Friday, February 5, 2010

Weyerhaeuser Co Alert: 4Q09 Early Read

WY reported adjusted 4Q EPS of negative $0.52, below consensus expectations of negative $0.34.Sales of $1,455MM fell 18% y/y but increased by 3% q/q. Sales came in better than consensus of $1,396MM.

WY reported adjusted EBITDA of $80MM, better than negative $85MMin 4Q08 but
down from $109MM in 3Q09. EBITDA was just above consensus of $78MM.
Cash increased to $1,918MM from $1,675MM at 3Q09. Year-end debt was
$5,690MM compared with $5,598MM at 3Q09. Debt/EBITDA stands at 38.2x
(25.3x net).

Timberlands adjusted pretax earnings of $28MM was down from $50MM in 3Q09.
The decline was due to the decision to defer additional harvest, lower timberland
sales, and higher logging, trucking, and road costs, partly offset by an increase in
log prices. Excluding land sales, WY expects operating earnings to be similar to
4Q09 due to improved log prices offset by higher costs.
Wood products adjusted pretax earnings came in at negative $123MM, down from
negative $92MM. The decline was due to lower volumes and lower prices in nearly
all product lines. WY expects a lower operating loss in 1Q due to improved
operating rates and sales realization improvements for lumber and OSB.
Cellulose fibers adjusted pretax earnings of $34MM fell from $44MM in 3Q09. The
decline was due to lower production and higher maintenance costs due to an
outage, higher fiber and energy costs, partly offset by improved pulp pricing.
Excluding the impact of fuel tax credits, WY expects 1Q earnings to be similar to
4Q. Higher pulp prices are expected to offset higher maintenance and fiber costs.
Real Estate adjusted pretax earnings of $21MM, up from negative $9MM in 3Q09.
The increase was because the homebuilding operations closed 77 single family
homes, up 54% sequentially. Average prices for homes closed increased 7%.
Selling expenses were up because of the higher volumes. Excluding one-time
items, WY expects the segment to be profitable in 1Q. Single-family homebuilding
operations are expected to report a loss due to seasonally lower closings, but two
commercial partnership interests were sold in January 2010 and will contribute
$33MM in earnings.
Weyerhaeuser Co (WY; Deteriorating, High Risk)

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