Weyerhaeuser Q2 2025 slides: Real Estate gains offset Wood Products weakness

Weyerhaeuser Company (NYSE:WY) reported mixed second-quarter 2025 results, with strong performance in its Real Estate segment counterbalancing weakness in Wood Products, according to the company’s earnings presentation released on July 25, 2025. The timber and forest products company maintained stable overall financial performance despite facing headwinds in key product pricing.

Quarterly Performance Highlights

Weyerhaeuser reported net earnings of $87 million in Q2 2025, a slight improvement from $83 million in Q1, with diluted earnings per share increasing to $0.12 from $0.11. Total (EPA:TTEF) Adjusted EBITDA rose to $336 million from $328 million in the previous quarter, representing a modest 2.4% sequential increase.

As shown in the following consolidated results chart, the company’s performance was driven by significant improvement in the Real Estate, Energy & Natural Resources segment, which saw a $61 million increase in Adjusted EBITDA, offsetting declines in both Timberlands and Wood Products segments:

The company’s Adjusted EBITDA has remained relatively stable over the past six quarters, with the most recent quarter showing continued resilience despite market challenges. The following chart illustrates this trend across all business segments:

Segment Performance Analysis

Real Estate, Energy & Natural Resources

The Real Estate, Energy & Natural Resources segment was the standout performer in Q2 2025, with Adjusted EBITDA surging to $143 million from $82 million in Q1. This 74.4% increase was primarily driven by the timing and mix of real estate sales, with Real Estate contributing $113 million to the segment’s Adjusted EBITDA, up from $59 million in the previous quarter.

The segment’s strong performance is reflected in both higher average price per acre and increased sales volumes, as illustrated in the following charts:

Wood Products

The Wood Products segment experienced a significant decline in Q2 2025, with Adjusted EBITDA falling to $101 million from $161 million in Q1, a 37.3% decrease. This decline was primarily driven by lower sales realizations across most product categories, particularly in Oriented Strand Board (OSB), where realizations decreased by 12%.

The following chart shows the trend in third-party sales volumes and realizations for various wood products:

The company noted that lumber sales realizations decreased by 2% in Q2, while OSB realizations fell by 12%. Unit manufacturing costs were comparable for lumber but higher for OSB due to increased downtime for planned annual maintenance. Looking ahead, current sales realizations for both lumber and OSB are approximately $40/MBF and $35/MSF lower than Q2 averages, respectively, which could further impact the segment’s performance in Q3.

Timberlands

The Timberlands segment saw a modest decline in Q2 2025, with Adjusted EBITDA decreasing to $152 million from $167 million in Q1, a 9% reduction. This was primarily due to higher per unit log and haul costs, as well as higher forestry and road costs, which are seasonal in nature.

The following chart illustrates sales volumes, realizations, and export revenue across different regions:

Capital Allocation and Shareholder Returns

Weyerhaeuser maintained its disciplined capital allocation framework in Q2 2025, with a focus on returning cash to shareholders. The company generated $396 million in cash from operations and spent $107 million on capital expenditures, resulting in Adjusted Funds Available for Distribution (Adjusted FAD) of $311 million for the quarter.

The company significantly increased its share repurchases to $100 million in Q2 from $25 million in Q1, demonstrating its commitment to returning value to shareholders. This aligns with Weyerhaeuser’s target of returning 75-80% of Adjusted FAD to shareholders through a combination of base dividends, supplemental dividends, and share repurchases.

The following chart illustrates the company’s capital allocation framework:

Outlook and Guidance

Looking ahead to Q3 2025, Weyerhaeuser expects mixed performance across its segments. The Timberlands segment is projected to see earnings and Adjusted EBITDA approximately $10 million lower than Q2, primarily due to higher per unit log and haul costs, as well as higher forestry and road costs, despite slightly higher fee harvest volumes and sales realizations.

The Real Estate, Energy & Natural Resources segment is expected to experience a significant decline, with earnings approximately $60 million lower and Adjusted EBITDA approximately $80 million lower than Q2, mainly due to timing and mix of real estate sales.

For the Wood Products segment, performance is expected to be comparable to Q2, excluding the effect of changes in average sales realizations for lumber and oriented strand board. However, with current sales realizations for both lumber and OSB lower than Q2 averages, this segment could face continued pressure.

The company maintained its full-year 2025 outlook for fee harvest volumes, Real Estate & ENR Adjusted EBITDA, and basis of real estate sold. The consolidated tax rate is expected to be 11-14% expense, excluding special items, and capital expenditures are projected at approximately $400 million.

These projections come after a first quarter that saw Weyerhaeuser miss analyst expectations, with Q1 EPS of $0.11 falling short of the $0.12 forecast. The Q2 EPS of $0.12 represents an improvement from Q1 but merely meets what analysts had expected for the previous quarter.

Despite the challenges in certain segments, Weyerhaeuser’s diversified business model and strong cash generation capabilities continue to provide resilience in a challenging market environment. The company’s commitment to returning value to shareholders through its disciplined capital allocation framework remains a key focus, as evidenced by the increased share repurchases in Q2 2025.

Full presentation:

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