# WEYERHAEUSER CO (WY) FY 2024 MD&A Verbatim Item 7 Management's Discussion and Analysis from WEYERHAEUSER CO's 10-K for fiscal year 2024. SEC filing source: https://www.sec.gov/Archives/edgar/data/106535/000095017025021254/wy-20241231.htm Accession: 0000950170-25-021254 Filing date: 2025-02-14 Report date: 2024-12-31 Extracted from a later financial-section MD&A body after the formal Item 7 span was a short reference. Confidence: high Company profile: /company/WY/ All MD&A years: /company/WY/mda/ Previous year: /company/WY/mda/fy2023/ (FY 2023) Next year: /company/WY/mda/fy2025/ (FY 2025) MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A) WHAT YOU WILL FIND IN THIS MD&A Our MD&A includes the following major sections: [[GREPCENT_TABLE]] [["\uf0b7","economic and market conditions affecting our operations;"],["\uf0b7","financial performance summary;"],["\uf0b7","results of operations;"],["\uf0b7","liquidity and capital resources;"],["\uf0b7","environmental matters, legal proceedings and other contingencies;"],["\uf0b7","accounting matters and"],["\uf0b7","performance and liquidity measures."]] [[/GREPCENT_TABLE]] For Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) related to the year ended December 31, 2022, refer to this same section in our 2023 annual report on Form 10-K as filed with the Securities and Exchange Commission on February 16, 2024. 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 moderated in part due to consistently elevated mortgage interest rates and reduced affordability. Specifically, multi-family construction has been hampered by a large supply of recently completed projects as well as higher interest rates and other factors constraining the underwriting of proposed projects. In contrast, new single-family home construction has remained resilient, as existing homeowners continued to be constrained by the lock-in effect of lower mortgage rates, compared to current rates. On a seasonally adjusted annual basis, as reported by the U.S. Census Bureau, housing starts for fourth quarter 2024 averaged 1.4 million units, a 3.5 percent increase from third quarter 2024. Single-family starts averaged 1.0 million units in fourth quarter 2024, a 3.3 percent increase from third quarter 2024. Multi-family starts averaged 376 thousand units in fourth quarter 2024, which was a 4.1 percent increase from third quarter 2024. 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 662 thousand units for fourth quarter 2024, a decrease of 6.5 percent from third quarter 2024, primarily driven by a seasonal reduction in buying activity. Over the medium to long-term, we expect a favorable U.S. housing construction market supported by strong demographics in the key home buying age cohorts, a decade of under building and historically low housing inventory. Repair and remodeling expenditures decreased by 0.7 percent from third quarter 2024 to fourth quarter 2024 according to the Census Bureau Advance Retail Spending report. While there continues to be steady demand due to growing home equity and the lock-in effect, many homeowners have been more cautious in discretionary spending on large projects. Additionally, some repair and remodeling activity was accelerated during the pandemic which has had some impact on the level of spending. This softness has been reflected in both the do-it-yourself (DIY) and professionally built segments. Over the longer term, we expect this sector to resume pre-pandemic growth trends with healthy household balance sheets, elevated home equity and an aging U.S. housing stock, with a median age of 45 years. In U.S. wood product markets, pricing for lumber and OSB increased during the fourth quarter, primarily driven by more constrained market supply. Demand for both products reflected measured buyer sentiment and a typical seasonal reduction in building activity through the winter months. In fourth quarter 2024, the Random Lengths Framing Lumber Composite price averaged $429/MBF and the OSB Composite averaged WEYERHAEUSER COMPANY 2024 ANNUAL REPORT AND FORM 10-K 44 Table of Contents $401/MSF. Over the course of fourth quarter 2024, composite prices for lumber increased from $396/MBF to $433/MBF and composite prices for OSB increased from $344/MSF to $418/MSF. Recent mill curtailments contributed to the strengthening lumber prices. OSB prices were supported by steady demand and limited open-market supply. In Western log markets, Douglas fir sawlog prices increased 5.6 percent in fourth quarter 2024 compared with third quarter 2024, as reported by Fastmarkets RISI Log Lines based on Weyerhaeuser’s sales mix. Strengthening lumber prices and seasonal reductions in log supply contributed to log price increases in fourth quarter 2024. In the South, delivered sawlog prices decreased 3.0 percent in fourth quarter 2024 compared to third quarter 2024 and declined 2.9 percent from fourth quarter 2023, as reported by TimberMart-South. This was largely driven by ample log supply and ongoing actions taken by mills to align capacity with lower demand for finished products, partially driven by the seasonal reduction in building activity in the winter months. Currency exchange rates, available supply from other countries and trade policy affect our export businesses. During fourth quarter 2024, end use demand in export markets moderated. In Japan, total housing starts decreased 3.4 percent year to date through November compared to the same period in 2023, while the key Post and Beam segment saw a 2.6 percent decrease. The slowing demand was partially offset by a decrease in lumber imports to Japan from Europe, and reduced inventories of European lumber in the Japanese market. China’s log markets were generally stable despite ongoing softness in end-market demand. 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 6.1 percent in third quarter 2024 to 6.9 percent in fourth quarter 2024, according to economic data from Freddie Mac. 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, thereby 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 at an annual rate of 2.9 percent as of December 2024 compared to 2.4 percent in September 2024. This rate 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, operational excellence initiatives and procurement practices, not all costs associated with inflation can be fully mitigated or passed on to the customer. 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 remained flat at 4.1 percent from third quarter 2024 to fourth quarter 2024. Governments and businesses across the globe are taking action on climate change and are making significant commitments toward 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 credits 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. WEYERHAEUSER COMPANY 2024 ANNUAL REPORT AND FORM 10-K 45 Table of Contents FINANCIAL PERFORMANCE SUMMARY Net Sales by Segment Contribution to Earnings by Segment WEYERHAEUSER COMPANY 2024 ANNUAL REPORT AND FORM 10-K 46 Table of Contents RESULTS OF OPERATIONS In reviewing our results of operations, it is important to understand these terms: [[GREPCENT_TABLE]] [["\uf0b7","Sales realizations refer to net selling prices \u2014 this includes selling price plus freight minus normal sales deductions."],["\uf0b7","Net contribution (charge) to earnings refers to earnings (loss) before interest expense, loss on debt extinguishment and income taxes."]] [[/GREPCENT_TABLE]] CONSOLIDATED RESULTS HOW WE DID Summary of Financial Results [[GREPCENT_TABLE]] [["DOLLAR AMOUNTS IN MILLIONS, EXCEPT PER-SHARE FIGURES"],["","","","","","AMOUNT OF CHANGE"],["","","","","","","","","2024"],["","","","","","","","","vs."],["","","2024","","","2023","","","2023"],["Net sales","","$","7,124","","","$","7,674","","","$","(550",")"],["Costs of sales","","$","5,811","","","$","5,992","","","$","(181",")"],["Operating income","","$","685","","","$","1,186","","","$","(501",")"],["Net earnings","","$","396","","","$","839","","","$","(443",")"],["Basic and diluted earnings per share","","$","0.54","","","$","1.15","","","$","(0.61",")"]] [[/GREPCENT_TABLE]] COMPARING 2024 WITH 2023 Net Sales Net sales decreased $550 million — 7 percent — primarily due to a $436 million decrease in Wood Products net sales attributable to decreased sales realizations and sales volumes across most product lines, as well as a $142 million decrease in Timberlands net sales to unaffiliated customers attributable to decreased log sales realizations and sales volumes in the Western and Southern regions. Costs of Sales Costs of sales decreased $181 million — 3 percent — primarily due to decreased sales volumes across most product lines in Wood Products, as well as decreased sales volumes in our Timberlands segment, partially offset by an increase in acres sold in our Real Estate, Energy and Natural Resources segment. Operating Income Operating income decreased $501 million — 42 percent — primarily due to a $369 million decrease in consolidated gross margin (see discussion of components above), as well as an $84 million decrease in gain on sale of timberlands (refer to Note 4: Timberland Acquisitions and Divestitures). Net Earnings Net earnings decreased $443 million — 53 percent — primarily due to the $501 million decrease in operating income discussed above. This decrease was partially offset by a $67 million decrease in income tax expense (refer to Income Taxes). WEYERHAEUSER COMPANY 2024 ANNUAL REPORT AND FORM 10-K 47 Table of Contents TIMBERLANDS HOW WE DID We report sales volumes and fee harvest volumes for our Timberlands segment in Our Business/What We Do/Timberlands. Net Sales and Net Contribution to Earnings for Timberlands [[GREPCENT_TABLE]] [["DOLLAR AMOUNTS IN MILLIONS"],["","","","","","AMOUNT OF CHANGE"],["","","","","","","","","2024"],["","","","","","","","","vs."],["","","2024","","","2023","","","2023"],["Net sales to unaffiliated customers:"],["Delivered logs:"],["West","","$","693","","","$","794","","","$","(101",")"],["South","","","603","","","","643","","","","(40",")"],["North","","","46","","","","48","","","","(2",")"],["Total","","","1,342","","","","1,485","","","","(143",")"],["Stumpage and pay-as-cut timber","","","51","","","","56","","","","(5",")"],["Recreational and other lease revenue","","","77","","","","74","","","","3"],["Other products(1)","","","42","","","","39","","","","3"],["Subtotal net sales to unaffiliated customers","","","1,512","","","","1,654","","","","(142",")"],["Intersegment net sales","","","554","","","","572","","","","(18",")"],["Total segment net sales","","$","2,066","","","$","2,226","","","$","(160",")"],["Costs of sales","","$","1,686","","","$","1,746","","","$","(60",")"],["Operating income","","$","279","","","$","488","","","$","(209",")"],["Interest income and other","","","1","","","","\u2014","","","","1"],["Net contribution to earnings","","$","280","","","$","488","","","$","(208",")"]] [[/GREPCENT_TABLE]] (1) Other products include sales of seeds and seedlings from our nursery operations and wood chips. COMPARING 2024 WITH 2023 Net Sales — Unaffiliated Customers Net sales to unaffiliated customers decreased $142 million — 9 percent — primarily due to a $101 million decrease in Western log sales attributable to a 7 percent decrease in sales realizations and a 6 percent decrease in sales volumes, as well as a $40 million decrease in Southern log sales primarily attributable to a 5 percent decrease in sales volumes. Intersegment Sales Intersegment sales decreased $18 million — 3 percent — primarily due to a 6 percent decrease in sales realizations, partially offset by a 3 percent increase in sales volumes. Costs of Sales Costs of sales decreased $60 million — 3 percent — primarily due to decreased Western and Southern sales volumes. Net Contribution to Earnings Net contribution to earnings decreased $208 million — 43 percent — primarily due to the change in the components of gross margin, as discussed above, as well as an $84 million decrease in gain on sale of timberlands (refer to Note 4: Timberland Acquisitions and Divestitures). WEYERHAEUSER COMPANY 2024 ANNUAL REPORT AND FORM 10-K 48 Table of Contents REAL ESTATE, ENERGY AND NATURAL RESOURCES HOW WE DID We report acres sold and average price per acre for our Real Estate, Energy and Natural Resources (Real Estate & ENR) segment in Our Business/What We Do/Real Estate, Energy and Natural Resources. Net Sales and Net Contribution to Earnings for Real Estate, Energy and Natural Resources [[GREPCENT_TABLE]] [["DOLLAR AMOUNTS IN MILLIONS"],["","","","","","AMOUNT OF CHANGE"],["","","","","","","","","2024"],["","","","","","","","","vs."],["","","2024","","","2023","","","2023"],["Net sales to unaffiliated buyers:"],["Real estate","","$","280","","","$","237","","","$","43"],["Energy and natural resources","","","111","","","","126","","","","(15",")"],["Total segment net sales","","$","391","","","$","363","","","$","28"],["Costs of sales","","$","152","","","$","126","","","$","26"],["Operating income and Net contribution to earnings","","$","216","","","$","211","","","$","5"]] [[/GREPCENT_TABLE]] 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 expectations 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 2024 WITH 2023 Net Sales Net sales increased $28 million — 8 percent — primarily due to an increase in acres sold, partially offset by a decrease in average price per acre sold and a decrease in royalty income from our Energy and Natural Resources business. Costs of Sales Costs of sales increased $26 million — 21 percent — primarily due to an increase in acres sold. Operating Income and Net Contribution to Earnings Operating income and net contribution to earnings increased $5 million — 2 percent — primarily due to the change in the components of gross margin, as discussed above. WEYERHAEUSER COMPANY 2024 ANNUAL REPORT AND FORM 10-K 49 Table of Contents WOOD PRODUCTS HOW WE DID We report sales volumes and annual production data for our Wood Products segment in Our Business/What We Do/Wood Products. Net Sales and Net Contribution to Earnings for Wood Products [[GREPCENT_TABLE]] [["DOLLAR AMOUNTS IN MILLIONS"],["","","","","","AMOUNT OF CHANGE"],["","","","","","","","","2024"],["","","","","","","","","vs."],["","","2024","","","2023","","","2023"],["Net sales:"],["Structural lumber","","$","1,906","","","$","2,123","","","$","(217",")"],["Oriented strand board","","","979","","","","944","","","","35"],["Engineered solid section","","","708","","","","783","","","","(75",")"],["Engineered I-joists","","","390","","","","447","","","","(57",")"],["Softwood plywood","","","158","","","","166","","","","(8",")"],["Medium density fiberboard","","","159","","","","155","","","","4"],["Complementary building products","","","615","","","","704","","","","(89",")"],["Other products produced (1)","","","306","","","","335","","","","(29",")"],["Total segment net sales","","$","5,221","","","$","5,657","","","$","(436",")"],["Costs of sales","","$","4,516","","","$","4,699","","","$","(183",")"],["Operating income and Net contribution to earnings","","$","457","","","$","709","","","$","(252",")"]] [[/GREPCENT_TABLE]] (1) Other products produced sales include wood chips, other byproducts and third-party residual log sales from our Canadian Forestlands operations. COMPARING 2024 WITH 2023 Net Sales Net sales decreased $436 million — 8 percent — primarily due to: [[GREPCENT_TABLE]] [["\uf0b7","a $217 million decrease in structural lumber sales attributable to a 7 percent decrease in sales realizations, as well as a 3 percent decrease in sales volumes;"],["\uf0b7","an $89 million decrease in complementary building products sales attributable to decreased sales volumes across most products;"],["\uf0b7","a $75 million decrease in engineered solid section sales attributable to a 10 percent decrease in sales realizations;"],["\uf0b7","a $57 million decrease in engineered I-joists sales attributable to a 10 percent decrease in sales realizations, as well as a 3 percent decrease in sales volumes;"],["\uf0b7","a $29 million decrease in other products produced primarily attributable to decreased sales realizations for wood chips and"],["\uf0b7","an $8 million decrease in softwood plywood sales attributable to a 5 percent decrease in sales realizations."]] [[/GREPCENT_TABLE]] These decreases were partially offset by a $35 million increase in oriented strand board sales attributable to a 6 percent increase in sales realizations, partially offset by a 2 percent decrease in sales volumes. Costs of Sales Costs of sales decreased $183 million — 4 percent — primarily due to decreased sales volumes across most product lines. Operating Income and Net Contribution to Earnings Operating income and net contribution to earnings decreased $252 million — 36 percent — primarily due to the change in the components of gross margin, as discussed above. WEYERHAEUSER COMPANY 2024 ANNUAL REPORT AND FORM 10-K 50 Table of Contents UNALLOCATED ITEMS Unallocated items are gains or charges not related to, or allocated to, an individual operating segment. They include all or a portion of items such as: [[GREPCENT_TABLE]] [["\uf0b7","share-based compensation,"],["\uf0b7","pension and post-employment costs,"],["\uf0b7","elimination of intersegment profit in inventory and LIFO - the last-in, first-out method,"],["\uf0b7","foreign exchange transaction gains and losses resulting from changes in exchange rates primarily related to our U.S. dollar denominated cash and debt balances that are held by our Canadian subsidiary, as well as"],["\uf0b7","interest income and other."]] [[/GREPCENT_TABLE]] Net Charge to Earnings for Unallocated Items [[GREPCENT_TABLE]] [["DOLLAR AMOUNTS IN MILLIONS"],["","","","","","AMOUNT OF CHANGE"],["","","","","","","","","2024"],["","","","","","","","","vs."],["","","2024","","","2023","","","2023"],["Unallocated corporate function and variable compensation expense","","$","(154",")","","$","(127",")","","$","(27",")"],["Liability classified share-based compensation","","","2","","","","(2",")","","","4"],["Foreign exchange gain","","","1","","","","1","","","","\u2014"],["Elimination of intersegment profit in inventory and LIFO","","","4","","","","11","","","","(7",")"],["Other","","","(120",")","","","(105",")","","","(15",")"],["Operating loss","","","(267",")","","","(222",")","","","(45",")"],["Non-operating pension and other post-employment benefit costs","","","(42",")","","","(45",")","","","3"],["Interest income and other","","","52","","","","76","","","","(24",")"],["Net charge to earnings","","$","(257",")","","$","(191",")","","$","(66",")"]] [[/GREPCENT_TABLE]] Net charge to earnings increased by $66 million — 35 percent — primarily due to: [[GREPCENT_TABLE]] [["\uf0b7","a $27 million increase in unallocated corporate function and variable compensation expense;"],["\uf0b7","a $24 million decrease in interest income and other, primarily attributable to a decrease in our cash and short-term investment accounts and"],["\uf0b7","a $7 million decrease in elimination of intersegment profit in inventory and LIFO."]] [[/GREPCENT_TABLE]] INTEREST EXPENSE Our net interest expense incurred for the last two years was: [[GREPCENT_TABLE]] [["\uf0b7","$269 million in 2024 and"],["\uf0b7","$280 million in 2023."]] [[/GREPCENT_TABLE]] Interest expense decreased by $11 million compared to 2023 primarily due to a series of debt issuances and retirements during 2023 that decreased our average outstanding debt. Refer to Note 11: Long-Term Debt, Net for further information. INCOME TAXES As a REIT, we generally are not subject to federal corporate level income taxes on REIT taxable income that is distributed to shareholders. Historical distributions to shareholders, including amounts and tax characteristics, are summarized in the table below. [[GREPCENT_TABLE]] [["AMOUNTS PER SHARE"],["","","2024","","","2023"],["Common - capital gain distribution","","$","0.94","","","$","1.66"]] [[/GREPCENT_TABLE]] We are required to pay corporate income taxes on earnings of our TRSs, which include our Wood Products segment and portions of our Timberlands and Real Estate & ENR segments' earnings. Our provision for income taxes is primarily driven by earnings generated by our TRSs. WEYERHAEUSER COMPANY 2024 ANNUAL REPORT AND FORM 10-K 51 Table of Contents Our provision for income taxes the last two years was: [[GREPCENT_TABLE]] [["\uf0b7","$31 million in 2024 and"],["\uf0b7","$98 million in 2023."]] [[/GREPCENT_TABLE]] Income tax expense decreased by $67 million compared to 2023 primarily due to decreases in our pretax earnings and effective income tax rate. Refer to Note 18: Income Taxes for further information. LIQUIDITY AND CAPITAL RESOURCES We are committed to maintaining an appropriate capital structure that provides financial 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 December 31, 2024, we had $684 million in cash and cash equivalents 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: [[GREPCENT_TABLE]] [["\uf0b7","$1,008 million in 2024 and"],["\uf0b7","$1,433 million in 2023."]] [[/GREPCENT_TABLE]] COMPARING 2024 WITH 2023 Net cash from operations decreased by $425 million, primarily due to decreased cash inflows from our business operations. Pension Contributions and Benefit Payments Made and Expected During 2024, we contributed a total of $18 million to our pension and post-employment benefit plans, compared to a total of $20 million during 2023. For 2025, we expect to contribute approximately $20 million to our pension and post-employment benefit plans. Refer to Note 8: Pension and Other Post-Employment Benefit Plans for further information. INVESTING IN OUR BUSINESS Cash from investing activities includes items such as: [[GREPCENT_TABLE]] [["\uf0b7","capital expenditures for property, equipment and reforestation,"],["\uf0b7","acquisitions of timberlands,"],["\uf0b7","proceeds from sales of assets and operations and"],["\uf0b7","purchases and maturities of short-term investments."]] [[/GREPCENT_TABLE]] Consolidated net cash from investing activities was: [[GREPCENT_TABLE]] [["\uf0b7","$(636) million in 2024 and"],["\uf0b7","$(508) million in 2023."]] [[/GREPCENT_TABLE]] COMPARING 2024 WITH 2023 Net cash from investing activities decreased by $128 million, primarily due to: [[GREPCENT_TABLE]] [["\uf0b7","a $166 million decrease in proceeds from the sale of timberlands and"],["\uf0b7","an $18 million increase in cash spent on the acquisition of timberlands."]] [[/GREPCENT_TABLE]] These changes were partially offset by a $26 million decrease in capital expenditures for property and equipment. WEYERHAEUSER COMPANY 2024 ANNUAL REPORT AND FORM 10-K 52 Table of Contents Summary of Capital Spending by Business Segment [[GREPCENT_TABLE]] [["DOLLAR AMOUNTS IN MILLIONS"],["","","2024","","","2023"],["Timberlands","","$","105","","","$","111"],["Wood Products","","","294","","","","323"],["Unallocated Items","","","17","","","","13"],["Total","","$","416","","","$","447"]] [[/GREPCENT_TABLE]] During fourth quarter 2024, we announced our plan to invest approximately $500 million to build a new TimberStrand® facility in Monticello, Arkansas. This capital outlay may be sourced from cash on hand or through future financing, as deemed appropriate. Construction is expected to start in 2025, with the goal of starting operations in 2027. Once completed, the new facility will increase our engineered wood products capacity by approximately 10 million cubic feet. We expect our capital expenditures for 2025 to be approximately $440 million, excluding the investment in our Monticello engineered wood products facility. We plan to exclude the investment for purposes of calculating our annual Adjusted Funds Available for Distribution (Adjusted FAD), as used in our flexible cash return framework. The amount we spend on capital expenditures could change due to: [[GREPCENT_TABLE]] [["\uf0b7","future economic conditions,"],["\uf0b7","environmental regulations,"],["\uf0b7","changes in the composition of our business,"],["\uf0b7","weather,"],["\uf0b7","timing of equipment purchases and"],["\uf0b7","capital needs related to other business opportunities."]] [[/GREPCENT_TABLE]] FINANCING Cash from financing activities includes items such as: [[GREPCENT_TABLE]] [["\uf0b7","issuances and payments of debt and"],["\uf0b7","payments for cash dividends and repurchasing stock."]] [[/GREPCENT_TABLE]] Consolidated net cash from financing activities was: [[GREPCENT_TABLE]] [["\uf0b7","$(852) million in 2024 and"],["\uf0b7","$(1,342) million in 2023."]] [[/GREPCENT_TABLE]] COMPARING 2024 WITH 2023 Net cash from financing activities increased by $490 million, primarily due to: [[GREPCENT_TABLE]] [["\uf0b7","a $978 million decrease in payments on long-term debt and"],["\uf0b7","a $532 million decrease in cash paid for dividends."]] [[/GREPCENT_TABLE]] These changes were partially offset by a $992 million decrease in net proceeds from issuance of long-term debt and a $23 million increase in cash used for repurchases of common stock. LONG-TERM DEBT Our consolidated long-term debt (including current portion) was: [[GREPCENT_TABLE]] [["\uf0b7","$5,076 million as of December 31, 2024 and"],["\uf0b7","$5,069 million as of December 31, 2023."]] [[/GREPCENT_TABLE]] The $7 million increase in our long-term debt during 2024 is attributable to amortization of debt discounts and capitalized debt expenses. The weighted average interest rate and the weighted average maturity on our long-term debt as of December 31, 2024 were 5.30 percent and 6.6 years, respectively. In January 2025, we repaid our $139 million 8.50 percent debentures at maturity. We have $71 million of 7.95 percent debentures scheduled to mature in first quarter 2025. See Note 11: Long-Term Debt, Net for more information. WEYERHAEUSER COMPANY 2024 ANNUAL REPORT AND FORM 10-K 53 Table of Contents LINE OF CREDIT We had no outstanding borrowings on our $1.5 billion five-year senior unsecured revolving credit facility as of December 31, 2024 or December 31, 2023. This credit facility expires in March 2028. Refer to Note 10: Line of Credit for further information. Our Covenants Our key covenants include the requirement to maintain: [[GREPCENT_TABLE]] [["\uf0b7","a minimum total adjusted shareholders' equity of $3.0 billion and"],["\uf0b7","a defined debt-to-total-capital ratio of 65 percent or less."]] [[/GREPCENT_TABLE]] Our total adjusted shareholders' equity is comprised of: [[GREPCENT_TABLE]] [["\uf0b7","total shareholders\u2019 equity,"],["\uf0b7","excluding accumulated other comprehensive loss,"],["\uf0b7","minus our investment in our unrestricted subsidiaries."]] [[/GREPCENT_TABLE]] Our capitalization is comprised of: [[GREPCENT_TABLE]] [["\uf0b7","total debt,"],["\uf0b7","plus total adjusted shareholders' equity."]] [[/GREPCENT_TABLE]] As of December 31, 2024, we had: [[GREPCENT_TABLE]] [["\uf0b7","total adjusted shareholders' equity of $10.1 billion and"],["\uf0b7","a defined debt-to-total-capital ratio of 33.4 percent."]] [[/GREPCENT_TABLE]] When calculating compliance in accordance with financial debt covenants as of December 31, 2024 and December 31, 2023, we excluded the full amount of accumulated other comprehensive loss of $402 million and $293 million, respectively. See Note 14: Shareholders’ Interest for further information on accumulated other comprehensive loss. There are no other significant financial debt covenants related to our third-party debt. CREDIT RATINGS As of December 31, 2024, our long-term issuer credit rating was BBB and Baa2 from S&P and Moody’s, respectively. DIVIDENDS We paid cash dividends on common shares of: [[GREPCENT_TABLE]] [["\uf0b7","$684 million in 2024 and"],["\uf0b7","$1,216 million in 2023."]] [[/GREPCENT_TABLE]] The decrease in dividends paid is primarily due to a supplemental dividend of $0.14 per share based on 2023 financial results for a total of $102 million paid in first quarter 2024 in comparison 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. Under our cash return framework, we plan to supplement our base dividend with an additional return of variable cash, as appropriate, in the form of a supplemental cash dividend and/or share repurchase to achieve our targeted total return to shareholders of 75 to 80 percent of annual Adjusted Funds Available for Distribution (Adjusted FAD). For further information on Adjusted FAD see Performance and Liquidity Measures. SHARE REPURCHASES We repurchased 4.9 million common shares for approximately $153 million (including transaction fees) during the year ended December 31, 2024. We repurchased 4.1 million common shares for approximately $125 million (including transaction fees) in 2023. As of December 31, 2024, we had remaining authorization of $99 million for future share repurchases. For further information on share repurchases see Note 14: Shareholders’ Interest. OUR CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS More details about our contractual obligations and commercial commitments are in Note 8: Pension and Other Post-Employment Benefit Plans, Note 10: Line of Credit, Note 11: Long-Term Debt, Net, Note 13: Legal Proceedings, Commitments and Contingencies, Note 16: Leases and Note 18: Income Taxes. WEYERHAEUSER COMPANY 2024 ANNUAL REPORT AND FORM 10-K 54 Table of Contents Significant Contractual Obligations as of December 31, 2024 Significant contractual obligations as of December 31, 2024 include our long-term debt obligations and lease obligations. Refer to Note 11: Long-Term Debt, Net and Note 16: Leases, respectively, for further information. Additional significant contractual obligations are included below. [[GREPCENT_TABLE]] [["DOLLAR AMOUNTS IN MILLIONS"],["","","","","","","","","PAYMENTS DUE BY PERIOD"],["","","","","","LESS THAN","","","1\u20133","","","3\u20135","","","MORE THAN"],["","","TOTAL","","","1 YEAR","","","YEARS","","","YEARS","","","5 YEARS"],["Interest(1)","","$","1,703","","","$","264","","","$","431","","","$","337","","","$","671"],["Purchase obligations(2)","","$","624","","","$","219","","","$","272","","","$","70","","","$","63"],["Employee-related obligations(3)","","$","263","","","$","114","","","$","20","","","$","17","","","$","40"]] [[/GREPCENT_TABLE]] (1) Amounts presented for interest payments assume that all long-term debt obligations outstanding as of December 31, 2024 will remain outstanding until maturity. (2) Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on the company and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions and the approximate timing of the transaction. Purchase obligations exclude arrangements that the company can cancel without penalty. (3) The timing of certain payments within this category will be triggered by retirements or other events. These payments can include workers compensation, deferred compensation and banked vacation, among other obligations. When the timing of payment is uncertain, the amounts are included in the total column only. Minimum pension funding is required by established funding standards and estimates are not made for 2026 onward. Estimated payments of contractually obligated post-employment benefits are not included due to the uncertainty of payment timing. OFF-BALANCE SHEET ARRANGEMENTS Off-balance sheet arrangements have not had — and are not reasonably likely to have — a material effect on our current or future financial condition, results of operations or cash flows. Note 10: Line of Credit contains our disclosures of surety bonds and letters of credit. ENVIRONMENTAL MATTERS, LEGAL PROCEEDINGS AND OTHER CONTINGENCIES See Note 13: Legal Proceedings, Commitments and Contingencies. ACCOUNTING MATTERS CRITICAL ACCOUNTING ESTIMATES In the preparation of our financial statements we follow established accounting policies and make estimates that affect both the amounts and timing of the recording of assets, liabilities, revenues and expenses. We base our judgments and estimates on historical experience and assumptions we believe are appropriate and reasonable under current circumstances. Actual results, however, could differ materially from the estimated amounts we have recorded. Some of these estimates require judgments about matters that are inherently uncertain. Accounting policies whose application involve a significant level of estimation uncertainty and may have a material effect on our results of operations or financial condition are considered critical accounting estimates. DISCOUNT RATES FOR PENSION AND POST-EMPLOYMENT BENEFIT PLANS Discount rates are used to estimate the net present value of our pension and other post-employment plan obligations. These rates are determined at the measurement date by matching current spot rates of high-quality corporate bonds with maturities similar to the timing of expected cash outflows for benefits. The selection of discount rates requires judgment as well as the involvement of actuarial specialists. These specialists assist with selecting yield curves based on published indices for high-quality corporate bonds and projecting the timing and amount of cash flows associated with our obligations to ultimately support our determination of an appropriate discount rate for each plan. Our discount rates as of December 31, 2024 are: [[GREPCENT_TABLE]] [["\uf0b7","5.7 percent for our U.S. pension plans \u2014 compared with 5.2 percent at December 31, 2023;"],["\uf0b7","5.5 percent for our U.S. post-employment benefit plans \u2014 compared with 5.1 percent at December 31, 2023;"],["\uf0b7","4.7 percent for our Canadian pension plans \u2014 compared with 4.7 percent at December 31, 2023 and"],["\uf0b7","4.5 percent for our Canadian post-employment benefit plans \u2014 compared with 4.6 percent at December 31, 2023."]] [[/GREPCENT_TABLE]] Pension expenses for 2025 will be based on the 5.7 percent and 4.7 percent assumed discount rates for the U.S. pension plans and the Canadian pension plans, respectively, and the 5.5 percent and 4.5 percent assumed discount rates for the U.S. and Canadian post-employment benefit plans, respectively. WEYERHAEUSER COMPANY 2024 ANNUAL REPORT AND FORM 10-K 55 Table of Contents Our discount rates are important in determining the cost of our plans. A 50 basis point decrease in our discount rate would increase expense or reduce a credit by approximately: [[GREPCENT_TABLE]] [["\uf0b7","$10 million for our U.S. qualified pension plans and"],["\uf0b7","$2 million for our Canadian registered pension plans."]] [[/GREPCENT_TABLE]] Details about our other significant accounting policies are in Note 1: Summary of Significant Accounting Policies. PROSPECTIVE ACCOUNTING PRONOUNCEMENTS A summary of prospective accounting pronouncements is in Note 1: Summary of Significant Accounting Policies. PERFORMANCE AND LIQUIDITY MEASURES We use Adjusted EBITDA as a key performance measure to evaluate the performance of the consolidated company and our business segments. This measure should not be considered in isolation from, and is not intended to represent an alternative to, our results reported in accordance with U.S. generally accepted accounting principles (U.S. GAAP). However, we believe Adjusted EBITDA provides meaningful supplemental information for our investors about our operating performance, better facilitates period to period comparisons and is widely used by analysts, lenders, rating agencies and other interested parties. Our definition of Adjusted EBITDA may be different from similarly titled measures reported by other companies. Adjusted EBITDA, as we define it, is operating income adjusted for depreciation, depletion, amortization, basis of real estate sold and special items. Adjusted EBITDA by Segment [[GREPCENT_TABLE]] [["DOLLAR AMOUNTS IN MILLIONS"],["","","2024","","","2023"],["Timberlands","","$","539","","","$","646"],["Real Estate & ENR","","","349","","","","320"],["Wood Products","","","661","","","","905"],["Unallocated Items","","","(257",")","","","(177",")"],["Total","","$","1,292","","","$","1,694"]] [[/GREPCENT_TABLE]] We reconcile Adjusted EBITDA to net earnings for the consolidated company and to operating income (loss) for the business segments, as those are the most directly comparable U.S. GAAP measures for each. The table below reconciles Adjusted EBITDA by segment to net earnings for the year ended December 31, 2024: [[GREPCENT_TABLE]] [["DOLLAR AMOUNTS IN MILLIONS"],["","","","","","REAL ESTATE","","","WOOD","","","UNALLOCATED"],["","","TIMBERLANDS","","","& ENR","","","PRODUCTS","","","ITEMS","","","TOTAL"],["Net earnings","","","","","","","","","","","","","","$","396"],["Interest expense, net of capitalized interest","","","","","","","","","","","","","","","269"],["Income taxes","","","","","","","","","","","","","","","31"],["Net contribution (charge) to earnings","","$","280","","","$","216","","","$","457","","","$","(257",")","","$","696"],["Non-operating pension and other post-employment benefit costs","","","\u2014","","","","\u2014","","","","\u2014","","","","42","","","","42"],["Interest income and other","","","(1",")","","","\u2014","","","","\u2014","","","","(52",")","","","(53",")"],["Operating income (loss)","","","279","","","","216","","","","457","","","","(267",")","","","685"],["Depreciation, depletion and amortization","","","260","","","","13","","","","219","","","","10","","","","502"],["Basis of real estate sold","","","\u2014","","","","120","","","","\u2014","","","","\u2014","","","","120"],["Special items included in operating income (loss)(1)","","","\u2014","","","","\u2014","","","","(15",")","","","\u2014","","","","(15",")"],["Adjusted EBITDA","","$","539","","","$","349","","","$","661","","","$","(257",")","","$","1,292"]] [[/GREPCENT_TABLE]] (1) Operating income (loss) for Wood Products includes pretax special items consisting of a $25 million product remediation recovery and a $10 million noncash impairment charge related to the indefinite curtailment of our New Bern lumber mill. WEYERHAEUSER COMPANY 2024 ANNUAL REPORT AND FORM 10-K 56 Table of Contents The table below reconciles Adjusted EBITDA by segment to net earnings for the year ended December 31, 2023: [[GREPCENT_TABLE]] [["DOLLAR AMOUNTS IN MILLIONS"],["","","","","","REAL ESTATE","","","WOOD","","","UNALLOCATED"],["","","TIMBERLANDS","","","& ENR","","","PRODUCTS","","","ITEMS","","","TOTAL"],["Net earnings","","","","","","","","","","","","","","$","839"],["Interest expense, net of capitalized interest","","","","","","","","","","","","","","","280"],["Income taxes","","","","","","","","","","","","","","","98"],["Net contribution (charge) to earnings","","$","488","","","$","211","","","$","709","","","$","(191",")","","$","1,217"],["Non-operating pension and other post-employment benefit costs","","","\u2014","","","","\u2014","","","","\u2014","","","","45","","","","45"],["Interest income and other","","","\u2014","","","","\u2014","","","","\u2014","","","","(76",")","","","(76",")"],["Operating income (loss)","","","488","","","","211","","","","709","","","","(222",")","","","1,186"],["Depreciation, depletion and amortization","","","267","","","","16","","","","210","","","","7","","","","500"],["Basis of real estate sold","","","\u2014","","","","93","","","","\u2014","","","","\u2014","","","","93"],["Special items included in operating income (loss)(1)(2)(3)","","","(109",")","","","\u2014","","","","(14",")","","","38","","","","(85",")"],["Adjusted EBITDA","","$","646","","","$","320","","","$","905","","","$","(177",")","","$","1,694"]] [[/GREPCENT_TABLE]] (1) Operating income (loss) for Timberlands includes pretax special items consisting of an $84 million gain on the sale of timberlands and a $25 million legal benefit. (2) Operating income (loss) for Wood Products includes a pretax special item consisting of a $14 million insurance recovery. (3) Operating income (loss) for Unallocated Items includes pretax special items consisting of an $11 million noncash environmental remediation charge and $27 million of legal expense. Net Earnings and Net Earnings per Diluted Share Before Special Items (Income Tax Affected) We reconcile net earnings before special items to net earnings and net earnings per diluted share before special items to net earnings per diluted share, as those are the most directly comparable U.S. GAAP measures. We believe the measures provide meaningful supplemental information for investors about our operating performance, better facilitate period to period comparisons, and are widely used by analysts, lenders, rating agencies and other interested parties. The table below reconciles net earnings before special items to net earnings: [[GREPCENT_TABLE]] [["DOLLAR AMOUNTS IN MILLIONS"],["","","2024","","","2023"],["Net earnings","","$","396","","","$","839"],["Environmental remediation charge","","","\u2014","","","","8"],["Gain on sale of timberlands","","","\u2014","","","","(83",")"],["Insurance recovery","","","\u2014","","","","(10",")"],["Legal benefit","","","\u2014","","","","(25",")"],["Legal expense","","","\u2014","","","","20"],["Product remediation recovery","","","(19",")","","","\u2014"],["Restructuring, impairments and other charges","","","7","","","","\u2014"],["Net earnings before special items","","$","384","","","$","749"]] [[/GREPCENT_TABLE]] WEYERHAEUSER COMPANY 2024 ANNUAL REPORT AND FORM 10-K 57 Table of Contents The table below reconciles net earnings per diluted share before special items to net earnings per diluted share: [[GREPCENT_TABLE]] [["AMOUNTS PER SHARE"],["","","2024","","","2023"],["Net earnings per diluted share","","$","0.54","","","$","1.15"],["Environmental remediation charge","","","\u2014","","","","0.01"],["Gain on sale of timberlands","","","\u2014","","","","(0.12",")"],["Insurance recovery","","","\u2014","","","","(0.01",")"],["Legal benefit","","","\u2014","","","","(0.03",")"],["Legal expense","","","\u2014","","","","0.02"],["Product remediation recovery","","","(0.02",")","","","\u2014"],["Restructuring, impairments and other charges","","","0.01","","","","\u2014"],["Net earnings per diluted share before special items","","$","0.53","","","$","1.02"]] [[/GREPCENT_TABLE]] Adjusted FAD We use Adjusted Funds Available for Distribution (Adjusted FAD) to evaluate the company’s liquidity and measure cash generated during the period (net of capital expenditures and significant nonrecurring items) that is available for dividends, repurchases of common shares, debt reduction, acquisitions, and other discretionary and nondiscretionary capital allocation activities. Adjusted FAD should not be considered in isolation from, and is not intended to represent an alternative to, results reported in accordance with U.S. GAAP. However, we believe the measure provides meaningful supplemental information for our investors about our liquidity. Adjusted FAD, as we define it, is net cash from operations adjusted for capital expenditures and significant non-recurring items. Our definition of Adjusted FAD may be different from similarly titled measures reported by other companies, including those in our industry. We reconcile Adjusted FAD to net cash from operations, as that is the most directly comparable U.S. GAAP measure. The table below reconciles Adjusted FAD to net cash from operations: [[GREPCENT_TABLE]] [["DOLLAR AMOUNTS IN MILLIONS"],["","","2024","","","2023"],["Net cash from operations","","$","1,008","","","$","1,433"],["Capital expenditures","","","(416",")","","","(447",")"],["FAD","","$","592","","","$","986"],["Cash from product remediation recovery","","","(25",")","","","\u2014"],["Adjusted FAD","","$","567","","","$","986"],["Net cash from investing activities","","$","(636",")","","$","(508",")"],["Net cash from financing activities","","$","(852",")","","$","(1,342",")"]] [[/GREPCENT_TABLE]] WEYERHAEUSER COMPANY 2024 ANNUAL REPORT AND FORM 10-K 58 Table of Contents