Weyerhaeuser's sale of its Cellulose Fibers pulp mills, liquid packaging board business, and printing papers joint venture contributed to the company's 45% increase in earnings compared to the last quarter.
Weyerhaeuser also benefited from a 7% increase in average sales realizations for OSB and a slight rise in lumber sales realizations compared to the second quarter.
The company reported third quarter net earnings to common shareholders of $227 million, or $0.30 per diluted share, on net sales of $1.7 billion. This compares with net earnings of $180 million, or $0.35 per diluted share, on net sales of $1.4 billion for the same period last year.Third quarter results include after-tax earnings of $65 million from discontinued operations, which included a net gain of $41 million on the divestiture of the liquid packaging board business. Third quarter results also include net after-tax charges of $10 million from special items. Excluding discontinued operations and special items, the company reported net earnings of $172 million, or $0.23 per diluted share for the third quarter. This compares with net earnings from continuing operations before special items of $121 million for the same period last year and $130 million for second quarter of 2016.
"Our employees delivered strong results in the quarter as Timberlands drove improved performance through merger synergies and Wood Products reported its best third quarter in over a decade," said Doyle R. Simons, president and CEO. "The integration with Plum Creek continues to go very well and we are confident we will fully capture the cost and operational synergies from the merger."
Weyerhaeuser merged with Plum Creek Timber Company, Inc. (Plum Creek) on February 19, 2016. The financial statements presented within this release do not include Plum Creek financial results for any period prior to the February 19, 2016 merger date.
During 2016, Weyerhaeuser announced the sale of its Cellulose Fibers pulp mills, liquid packaging board business, and printing papers joint venture. Results for the Cellulose Fibers segment are presented as discontinued operations. All periods presented have been revised to separate results of discontinued operations from the results of our continuing operations.
Timberlands
3Q 2016 Performance - Sales volumes for Southern and Northern logs increased seasonally. Western fee harvest volumes declined and average realizations for Western logs were comparable to the second quarter, as improved domestic realizations were offset by slightly lower realizations for export logs. Silviculture and road costs increased seasonally, and the business benefited from merger-related synergies and operational excellence initiatives.
4Q 2016 Outlook - Weyerhaeuser anticipates modestly higher earnings and Adjusted EBITDA from the Timberlands segment in the fourth quarter. In the West, the company expects slightly higher realizations for domestic and export logs, partially offset by lower fee harvest volumes. In the South, the company anticipates increased fee harvest volumes and seasonally lower silviculture expense.
Wood products
3Q 2016 Performance - Average sales realizations for oriented strand board increased 7 percent and lumber sales realizations rose slightly compared to the second quarter. Lumber sales volumes and operating rates were slightly lower and log costs for Canadian and Western mills increased. Manufacturing costs for oriented strand board improved due to operational excellence initiatives and higher operating rates.
4Q 2016 Outlook - Weyerhaeuser expects seasonally lower earnings and Adjusted EBITDA from the Wood Products segment in the fourth quarter compared with the third quarter due to lower sales volumes across most product lines and seasonally weaker average sales realizations for oriented strand board. Fourth quarter Adjusted EBITDA, however, should be nearly double the fourth quarter of 2015.
Discontinued operations
Discontinued operations include the company's Cellulose Fibers segment, which consists of pulp mills, a liquid packaging board facility, and a printing papers joint venture. The sale of the liquid packaging board business closed on August 31, 2016. These results correspond to assets and liabilities that have been classified as discontinued operations on our balance sheet.
3Q 2016 Performance - Improved sales realizations for pulp were more than offset by increased maintenance expense due to additional scheduled maintenance outage days. Third quarter includes a net after tax gain of $41 million on the divestiture of the liquid packaging board business.
