and

●

Wood Products – Structural lumber, oriented strand board, engineered wood products and building materials distribution.

A reconciliation of our business segment information to the respective information in the Consolidated Statement of Operations is as follows:


	QUARTER ENDED						YEAR-TO-DATE ENDED
DOLLAR AMOUNTS IN MILLIONS	SEPTEMBER 2023			SEPTEMBER 2022			SEPTEMBER 2023			SEPTEMBER 2022
Sales to unaffiliated customers:
Timberlands	$	380		$	441		$	1,259		$	1,421
Real Estate & ENR		105			68			286			313
Wood Products		1,537			1,767			4,355			6,627
		2,022			2,276			5,900			8,361
Intersegment sales:
Timberlands		141			133			433			450

Total sales		2,163			2,409			6,333			8,811
Intersegment eliminations		(141	)		(133	)		(433	)		(450	)
Total	$	2,022		$	2,276		$	5,900		$	8,361
Net contribution (charge) to earnings:
Timberlands	$	78		$	107		$	302		$	442
Real Estate & ENR		56			48			161			194
Wood Products		277			344			590			2,389
		411			499			1,053			3,025
Unallocated items(1)		(46	)		(45	)		(124	)		(206	)
Net contribution to earnings		365			454			929			2,819
Interest expense, net of capitalized interest		(72	)		(67	)		(208	)		(204	)
Loss on debt extinguishment		—			—			—			(276	)
Earnings before income taxes		293			387			721			2,339
Income taxes		(54	)		(77	)		(101	)		(470	)
Net earnings	$	239		$	310		$	620		$	1,869

(1)

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

NOTE 3: REVENUE RECOGNITION

A reconciliation of revenue recognized by our major products:


	QUARTER ENDED				YEAR-TO-DATE ENDED
DOLLAR AMOUNTS IN MILLIONS	SEPTEMBER 2023		SEPTEMBER 2022		SEPTEMBER 2023		SEPTEMBER 2022
Net sales to unaffiliated customers:
Timberlands segment
Delivered logs:
West
Domestic sales	$	96	$	97	$	290	$	313
Export grade sales		80		127		321		478
Subtotal West		176		224		611		791
South		155		166		485		480
North		11		15		35		40
Subtotal delivered logs sales		342		405		1,131		1,311
Stumpage and pay-as-cut timber		12		10		43		30
Recreational and other lease revenue		19		18		54		51
Other(1)		7		8		31		29
Net sales attributable to Timberlands segment		380		441		1,259		1,421
Real Estate & ENR segment
Real estate		79		30		198		217
Energy and natural resources		26		38		88		96
Net sales attributable to Real Estate & ENR segment		105		68		286		313
Wood Products segment
Structural lumber		570		676		1,658		2,880
Oriented strand board		284		287		707		1,348
Engineered solid section		216		233		600		676
Engineered I-joists		122		166		335		471
Softwood plywood		42		47		127		158
Medium density fiberboard		40		50		120		151
Complementary building products		184		222		551		676
Other(2)		79		86		257		267
Net sales attributable to Wood Products segment		1,537		1,767		4,355		6,627
Total net sales	$	2,022	$	2,276	$	5,900	$	8,361

(1)

Other Timberlands sales include sales of seeds and seedlings from our nursery operations as well as wood chips.

(2)

Other Wood Products sales include wood chips, other byproducts and third-party residual log sales from our Canadian Forestlands operations.

NOTE 4: NET EARNINGS PER SHARE AND SHARE REPURCHASES

Our basic and diluted earnings per share were:

●

$0.33 during third quarter 2023 and $0.85 during year-to-date 2023;

●

$0.42 during third quarter 2022 and $2.51 during year-to-date 2022.

Basic earnings per share is net earnings divided by the weighted average number of our outstanding common shares, including stock equivalent units where there is no circumstance under which those shares would not be issued. Diluted earnings per share is net earnings divided by the sum of the weighted average number of our outstanding common shares and the effect of our outstanding dilutive potential common shares.


	QUARTER ENDED				YEAR-TO-DATE ENDED
SHARES IN THOUSANDS	SEPTEMBER 2023		SEPTEMBER 2022		SEPTEMBER 2023		SEPTEMBER 2022
Weighted average common shares outstanding – basic		731,046		740,058		732,069		743,990
Dilutive potential common shares:
Stock options		154		192		134		294
Restricted stock units		304		420		117		417
Performance share units		238		305		222		380
Total effect of outstanding dilutive potential common shares		696		917		473		1,091
Weighted average common shares outstanding – dilutive		731,742		740,975		732,542		745,081

We use the treasury stock method to calculate the dilutive effect of our outstanding stock options, restricted stock units and performance share units.

Potential Shares Not Included in the Computation of Diluted Earnings per Share

The following shares were not included in the computation of diluted earnings per share because they were either antidilutive or the required performance or market conditions were not met. Some or all of these shares may be dilutive potential common shares in future periods.


	QUARTER ENDED				YEAR-TO-DATE ENDED
SHARES IN THOUSANDS	SEPTEMBER 2023		SEPTEMBER 2022		SEPTEMBER 2023		SEPTEMBER 2022
Stock options		609		620		609		620
Performance share units		612		623		612		623

Share Repurchase Program

On September 22, 2021, we announced that our board of directors approved a new share repurchase program (the 2021 Repurchase Program) under which we are authorized to repurchase up to $1 billion of outstanding shares. Concurrently, the board terminated the remaining repurchase authorization under the share repurchase program approved by the board in February 2019 (the 2019 Repurchase Program).

We repurchased 757,510 common shares for approximately $25 million (including transaction fees) under the 2021 Repurchase Program during third quarter 2023 and 3,562,944 common shares for approximately $110 million under the 2021 Repurchase Program during year-to-date 2023. As of September 30, 2023, we had remaining authorization of $267 million for future share repurchases. During year-to-date 2022, we repurchased 11,217,300 common shares for approximately $404 million (including transaction fees) under the 2021 Repurchase Program.

All common stock repurchases under the 2021 Repurchase Program were made in open-market transactions. We record share repurchases upon trade date as opposed to the settlement date when cash is disbursed. We record a liability for repurchases that have not yet been settled as of period end. There were 32,757 unsettled shares (approximately $1 million) as of September 30, 2023, and 223,548 unsettled shares (approximately $7 million) as of December 31, 2022.

NOTE 5: INVENTORIES

Inventories include raw materials, work-in-process and finished goods, as well as materials and supplies.


DOLLAR AMOUNTS IN MILLIONS	SEPTEMBER 30, 2023		DECEMBER 31, 2022
LIFO inventories:
Logs	$	28	$	32
Lumber, plywood, panels and fiberboard		80		61
Other products		16		9
Moving average cost or FIFO inventories:
Logs		31		56
Lumber, plywood, panels, fiberboard and engineered wood products		98		122
Other products		129		140
Materials and supplies		146		130
Total	$	528	$	550

LIFO – the last-in, first-out method – applies to major inventory products held at our U.S. locations. The moving average cost method or FIFO – the first-in, first-out method – applies to the balance of our U.S. raw material and product inventories, all material and supply inventories and all foreign inventories.

NOTE 6: PENSION AND OTHER POST-EMPLOYMENT BENEFIT PLANS

The components of net periodic benefit cost are:


	PENSION
	QUARTER ENDED						YEAR-TO-DATE ENDED
DOLLAR AMOUNTS IN MILLIONS	SEPTEMBER 2023			SEPTEMBER 2022			SEPTEMBER 2023			SEPTEMBER 2022
Service cost	$	6		$	9		$	17		$	27
Interest cost		30			27			89			80
Expected return on plan assets		(30	)		(40	)		(90	)		(120	)
Amortization of actuarial loss		10			23			29			70
Amortization of prior service cost		—			1			1			2
Total net periodic benefit cost – pension	$	16		$	20		$	46		$	59


	OTHER POST-EMPLOYMENT BENEFITS
	QUARTER ENDED				YEAR-TO-DATE ENDED
DOLLAR AMOUNTS IN MILLIONS	SEPTEMBER 2023		SEPTEMBER 2022		SEPTEMBER 2023			SEPTEMBER 2022
Interest cost	$	2	$	—	$	4		$	2
Amortization of actuarial loss		—		1		1			4
Amortization of prior service credit		—		—		(1	)		—
Total net periodic benefit cost – other post-employment benefits	$	2	$	1	$	4		$	6

For the periods presented, service cost is included in “Costs of sales,” “Selling expenses,” and “General and administrative expenses” with the remaining components included in “Non-operating pension and other post-employment benefit costs” in the Consolidated Statement of Operations.

Fair Value of Pension Plan Assets and Obligations

In our year-end reporting process, we estimate the fair value of pension plan assets based upon the information available at that time. For certain assets, primarily private equity funds, the information available consists of net asset values as of an interim date, cash flows between the interim date and the end of the year and market events. We update the year-end estimated fair value of pension plan assets in second quarter of each year to incorporate final net asset values reflected in financial statements received after we have filed our Annual Report on Form 10-K. No adjustments to the fair value of assets or projected benefit obligations were necessary during second quarter 2023.

NOTE 7: ACCRUED LIABILITIES

Accrued liabilities were comprised of the following:


DOLLAR AMOUNTS IN MILLIONS	SEPTEMBER 30, 2023		DECEMBER 31, 2022
Compensation and employee benefit costs	$	173	$	201
Current portion of lease liabilities		21		22
Customer rebates, volume discounts and deferred income		135		132
Interest		84		69
Taxes payable		66		23
Other		58		64
Total	$	537	$	511

NOTE 8: LONG-TERM DEBT AND LINE OF CREDIT

In July 2023, we repaid $118 million of our 7.125 percent notes at maturity.

In May 2023, we completed an offering of debt securities by issuing $750 million of 4.750 percent notes due in May 2026. The net proceeds after deducting the discount, underwriting fees and issuance costs were $743 million. Of these total net proceeds, $664 million was invested in short-term investments classified as held-to-maturity securities.

In March 2022, we completed a series of transactions that lowered our weighted average interest rate and extended our weighted average maturity by issuing $900 million in notes and using the net proceeds plus cash on hand to close cash tender offers for $931 million of principal in higher interest rate notes. We issued $450 million of 3.375 percent notes due in March 2033 and $450 million of 4.000 percent notes due in March 2052. The net proceeds after deducting the discount, underwriting fees and issuance costs were $444 million and $437 million, respectively. The net proceeds were used to retire $592 million of our 7.375 percent notes due in March 2032, $161 million of our 8.500 percent notes due in January 2025, $73 million of our 7.125 percent notes due in July 2023, $65 million of our 7.950 percent notes due in March 2025, and $40 million of our 7.850 percent notes due in July 2026. We paid holders an aggregate $1.2 billion in cash reflecting principal, premium to par and tender premium. A net pretax charge of $276 million ($207 million after-tax) was included in the Consolidated Statement of Operations in first quarter 2022 for premiums to retire $931 million of principal plus unamortized debt issuance costs and unamortized debt discounts in connection with the early debt retirement.

In March 2023, we entered into a new $1.5 billion five-year senior unsecured revolving credit facility, which expires in March 2028 and replaced the existing facility which was set to expire in January 2025. Borrowings will bear interest at a floating rate based on either the adjusted term Secured Overnight Financing Rate (SOFR) plus a spread or a mutually agreed upon base rate plus a spread. We had no outstanding borrowings on our credit facility as of September 30, 2023 and December 31, 2022.

NOTE 9: FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair value and carrying value of our long-term debt consisted of the following:


DOLLAR AMOUNTS IN MILLIONS	SEPTEMBER 30, 2023		DECEMBER 31, 2022
Long-term fixed rate debt (including current maturities):
Carrying value	$	5,679	$	5,053
Fair value (level 2)	$	5,434	$	4,918

To estimate the fair value of fixed rate long-term debt, we used the market approach, which is based on quoted market prices we received for the same types and issues of our debt. We believe that our line of credit has a net carrying value that approximates its fair value within an insignificant difference. The inputs to the valuations of our long-term debt are based on market data obtained from independent sources or information derived principally from observable market data. The difference between the fair value and the carrying value represents the theoretical net premium or discount we would pay or receive to retire all debt at the measurement date.

Fair Value of Other Financial Instruments

We believe that our other financial instruments, including cash and cash equivalents, short-term investments, receivables and payables, have net carrying values that approximate their fair values with only insignificant differences. This is primarily due to the short-term nature of these instruments and the allowance for doubtful accounts.

As of September 30, 2023, we had $668 million in short-term investments classified as held-to-maturity debt securities, which consist of a mixture of term deposits and Treasury bills. We did not have any short-term investments classified as held-to-maturity debt securities as of December 31, 2022. These short-term investments mature within one year and are recorded in "Short-term investments" on our Consolidated Balance Sheet. We record held-to-maturity debt securities at amortized cost, which approximates fair value.

NOTE 10: LEGAL PROCEEDINGS, COMMITMENTS AND CONTINGENCIES

Legal Proceedings

We are party to various legal proceedings arising in the ordinary course of business. We are not currently a party to any legal proceeding that management believes could have a material adverse effect on our Consolidated Statement of Operations, Consolidated Balance Sheet or Consolidated Statement of Cash Flows.

Environmental Matters

Site Remediation

Under the federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) – commonly known as the “Superfund” – and similar state laws, we:

●

are a party to various proceedings related to the cleanup of hazardous waste sites and

●

have been notified that we may be a potentially responsible party related to the cleanup of other hazardous waste sites for which proceedings have not yet been initiated.

As of September 30, 2023, our total accrual for future estimated remediation costs on active Superfund sites and other sites for which we are potentially responsible was approximately $75 million. These amounts are recorded in "Accrued liabilities" and "Other liabilities" on our Consolidated Balance Sheet.

NOTE 11: ACCUMULATED OTHER COMPREHENSIVE LOSS

Changes in amounts included in our accumulated other comprehensive loss by component are:


	QUARTER ENDED						YEAR-TO-DATE ENDED
DOLLAR AMOUNTS IN MILLIONS	SEPTEMBER 2023			SEPTEMBER 2022			SEPTEMBER 2023			SEPTEMBER 2022
Pension(1)
Balance at beginning of period	$	(444	)	$	(632	)	$	(458	)	$	(720	)
Other comprehensive income (loss) before reclassifications		—			14			(1	)		65
Amounts reclassified from accumulated other comprehensive loss to earnings(2)		9			19			24			56
Total other comprehensive income		9			33			23			121
Balance at end of period	$	(435	)	$	(599	)	$	(435	)	$	(599	)
Other post-employment benefits(1)
Balance at beginning of period	$	21		$	—		$	20		$	(2	)
Other comprehensive loss before reclassifications		(1	)		(1	)		—			(1	)
Amounts reclassified from accumulated other comprehensive loss to earnings(2)		1			1			1			3
Total other comprehensive income		—			—			1			2
Balance at end of period	$	21		$	—		$	21		$	—
Translation adjustments and other
Balance at beginning of period	$	198		$	234		$	191		$	243
Translation adjustments		(7	)		(53	)		—			(62	)
Total other comprehensive loss		(7	)		(53	)		—			(62	)
Balance at end of period		191			181			191			181
Accumulated other comprehensive loss, end of period	$	(223	)	$	(418	)	$	(223	)	$	(418	)

(1)

Amounts presented are net of tax.

(2)

Amounts of actuarial loss and prior service (cost) credit are components of net periodic benefit cost. See Note 6: Pension and Other Post-Employment Benefit Plans.

NOTE 12: SHARE-BASED COMPENSATION

Share-based compensation activity during year-to-date 2023 included the following:


SHARES IN THOUSANDS	GRANTED		VESTED
Restricted stock units (RSUs)		844		771
Performance share units (PSUs)		392		228

A total of 897 thousand shares of common stock were issued as a result of RSU vestings, PSU vestings and stock option exercises.

Restricted Stock Units

The weighted average fair value of the RSUs granted in 2023 was $33.76. The vesting provisions for RSUs granted in 2023 were consistent with prior year grants.

Performance Share Units

The weighted average grant date fair value of PSUs granted in 2023 was $37.58. The final number of shares granted in 2023 will vest between a range of 0 percent to 150 percent of each grant's target, depending upon actual company performance compared against an industry peer group. PSUs granted in 2023 will vest at a maximum of 100 percent of target value in the event of negative absolute company total shareholder return.

Weighted Average Assumptions Used in Estimating the Value of Performance Share Units Granted in 2023


		PERFORMANCE SHARE UNITS
Performance period		2/09/2023 – 12/31/2025
Valuation date average stock price(1)		$33.96
Expected dividends		2.25%
Risk-free rate		4.21% – 4.66%
Expected volatility		29.26% – 40.19%

(1)

Calculated as an average of the high and low prices on grant date.

NOTE 13: OTHER OPERATING COSTS, NET

Other operating costs, net were comprised of the following:


	QUARTER ENDED					YEAR-TO-DATE ENDED
DOLLAR AMOUNTS IN MILLIONS	SEPTEMBER 2023		SEPTEMBER 2022			SEPTEMBER 2023			SEPTEMBER 2022
Environmental remediation charges	$	1	$	—		$	14		$	1
Foreign exchange losses (gains), net		1		(8	)		(1	)		(12	)
Litigation expense, net		9		2			11			10
Research and development expenses		2		1			5			4
Other, net		7		6			21			16
Total other operating costs, net	$	20	$	1		$	50		$	19

NOTE 14: INCOME TAXES

As a real estate investment trust (REIT), we generally are not subject to federal corporate income taxes on REIT taxable income that is distributed to shareholders. We are required to pay corporate income taxes on earnings of our wholly-owned Taxable REIT Subsidiaries (TRSs), which includes our Wood Products segment earnings and portions of our Timberlands and Real Estate & ENR segments' earnings.

The quarterly provision for income taxes is based on our current estimate of the annual effective tax rate and is adjusted for discrete taxable events that have occurred during the year. Our 2023 estimated annual effective tax rate, excluding discrete items, differs from the U.S. federal statutory tax rate of 21 percent primarily due to state and foreign income taxes and tax benefits associated with our nontaxable REIT earnings.

NOTE 15: TIMBERLAND ACQUISITIONS

On July 19, 2023, we completed the purchase of 22 thousand acres of Mississippi timberlands for approximately $60 million. We recorded $59 million of timberland assets in "Timber and timberlands at cost, less depletion" and $1 million of related assets in "Property and equipment, net" on our Consolidated Balance Sheet.

On May 18, 2022, we completed the purchase of 81 thousand acres of North and South Carolina timberlands for approximately $265 million. We recorded $263 million of timberland assets in “Timber and timberlands at cost, less depletion” and $2 million of related assets in “Property and equipment, net” on our Consolidated Balance Sheet.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)

NOTE ABOUT 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. These include, without limitation, statements relating to: our expected future financial and operating performance; our plans, strategies, intentions and expectations; our capital structure and the sufficiency of our liquidity position to meet future cash requirements; compliance with covenants in our debt agreements; our expectations concerning our contingent liabilities and the sufficiency of related reserves and accruals including, but not limited to, cost estimates of future litigation and environmental remediation; our provision for income taxes; expected capital expenditures; expected returns on pension plan assets; market and general economic conditions, including related influencing factors such as the trajectory of U.S. housing activity, repair and remodel activity, inflation trends and interest rates; our expectations about our future opportunities in emerging carbon offset and carbon capture and storage markets; and assumptions used in valuing incentive compensation and related expense.

Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often involve use of words such as “anticipate,” “believe,” “committed,” "continue,” “estimate,” “expect,” “foreseeable,” “maintain,” “may,” “potential,” and “will,” or similar words or terminology. They may use the positive, negative or another variation of those and similar words. These forward-looking statements are based on our current expectations and assumptions and are not guarantees of future events or 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 those described in the forward-looking statements. There is no guarantee that any of the events anticipated by our forward-looking statements will occur. If any of the events occur, there is no guarantee what effect it will have on our operations, cash flows, or financial condition. We undertake no obligation to update our forward-looking statements after the date of this report. The factors listed below, as well as other factors not described herein because they are not currently known to us or we currently judge them to be immaterial, may cause our actual results to differ significantly from our forward-looking statements:

●

the effect of general economic conditions, including employment rates, interest rate levels, inflation, housing starts, general availability and cost of financing for home mortgages and the relative strength of the U.S. dollar;

●

the effect of COVID-19 and other viral or disease outbreaks, including but not limited to any related regulatory restrictions or requirements, and their potential effects on our business, results of operations, cash flows, financial condition and future prospects;

●

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 Japanese yen, the Chinese yuan, and the Canadian dollar, and the relative value of the euro to the yen;

●

restrictions on international trade and tariffs imposed on imports or exports;

●

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, including restructuring and cost reduction initiatives;

●

our ability to hire and retain capable employees;

●

the successful and timely execution and integration of our strategic acquisitions, including our ability to realize expected benefits and synergies, and the successful and timely execution of our strategic divestitures, each of which is subject to a number of risks and conditions beyond our control including, but not limited to, timing and required regulatory approvals or the occurrence of any event, change or other circumstances that could give rise to a termination of any acquisition or divestiture transaction under the terms of the governing transaction agreements;

●

raw material availability and prices;

●

the effect of weather;

●

changes in global or regional climate conditions and governmental response to such changes;

●

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 as it relates to the cost of pension benefits 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 and the accuracy of our estimates of charges related to casualty losses;

●

changes in accounting principles; and

●

other risks and uncertainties described in this report under Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) and in our 2022 Annual Report on Form 10-K, as well as those set forth from time to time in our other public statements, reports, registration statements, prospectuses, information statements and other filings with the SEC.

It is not possible to predict or identify all risks and uncertainties that might affect the accuracy of our forward-looking statements and, consequently, our descriptions of such risks and uncertainties should not be considered exhaustive. There is no guarantee that any of the events anticipated by these forward-looking statements will occur, and if any of the events do occur, there is no guarantee what effect they will have on the company's business, results of operations, cash flows, financial condition and future prospects.

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.

RESULTS OF OPERATIONS

In reviewing our results of operations, it is important to understand these terms:

●

Sales realizations for Timberlands and Wood Products refer to net selling prices. This includes selling price plus freight, minus normal sales deductions. Real Estate transactions are presented at the contract sales price before commissions and closing costs, net of any credits.

●

Net contribution (charge) to earnings does not include interest expense, loss on debt extinguishment or income taxes.

ECONOMIC AND MARKET CONDITIONS AFFECTING OUR OPERATIONS

Our market conditions and the strength of the broader U.S. economy are, and will continue to be, influenced by the trajectory of activity in the U.S. housing and repair and remodel segments, inflation trends and interest rates. The demand for sawlogs within our Timberlands segment is directly affected by domestic production of wood-based building products. The strength of the U.S. housing market, particularly new residential construction, strongly affects demand in our Wood Products segment, as does repair and remodeling activity. Seasonal weather patterns impact the level of construction activity in the U.S., which in turn affects demand for our logs and wood products. Our Timberlands segment, specifically the Western region, is also affected by export demand and trade policy. Japanese housing starts are a key driver of export log demand in Japan. The demand for pulpwood from our Timberlands segment is directly affected by the production of pulp, paper and oriented strand board (OSB) as well as the demand for biofuels, such as wood-burning pellets made from pulpwood. Our Timberlands segment is also influenced by the availability of harvestable timber. In general, Western log markets are highly tensioned by available supply, while Southern log markets have more available supply. However, additional mill capacity being added in the U.S. South has led to tightening of markets in certain geographies. Our Real Estate, Energy and Natural Resources segment is affected by a variety of factors, including the general state of the economy, local real estate market conditions, the level of construction activity in the U.S. and evolution of emerging renewable energy and carbon-related markets.

Over the past year, home sales and building activity slowed due in part to higher mortgage interest rates, reduced affordability and general macroeconomic conditions. During third quarter 2023, market conditions continued to shift towards sales of new homes as existing inventory remained near record-low levels. On a seasonally adjusted annual basis, as reported by the U.S. Census Bureau, housing starts for third quarter 2023 averaged 1.36 million units, a 6.2 percent decrease from second quarter 2023. Single-family starts averaged 961 thousand units in third quarter 2023, a 3.4 percent increase from second quarter 2023. Multi-family starts averaged 398 thousand units in third quarter 2023, which was a 23.5 percent decrease from second quarter 2023. Single-family construction is the primary driver for our business as compared to multi-family due to the amount of wood products used. Sales of newly built, single-family homes averaged a seasonally adjusted annual rate of 724 thousand units for third quarter 2023, an increase of 4.8 percent from the prior quarter. Over the medium to long-term, we expect a favorable U.S. housing construction market supported by strong demographics in the key homebuying age cohorts, a decade of underbuilding and a historically low housing inventory.

Repair and remodeling expenditures were steady from second quarter 2023 to third quarter 2023 according to the Census Bureau Advance Retail Spending report. Do-it-yourself activity has been returning to more normalized levels while professionally contracted activities have benefited from larger projects and increases in home equity levels. Over the longer term, we expect this sector to return to pre-pandemic growth trends with healthy household balance sheets, elevated home equity and an aging U.S. housing stock, with a median age of 43 years.

In U.S. wood product markets, demand in third quarter 2023 helped lift prices in mid-summer. By the end of the third quarter, this had been offset by macroeconomic and housing market uncertainty, including an increase in interest and mortgage rates. Temporary and permanent curtailments provided some balance to the market. OSB demand was strong for most of the quarter, as customer inventories were not sufficient to meet current building activity. The Random Lengths Framing Lumber Composite price averaged $438/MBF and the OSB Composite averaged $540/MSF in third quarter 2023. Over the course of the third quarter, prices for lumber decreased from $438/MBF to $422/MBF and prices for OSB increased from $432/MSF to $454/MSF.

In Western log markets, Douglas fir sawlog prices decreased by 0.2 percent in third quarter 2023 compared with second quarter 2023, as reported by RISI Log Lines based on Weyerhaeuser’s sales mix. Overall, domestic prices in the West declined due to compressed mill margins, but this was partially offset by continued constraints in log supply. In the South, delivered sawlog prices decreased 0.3 percent in third quarter 2023 compared to second quarter 2023 and declined 2.0 percent from third quarter 2022 as reported by TimberMart-South. Favorable harvest conditions later in the quarter provided sufficient supply to meet mills' needs.

Currency exchange rates, available supply from other countries and trade policy affect our export businesses. During third quarter 2023, end use demand softened in export markets, partially offset by continued disruptions in global log and lumber supply. In Japan, total housing starts decreased 3.7 percent year to date through August compared to the same period in 2022, while the key Post and Beam segment saw a 5.7 percent decrease. Lumber imports to Japan from Europe placed downward pressure on market conditions. China demand has improved from low levels late in 2022 but remains subdued due to general economic conditions and steady supply of logs from New Zealand and rough lumber from Russia.

Interest rates affect our business primarily through their impact on mortgage rates and housing affordability, their general impact on the economy and their influence on our capital management activities. Actions by the U.S. Federal Reserve, the overall condition of the economy and fluctuations in financial markets are all factors that influence long-term interest rates. 30-year mortgage rates, which are correlated with long-term interest rates, increased from 6.7 percent at the end of second quarter 2023 to 7.3 percent at the end of third quarter 2023, according to economic data from the St. Louis Federal Reserve. Many builders have been able to offset higher mortgage rates through discounts, mortgage rate buydowns and modifying product offerings such as home sizes and finishes. Higher rates have also locked-in many existing homeowners from selling, reducing inventories of existing homes for sale which has led to increased demand for available new homes.

Increased inflation affects the cost of our operations across each of our business segments, including costs for raw materials, transportation, energy and labor. The Consumer Price Index increased 3.7 percent year over year in September 2023, which is markedly down from its peak of over 9.0 percent in June 2022. While we can offset some of the impacts of inflation through our sales activities, our operational excellence initiatives and our procurement practices, not all of the costs associated with inflation can be fully mitigated or passed on to the consumer.

The condition of the labor market affects all of our businesses as it relates to our ability to attract and retain employees and contractors. The unemployment rate of 3.8 percent in September 2023 remained near historically low levels and increased 0.2 percent from the end of second quarter

2023. Labor force participation has increased to 62.8 percent in September 2023, from 62.3 percent in September 2022, approaching pre-pandemic levels.

Governments and businesses across the globe are taking action on climate change and are making significant commitments towards decarbonizing operations and reducing greenhouse gas emissions to net zero. Achieving these commitments will require governments and companies to take major steps to modify operations, invest in low-carbon activities and purchase offsets to reduce environmental impacts. We believe we are uniquely positioned to help entities achieve these commitments through natural climate solutions, including forest carbon sequestration, carbon capture and storage and renewable energy activities.

CONSOLIDATED RESULTS

How We Did Third Quarter 2023 and Year-to-Date 2023


	QUARTER ENDED				AMOUNT OF CHANGE			YEAR-TO-DATE ENDED				AMOUNT OF CHANGE
DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES	SEPTEMBER 2023		SEPTEMBER 2022		2023 VS. 2022			SEPTEMBER 2023		SEPTEMBER 2022		2023 VS. 2022
Net sales	$	2,022	$	2,276	$	(254	)	$	5,900	$	8,361	$	(2,461	)
Costs of sales	$	1,520	$	1,694	$	(174	)	$	4,560	$	5,130	$	(570	)
Operating income	$	353	$	457	$	(104	)	$	908	$	2,848	$	(1,940	)
Net earnings	$	239	$	310	$	(71	)	$	620	$	1,869	$	(1,249	)
Earnings per share, basic and diluted	$	0.33	$	0.42	$	(0.09	)	$	0.85	$	2.51	$	(1.66	)

Comparing Third Quarter 2023 with Third Quarter 2022

Net sales

Net sales decreased $254 million – 11 percent – primarily due to a $230 million decrease in Wood Products sales to unaffiliated customers attributable to decreased sales volumes and sales realizations across most product lines.

Costs of sales

Costs of sales decreased $174 million – 10 percent – primarily due to decreased sales volumes across most product lines within our Wood Products segment, as well as decreased freight costs.

Operating income

Operating income decreased $104 million – 23 percent – primarily due to an $80 million decrease in consolidated gross margin, as discussed above.

Net earnings

Net earnings decreased $71 million – 23 percent – primarily due to the $104 million decrease in operating income, as discussed above.

This decrease was partially offset by a $23 million decrease in income tax expense (refer to Income Taxes).

Comparing Year-to-Date 2023 with Year-to-Date 2022

Net sales

Net sales decreased $2,461 million – 29 percent – primarily due to a $2,272 million decrease in Wood Products sales to unaffiliated customers attributable to decreased sales realizations and sales volumes across most product lines, as well as a $162 million decrease in Timberlands sales to unaffiliated customers attributable to decreased sales realizations in the Western region.

Costs of sales

Costs of sales decreased $570 million – 11 percent – primarily due to decreased sales volumes across most product lines within our Wood Products segment, as well as decreased freight costs and Western third-party log purchases.

Operating income

Operating income decreased $1,940 million – 68 percent – primarily due to a $1,891 million decrease in consolidated gross margin, as discussed above.

Net earnings

Net earnings decreased $1,249 million – 67 percent – primarily due to the $1,940 million decrease in operating income, as discussed above.

This decrease was partially offset by a $369 million decrease in income tax expense (refer to Income Taxes), as well as a $276 million pretax charge ($207 million after-tax) related to the early extinguishment of debt in first quarter 2022 (refer to Note 8: Long-Term Debt and Line of Credit).

TIMBERLANDS

How We Did Third Quarter 2023 and Year-to-Date 2023


	QUARTER ENDED				AMOUNT OF CHANGE			YEAR-TO-DATE ENDED				AMOUNT OF CHANGE
DOLLAR AMOUNTS IN MILLIONS	SEPTEMBER 2023		SEPTEMBER 2022		2023 VS. 2022			SEPTEMBER 2023		SEPTEMBER 2022		2023 VS. 2022
Net sales to unaffiliated customers:
Delivered logs:
West	$	176	$	224	$	(48	)	$	611	$	791	$	(180	)
South		155		166		(11	)		485		480		5
North		11		15		(4	)		35		40		(5	)
Subtotal delivered logs sales		342		405		(63	)		1,131		1,311		(180	)
Stumpage and pay-as-cut timber		12		10		2			43		30		13
Recreational and other lease revenue		19		18		1			54		51		3
Other(1)		7		8		(1	)		31		29		2
Subtotal net sales to unaffiliated customers		380		441		(61	)		1,259		1,421		(162	)
Intersegment sales		141		133		8			433		450		(17	)
Total sales	$	521	$	574	$	(53	)	$	1,692	$	1,871	$	(179	)
Costs of sales	$	417	$	442	$	(25	)	$	1,317	$	1,360	$	(43	)
Operating income and Net contribution to earnings	$	78	$	107	$	(29	)	$	302	$	442	$	(140	)

(1)

Other Timberlands sales include sales of seeds and seedlings from our nursery operations as well as wood chips.

Comparing Third Quarter 2023 with Third Quarter 2022

Net sales to unaffiliated customers

Net sales to unaffiliated customers decreased $61 million – 14 percent – primarily due to a $48 million decrease in Western log sales, attributable to a 25 percent decrease in sales realizations, as well as an $11 million decrease in Southern log sales, attributable to a 4 percent decrease in sales realizations and a 3 percent decrease in sales volumes.

Intersegment sales

Intersegment sales increased $8 million – 6 percent – primarily due to a 14 percent increase in sales volumes, partially offset by a 7 percent decrease in sales realizations.

Costs of sales

Costs of sales decreased $25 million – 6 percent – primarily due to decreased Western third-party log purchases and decreased Southern log sales volumes, partially offset by increased logging and hauling costs and increased Western log sales volumes.

Operating income and Net contribution to earnings

Operating income and net contribution to earnings decreased $29 million – 27 percent – primarily due to the change in the components of gross margin, as discussed above.

Comparing Year-to-Date 2023 with Year-to-Date 2022

Net sales to unaffiliated customers

Net sales to unaffiliated customers decreased $162 million – 11 percent – primarily due to a $180 million decrease in Western log sales, primarily attributable to a 23 percent decrease in sales realizations, partially offset by a $13 million increase in stumpage and pay-as-cut timber sales.

Intersegment sales

Intersegment sales decreased $17 million – 4 percent – primarily due to a 9 percent decrease in sales realizations, partially offset by a 5 percent increase in sales volumes.

Costs of sales

Costs of sales decreased $43 million – 3 percent – primarily due to decreased Western third-party log purchases, partially offset by increased logging and hauling costs and increased log sales volumes.

Operating income and Net contribution to earnings

Operating income and net contribution to earnings decreased $140 million – 32 percent – primarily due to the change in the components of gross margin, as discussed above.

Third-Party Log Sales Volumes and Fee Harvest Volumes


	QUARTER ENDED				AMOUNT OF CHANGE			YEAR-TO-DATE ENDED				AMOUNT OF CHANGE
VOLUMES IN THOUSANDS	SEPTEMBER 2023		SEPTEMBER 2022		2023 VS. 2022			SEPTEMBER 2023		SEPTEMBER 2022		2023 VS. 2022
Third-party log sales – tons:
West(1)		1,479		1,411		68			4,814		4,793		21
South		4,180		4,310		(130	)		12,907		12,612		295
North		148		177		(29	)		450		505		(55	)
Total		5,807		5,898		(91	)		18,171		17,910		261
Fee harvest volumes – tons:
West(1)		2,137		1,760		377			6,674		6,085		589
South		6,146		6,112		34			19,008		18,113		895
North		223		245		(22	)		683		703		(20	)
Total		8,506		8,117		389			26,365		24,901		1,464

(1)

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

REAL ESTATE, ENERGY AND NATURAL RESOURCES

How We Did Third Quarter 2023 and Year-to-Date 2023


	QUARTER ENDED				AMOUNT OF CHANGE			YEAR-TO-DATE ENDED				AMOUNT OF CHANGE
DOLLAR AMOUNTS IN MILLIONS	SEPTEMBER 2023		SEPTEMBER 2022		2023 VS. 2022			SEPTEMBER 2023		SEPTEMBER 2022		2023 VS. 2022
Net sales:
Real estate	$	79	$	30	$	49		$	198	$	217	$	(19	)
Energy and natural resources		26		38		(12	)		88		96		(8	)
Total	$	105	$	68	$	37		$	286	$	313	$	(27	)
Costs of sales	$	43	$	14	$	29		$	105	$	100	$	5
Operating income and Net contribution to earnings	$	56	$	48	$	8		$	161	$	194	$	(33	)

The volume of real estate sales is a function of many factors, including the general state of the economy, demand in local real estate markets, the ability of buyers to obtain financing, the number of competing properties listed for sale, the seasonal nature of sales, the plans of adjacent landowners, our expectation of future price appreciation, the timing of harvesting activities, and the availability of government and not-for-profit funding. In any period, the average price per acre will vary based on the location and physical characteristics of parcels sold.

Comparing Third Quarter 2023 with Third Quarter 2022

Net sales

Net sales increased $37 million – 54 percent – primarily due to an increase in acres sold, partially offset by a decrease in the average price per acre sold.

Costs of sales

Costs of sales increased $29 million – 207 percent – primarily due to an increase in acres sold.

Operating income and Net contribution to earnings

Operating income and net contribution to earnings increased $8 million – 17 percent – primarily due to the change in the components of gross margin, as discussed above.

Comparing Year-to-Date 2023 with Year-to-Date 2022

Net sales

Net sales decreased $27 million – 9 percent – primarily due to decreases in average price per acre sold and royalty income from our Energy and Natural Resources business.

Costs of sales

Costs of sales increased $5 million – 5 percent – primarily due to an increase in basis per acre sold.

Operating income and Net contribution to earnings

Operating income and net contribution to earnings decreased $33 million – 17 percent – primarily due to the change in the components of gross margin, as discussed above.

REAL ESTATE SALES STATISTICS


	QUARTER ENDED				AMOUNT OF CHANGE			YEAR-TO-DATE ENDED				AMOUNT OF CHANGE
	SEPTEMBER 2023		SEPTEMBER 2022		2023 VS. 2022			SEPTEMBER 2023		SEPTEMBER 2022		2023 VS. 2022
Acres sold		25,721		5,014		20,707			55,755		56,046		(291	)
Average price per acre	$	3,033	$	5,046	$	(2,013	)	$	3,403	$	3,624	$	(221	)

WOOD PRODUCTS

How We Did Third Quarter 2023 and Year-to-Date 2023


	QUARTER ENDED				AMOUNT OF CHANGE			YEAR-TO-DATE ENDED				AMOUNT OF CHANGE
DOLLAR AMOUNTS IN MILLIONS	SEPTEMBER 2023		SEPTEMBER 2022		2023 VS. 2022			SEPTEMBER 2023		SEPTEMBER 2022		2023 VS. 2022
Net sales:
Structural lumber	$	570	$	676	$	(106	)	$	1,658	$	2,880	$	(1,222	)
Oriented strand board		284		287		(3	)		707		1,348		(641	)
Engineered solid section		216		233		(17	)		600		676		(76	)
Engineered I-joists		122		166		(44	)		335		471		(136	)
Softwood plywood		42		47		(5	)		127		158		(31	)
Medium density fiberboard		40		50		(10	)		120		151		(31	)
Complementary building products		184		222		(38	)		551		676		(125	)
Other products produced(1)		79		86		(7	)		257		267		(10	)
Total	$	1,537	$	1,767	$	(230	)	$	4,355	$	6,627	$	(2,272	)
Costs of sales	$	1,195	$	1,360	$	(165	)	$	3,572	$	4,050	$	(478	)
Operating income and Net contribution to earnings	$	277	$	344	$	(67	)	$	590	$	2,389	$	(1,799	)

(1)

Other products produced sales include wood chips, other byproducts and third-party residual log sales from our Canadian Forestlands operations.

Comparing Third Quarter 2023 with Third Quarter 2022

Net sales

Net sales decreased $230 million – 13 percent – due to:

●

a $106 million decrease in structural lumber sales attributable to a 13 percent decrease in sales realizations, as well as a 3 percent decrease in sales volumes;

●

a $44 million decrease in engineered I-joists sales attributable to a 19 percent decrease in sales realizations, as well as an 11 percent decrease in sales volumes;

●

a $38 million decrease in complementary building products sales attributable to decreased sales volumes across most products;

●

a $17 million decrease in engineered solid section sales attributable to a 12 percent decrease in sales realizations, partially offset by a 5 percent increase in sales volumes;

●

a $10 million decrease in medium density fiberboard sales attributable to an 18 percent decrease in sales volumes, as well as a 3 percent decrease in sales realizations;

●

a $7 million decrease in other products produced sales attributable to decreased sales volumes for wood chips;

●

a $5 million decrease in softwood plywood sales attributable to a 23 percent decrease in sales realizations, partially offset by a 16 percent increase in sales volumes and

●

a $3 million decrease in oriented strand board sales attributable to a 4 percent decrease in sales volumes, partially offset by a 4 percent increase in sales realizations.

Costs of sales

Costs of sales decreased $165 million – 12 percent – primarily due to decreased sales volumes across most product lines, as well as decreased freight costs.

Operating income and Net contribution to earnings

Operating income and net contribution to earnings decreased $67 million – 19 percent – primarily due to the change in the components of gross margin, as discussed above.

Comparing Year-to-Date 2023 with Year-to-Date 2022

Net sales

Net sales decreased $2,272 million – 34 percent – due to:

●

a $1,222 million decrease in structural lumber sales attributable to a 40 percent decrease in sales realizations, as well as a 4 percent decrease in sales volumes;

●

a $641 million decrease in oriented strand board sales attributable to a 48 percent decrease in sales realizations;

●

a $136 million decrease in engineered I-joist sales attributable to a 20 percent decrease in sales volumes, as well as an 11 percent decrease in sales realizations;

●

a $125 million decrease in complementary building products sales attributable to decreased sales volumes and sales realizations across most products;

●

a $76 million decrease in engineered solid section sales attributable to a 6 percent decrease in sales volumes, as well as a 5 percent decrease in sales realizations;

●

a $31 million decrease in medium density fiberboard sales attributable to a 28 percent decrease in sales volumes, partially offset by an 11 percent increase in sales realizations;

●

a $31 million decrease in softwood plywood sales attributable to a 33 percent decrease in sales realizations, partially offset by a 20 percent increase in sales volumes and

●

a $10 million decrease in other products produced attributable to decreased sales volumes.

Costs of sales

Costs of sales decreased $478 million – 12 percent – primarily due to decreased sales volumes across most product lines, as well as decreased freight costs.

Operating income and Net contribution to earnings

Operating income and net contribution to earnings decreased $1,799 million – 75 percent – primarily due to the change in the components of gross margin, as discussed above.

Third-Party Sales Volumes


	QUARTER ENDED				AMOUNT OF CHANGE			YEAR-TO-DATE ENDED				AMOUNT OF CHANGE
VOLUMES IN MILLIONS(1)	SEPTEMBER 2023		SEPTEMBER 2022		2023 VS. 2022			SEPTEMBER 2023		SEPTEMBER 2022		2023 VS. 2022
Structural lumber – board feet		1,184		1,216		(32	)		3,524		3,662		(138	)
Oriented strand board – square feet (3/8”)		683		715		(32	)		2,176		2,167		9
Engineered solid section – cubic feet		6.2		5.9		0.3			16.9		18.0		(1.1	)
Engineered I-joists – lineal feet		42		47		(5	)		113		142		(29	)
Softwood plywood – square feet (3/8”)		86		74		12			263		219		44
Medium density fiberboard – square feet (3/4”)		33		40		(7	)		93		129		(36	)

(1)

Sales volumes include sales of internally produced products and products purchased for resale primarily through our distribution business.

PRODUCTION AND OUTSIDE PURCHASE VOLUMES

Outside purchase volumes are primarily purchased for resale through our distribution business. Production volumes are produced for sale through our own sales organizations and through our distribution business. Production of oriented strand board and engineered solid section are also used to manufacture engineered I-joists.


	QUARTER ENDED				AMOUNT OF CHANGE			YEAR-TO-DATE ENDED				AMOUNT OF CHANGE
VOLUMES IN MILLIONS	SEPTEMBER 2023		SEPTEMBER 2022		2023 VS. 2022			SEPTEMBER 2023		SEPTEMBER 2022		2023 VS. 2022
Structural lumber – board feet:
Production		1,174		1,140		34			3,481		3,575		(94	)
Outside purchase		38		35		3			113		120		(7	)
Total		1,212		1,175		37			3,594		3,695		(101	)
Oriented strand board – square feet (3/8”):
Production		724		735		(11	)		2,212		2,232		(20	)
Outside purchase		19		18		1			55		154		(99	)
Total		743		753		(10	)		2,267		2,386		(119	)
Engineered solid section – cubic feet:
Production		5.6		6.0		(0.4	)		16.1		18.1		(2.0	)
Outside purchase		3.7		3.6		0.1			9.7		4.1		5.6
Total		9.3		9.6		(0.3	)		25.8		22.2		3.6
Engineered I-joists – lineal feet:
Production		42		47		(5	)		105		141		(36	)
Outside purchase		2		1		1			2		6		(4	)
Total		44		48		(4	)		107		147		(40	)
Softwood plywood – square feet (3/8”):
Production		77		64		13			235		197		38
Outside purchase		10		9		1			33		27		6
Total		87		73		14			268		224		44
Medium density fiberboard – square feet (3/4"):
Production		34		38		(4	)		101		130		(29	)
Total		34		38		(4	)		101		130		(29	)

UNALLOCATED ITEMS

Net Charge to Earnings – Unallocated Items


	QUARTER ENDED						AMOUNT OF CHANGE			YEAR-TO-DATE ENDED						AMOUNT OF CHANGE
DOLLAR AMOUNTS IN MILLIONS	SEPTEMBER 2023			SEPTEMBER 2022			2023 VS. 2022			SEPTEMBER 2023			SEPTEMBER 2022			2023 VS. 2022
Unallocated corporate function and variable compensation expense	$	(33	)	$	(36	)	$	3		$	(92	)	$	(103	)	$	11
Liability classified share-based compensation		2			2			—			—			5			(5	)
Foreign exchange gain		—			9			(9	)		1			12			(11	)
Elimination of intersegment profit in inventory and LIFO		(4	)		2			(6	)		8			(39	)		47
Other		(23	)		(19	)		(4	)		(62	)		(52	)		(10	)
Operating loss		(58	)		(42	)		(16	)		(145	)		(177	)		32
Non-operating pension and other post-employment benefit costs		(12	)		(12	)		—			(33	)		(38	)		5
Interest income and other		24			9			15			54			9			45
Net charge to earnings	$	(46	)	$	(45	)	$	(1	)	$	(124	)	$	(206	)	$	82

Comparing Third Quarter 2023 with Third Quarter 2022

Net charge to earnings remained consistent primarily due to a $15 million increase in interest income and other due to an increase in the interest rate on our cash and short-term investment accounts, offset by a $9 million decrease in foreign exchange gain and a $6 million increase in elimination of intersegment profit in inventory and LIFO.

Comparing Year-to-Date 2023 with Year-to-Date 2022

Net charge to earnings decreased $82 million – 40 percent – primarily due to:

●

a $47 million decrease in elimination of intersegment profit in inventory and LIFO;

●

a $45 million increase in interest income and other due to an increase in the interest rate on our cash and short-term investment accounts and

●

an $11 million decrease in unallocated corporate function and variable compensation expense.

These changes were partially offset by an $11 million decrease in foreign exchange gain, as well as a $10 million increase in other primarily due to an increase in environmental remediation charges.

INTEREST EXPENSE

Our interest expense, net of capitalized interest, was:

●

$72 million for third quarter 2023 and $208 million year-to-date 2023;

●

$67 million for third quarter 2022 and $204 million year-to-date 2022.

Interest expense increased by $5 million compared to third quarter 2022 and increased by $4 million compared to year-to-date 2022 primarily due to the May 2023 issuance of debt securities that increased our weighted average outstanding debt.

Refer to Note 8: Long-Term Debt and Line of Credit for further information.

INCOME TAXES

Our provision for income taxes was:

●

a $54 million expense for third quarter 2023 and $101 million year-to-date 2023;

●

a $77 million expense for third quarter 2022 and $470 million year-to-date 2022.

Our provision for income taxes is primarily driven by earnings generated by our TRSs. Income tax expense decreased by $369 million compared to year-to-date 2022 primarily due to a decrease in our TRS earnings in 2023, as well as a decrease in our estimated annual effective tax rate.

Refer to Note 14: Income Taxes for further information.

LIQUIDITY AND CAPITAL RESOURCES

We are committed to maintaining an appropriate capital structure that provides flexibility and enables us to protect the interests of our shareholders and meet our obligations to our lenders, while also maintaining access to all major financial markets. As of September 30, 2023, we had approximately $1.2 billion in cash and cash equivalents, $668 million in short-term investments and $1.5 billion of availability on our line of credit, which expires in March 2028. We believe we have sufficient liquidity to meet our cash requirements for the foreseeable future.

CASH FROM OPERATIONS

Consolidated net cash from operations was:

●

$1,145 million for year-to-date 2023 and

●

$2,665 million for year-to-date 2022.

Net cash from operations decreased $1,520 million primarily due to decreased cash inflows from our business operations. This change was partially offset by a $406 million decrease in cash paid for income taxes, as well as a $21 million decrease in cash paid for interest.

CASH FROM INVESTING ACTIVITIES

Consolidated net cash from investing activities was:

●

$(982) million for year-to-date 2023 and

●

$(530) million for year-to-date 2022.

Net cash from investing activities decreased $452 million primarily due to a $664 million increase in cash paid for short-term investments. This change was partially offset by a $216 million decrease in cash paid for acquisition of timberlands.

Summary of Capital Spending by Business Segment


	YEAR-TO-DATE ENDED
DOLLAR AMOUNTS IN MILLIONS	SEPTEMBER 2023		SEPTEMBER 2022
Timberlands	$	74	$	75
Wood Products		168		163
Unallocated Items		9		7
Total	$	251	$	245

We anticipate our capital expenditures for 2023 to be approximately $440 million. The amount we spend on capital expenditures could change.

CASH FROM FINANCING ACTIVITIES

Consolidated net cash from financing activities was:

●

$(571) million for year-to-date 2023 and

●

$(2,214) million for year-to-date 2022.

Net cash from financing activities increased $1,643 million, primarily due to:

●

a $947 million decrease in net cash used for payments on long-term debt;

●

a $409 million decrease in cash used for payments of dividends and

●

a $293 million decrease in cash used for repurchases of common stock.

Line of Credit

In March 2023, we entered into a new $1.5 billion five-year senior unsecured revolving credit facility, which expires in March 2028 and replaced the existing facility which was set to expire in January 2025. Borrowings will bear interest at a floating rate based on either the adjusted term SOFR plus a spread or a mutually agreed upon base rate plus a spread. We had no outstanding borrowings on our $1.5 billion five-year senior unsecured revolving credit facility as of September 30, 2023 or December 31, 2022.

Refer to Note 8: Long-Term Debt and Line of Credit for further information.

Long-Term Debt

In July 2023, we repaid $118 million of our 7.125 percent notes at maturity. We have $860 million of long-term debt scheduled to mature during fourth quarter 2023, and we anticipate the majority will be funded through cash on hand, including the proceeds from our short-term investments which also mature in the fourth quarter.

Refer to Note 8: Long-Term Debt and Line of Credit for further information.

Debt Covenants

As of September 30, 2023, Weyerhaeuser Company was in compliance with its debt covenants. There have been no significant changes to the debt covenants presented in our 2022 Annual Report on Form 10-K for our long-term debt instruments, and we expect to remain in compliance with our debt covenants for the foreseeable future.

Dividend Payments

We paid cash dividends on common shares of:

●

$1,076 million for year-to-date 2023 and

●

$1,485 million for year-to-date 2022.

The decrease in dividends paid is primarily due to a supplemental dividend of $0.90 per share based on 2022 financial results for a total of $660 million paid in first quarter 2023 in comparison to a supplemental dividend of $1.45 per share based on 2021 financial results for a total of $1,084 million paid in first quarter 2022.

Share Repurchases

We repurchased 757,510 common shares for approximately $25 million (including transaction fees) during third quarter 2023 and 3,562,944 common shares for approximately $110 million (including transaction fees) during year-to-date 2023 under the 2021 Repurchase Program. During third quarter 2022, we repurchased 4,234,838 common shares for approximately $145 million (including transaction fees) and we repurchased 11,217,300 common shares for approximately $404 million (including transaction fees) during year-to-date 2022 under the 2021 Repurchase Program. There were 32,757 unsettled shares (approximately $1 million) as of September 30, 2023 and 223,548 unsettled shares (approximately $7 million) as of December 31, 2022. Refer to Note 4: Net Earnings Per Share and Share Repurchases for further information.

PERFORMANCE MEASURES

Adjusted EBITDA by Segment

We use Adjusted EBITDA as a key performance measure to evaluate the performance of the consolidated company and our business segments. This measure should not be considered in isolation from, and is not intended to represent an alternative to, our results reported in accordance with U.S. generally accepted accounting principles (U.S. GAAP). However, we believe Adjusted EBITDA provides meaningful supplemental information for investors about our operating performance, better facilitates period to period comparisons and is widely used by analysts, lenders, rating agencies and other interested parties. Our definition of Adjusted EBITDA may be different from similarly titled measures reported by other companies. Adjusted EBITDA, as we define it, is operating income adjusted for depreciation, depletion, amortization, basis of real estate sold and special items.


	QUARTER ENDED						AMOUNT OF CHANGE			YEAR-TO-DATE ENDED						AMOUNT OF CHANGE
DOLLAR AMOUNTS IN MILLIONS	SEPTEMBER 2023			SEPTEMBER 2022			2023 VS. 2022			SEPTEMBER 2023			SEPTEMBER 2022			2023 VS. 2022
Adjusted EBITDA by Segment:
Timberlands	$	143		$	168		$	(25	)	$	503		$	634		$	(131	)
Real Estate & ENR		94			60			34			253			283			(30	)
Wood Products		328			395			(67	)		746			2,540			(1,794	)
		565			623			(58	)		1,502			3,457			(1,955	)
Unallocated Items		(56	)		(40	)		(16	)		(129	)		(172	)		43
Adjusted EBITDA	$	509		$	583		$	(74	)	$	1,373		$	3,285		$	(1,912	)

We reconcile Adjusted EBITDA to net earnings for the consolidated company and to operating income (loss) 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 September 30, 2023:


DOLLAR AMOUNTS IN MILLIONS	Timberlands		Real Estate & ENR		Wood Products		Unallocated Items			Total
Adjusted EBITDA by Segment:
Net earnings										$	239
Interest expense, net of capitalized interest											72
Income taxes											54
Net contribution (charge) to earnings	$	78	$	56	$	277	$	(46	)	$	365
Non-operating pension and other post-employment benefit costs		—		—		—		12			12
Interest income and other		—		—		—		(24	)		(24	)
Operating income (loss)		78		56		277		(58	)		353
Depreciation, depletion and amortization		65		4		51		2			122
Basis of real estate sold		—		34		—		—			34
Adjusted EBITDA	$	143	$	94	$	328	$	(56	)	$	509

The table below reconciles Adjusted EBITDA for the quarter ended September 30, 2022:


DOLLAR AMOUNTS IN MILLIONS	Timberlands		Real Estate & ENR		Wood Products		Unallocated Items			Total
Adjusted EBITDA by Segment:
Net earnings										$	310
Interest expense, net of capitalized interest											67
Income taxes											77
Net contribution (charge) to earnings	$	107	$	48	$	344	$	(45	)	$	454
Non-operating pension and other post-employment benefit costs		—		—		—		12			12
Interest income and other		—		—		—		(9	)		(9	)
Operating income (loss)		107		48		344		(42	)		457
Depreciation, depletion and amortization		61		5		51		2			119
Basis of real estate sold		—		7		—		—			7
Adjusted EBITDA	$	168	$	60	$	395	$	(40	)	$	583

The table below reconciles Adjusted EBITDA for the year-to-date period ended September 30, 2023:


DOLLAR AMOUNTS IN MILLIONS	Timberlands		Real Estate & ENR		Wood Products		Unallocated Items			Total
Adjusted EBITDA by Segment:
Net earnings										$	620
Interest expense, net of capitalized interest											208
Income taxes											101
Net contribution (charge) to earnings	$	302	$	161	$	590	$	(124	)	$	929
Non-operating pension and other post-employment benefit costs		—		—		—		33			33
Interest income and other		—		—		—		(54	)		(54	)
Operating income (loss)		302		161		590		(145	)		908
Depreciation, depletion and amortization		201		12		156		5			374
Basis of real estate sold		—		80		—		—			80
Special items included in operating income (loss)(1)		—		—		—		11			11
Adjusted EBITDA	$	503	$	253	$	746	$	(129	)	$	1,373

(1)

Operating income (loss) for Unallocated Items includes a pretax special item consisting of an $11 million noncash environmental remediation charge.

The table below reconciles Adjusted EBITDA for the year-to-date period ended September 30, 2022:


DOLLAR AMOUNTS IN MILLIONS	Timberlands		Real Estate & ENR		Wood Products		Unallocated Items			Total
Adjusted EBITDA by Segment:
Net earnings										$	1,869
Interest expense, net of capitalized interest											204
Loss on debt extinguishment(1)											276
Income taxes											470
Net contribution (charge) to earnings	$	442	$	194	$	2,389	$	(206	)	$	2,819
Non-operating pension and other post-employment benefit costs		—		—		—		38			38
Interest income and other		—		—		—		(9	)		(9	)
Operating income (loss)		442		194		2,389		(177	)		2,848
Depreciation, depletion and amortization		192		12		151		5			360
Basis of real estate sold		—		77		—		—			77
Adjusted EBITDA	$	634	$	283	$	2,540	$	(172	)	$	3,285

(1)

Loss on debt extinguishment is a special item consisting of a pretax charge of $276 million ($207 million after-tax) related to early debt retirement.

Net Earnings and Net Earnings per Diluted Share Before Special Items

We use net earnings before special items and net earnings per diluted share before special items as key performance measures to evaluate the performance of the consolidated company. These measures should not be considered in isolation from, and are not intended to represent an alternative to, our results reported in accordance with U.S. GAAP. However, we believe the measures provide meaningful supplemental information for investors about our operating performance, better facilitate period to period comparisons and are widely used by analysts, lenders, rating agencies and other interested parties.

Net Earnings Before Special Items


	QUARTER ENDED				YEAR-TO-DATE ENDED
DOLLAR AMOUNTS IN MILLIONS	SEPTEMBER 2023		SEPTEMBER 2022		SEPTEMBER 2023		SEPTEMBER 2022
Net earnings	$	239	$	310	$	620	$	1,869
Environmental remediation charge		—		—		8		—
Loss on debt extinguishment		—		—		—		207
Net earnings before special items	$	239	$	310	$	628	$	2,076

Net Earnings per Diluted Share Before Special Items


	QUARTER ENDED				YEAR-TO-DATE ENDED
	SEPTEMBER 2023		SEPTEMBER 2022		SEPTEMBER 2023		SEPTEMBER 2022
Net earnings per diluted share	$	0.33	$	0.42	$	0.85	$	2.51
Environmental remediation charge		—		—		0.01		—
Loss on debt extinguishment		—		—		—		0.28
Net earnings per diluted share before special items	$	0.33	$	0.42	$	0.86	$	2.79

CRITICAL ACCOUNTING POLICIES

There have been no significant changes during year-to-date 2023 to the critical accounting policies presented in our 2022 Annual Report on Form 10-K.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

LONG-TERM INDEBTEDNESS OBLIGATIONS

The following summary of our long-term indebtedness obligations includes:

●

scheduled principal repayments for the next five years and after;

●

weighted average interest rates for debt maturing in each of the next five years and after and

●

estimated fair values of outstanding obligations.

We estimate the fair value of fixed-rate long-term debt using the market approach, which is based on quoted market prices we received for the same types and issues of our debt. Changes in market rates of interest affect the fair value of our fixed-rate debt.

Summary of Long-Term Indebtedness Principal Obligations as of September 30, 2023


DOLLAR AMOUNTS IN MILLIONS	2023			2024			2025			2026			2027			THEREAFTER			TOTAL(1)			FAIR VALUE
Fixed-rate debt	$	860		$	—		$	210		$	1,022		$	300		$	3,333		$	5,725		$	5,434
Average interest rate		5.21	%		—	%		8.31	%		5.52	%		6.95	%		4.82	%		5.24	%	N/A

(1)

Excludes $46 million of unamortized discounts, capitalized debt expense and business combination fair value adjustments.

Item 4. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Disclosure controls are controls and other procedures that are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, to allow timely decisions regarding required disclosure. The company’s principal executive officer and principal financial officer have concluded that the company’s disclosure controls and procedures were effective as of September 30, 2023, based on an evaluation of the company’s disclosure controls and procedures as of that date.

CHANGES IN INTERNAL CONTROLS

No changes occurred in the company’s internal control over financial reporting during year-to-date 2023 that have materially affected, or are reasonably likely to materially affect, the company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

Refer to Note 10: Legal Proceedings, Commitments and Contingencies. SEC regulations require us to disclose certain information about proceedings arising under federal, state or local environmental provisions if we reasonably believe that such proceedings may result in monetary sanctions above a stated threshold. In accordance with these regulations, the company uses a threshold of $1 million for purposes of determining whether disclosure of any such proceedings is required pursuant to this item.

Item 1A. RISK FACTORS

There have been no material changes with respect to the risk factors disclosed in our 2022 Annual Report on Form 10-K.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

The following table provides information with respect to purchases of common stock made by the company during third quarter 2023:


COMMON SHARE REPURCHASES DURING THIRD QUARTER 2023	TOTAL NUMBER OF SHARES PURCHASED		AVERAGE PRICE PAID PER SHARE		TOTAL NUMBER OF SHARES PURCHASED AS PART OF PUBLICLY ANNOUNCED PROGRAMS		APPROXIMATE DOLLAR VALUE OF SHARES THAT MAY YET BE PURCHASED UNDER THE PROGRAMS
July 1 – July 31		171,731	$	33.63		171,731	$	286,026,373
August 1 – August 31		353,664	$	32.88		353,664	$	274,398,582
September 1 – September 30		232,115	$	31.63		232,115	$	267,055,708
Total		757,510	$	32.67		757,510

On September 22, 2021, we announced that our board had approved a new share repurchase program (the 2021 Repurchase Program) under which we are authorized to repurchase up to $1 billion of outstanding shares. Concurrently, the board terminated the remaining repurchase authorization under the 2019 Repurchase Program.

During third quarter 2023, we repurchased 757,510 shares for approximately $25 million (including transaction fees) under the 2021 Repurchase Program in open-market transactions. Transaction fees incurred for repurchases are not counted as use of funds authorized for repurchases under the 2021 Repurchase Program. As of September 30, 2023, we had remaining authorization of $267 million for future stock repurchases.

Item 5. OTHER INFORMATION

Rule 10b5-1 Trading Arrangements

During third quarter 2023, two of the company’s “officers” (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) adopted trading plans intended to satisfy the affirmative defense conditions of Rule 10b5–1(c) of the Exchange Act.

(1)

Devin W. Stockfish, president and chief executive officer, adopted a plan on August 3, 2023 with respect to the exercise of up to 161,500 stock options in the aggregate,14,412 of which expire February 12, 2024, 17,468 of which expire April 9, 2024, 39,458 of which expire February 12, 2025 and 90,162 of which expire February 9, 2026. Specifically, the plan provides for: (i) the exercise of 90,162 stock options at a designated strike price and the sale of all of the underlying shares of common stock in a “cashless” exercise transaction and (ii) the exercise of the remaining stock options at designated strike prices and the sale of an indeterminate number of the underlying shares to cover applicable exercise prices and withholding taxes for such exercises in “cashless” exercise transactions, with the remaining shares to be held by Mr. Stockfish. Mr. Stockfish’s plan expires when all of the shares are sold or on November 12, 2024, whichever occurs first.

(2)

Keith J. O’Rear, senior vice president, Wood Products, adopted a plan on August 3, 2023 to sell an aggregate of 40,876 shares of common stock. Mr. O’Rear’s plan expires when all of the shares are sold or on October 30, 2024, whichever occurs first.

Item 6. EXHIBITS



31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.

31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.

32	Certification pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350).

101.INS	XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH	Inline XBRL Taxonomy Extension Schema Document

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document

104	The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, has been formatted in Inline XBRL.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	WEYERHAEUSER COMPANY
	(Registrant)

Date: October 27, 2023	By:	/s/ David M. Wold
		David M. Wold
		Senior Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer and Duly Authorized Officer)