Weyerhaeuser (WY) sells Washington’s North Cascades Timberlands – July 9, 2021
Weyerhaeuser Company (Wyoming – Free Report) ceded 145,000 acres of woodland in the North Cascades area of Washington to Hampton Resources in order to optimize its woodland portfolio. The transaction is valued at $ 266 million and no tax payable is expected in connection with the sale. The Washington sale marks the completion of Weyerhaeuser’s targeted large-scale divestiture of non-strategic acreage in the West.
Washington Woodlands, acquired through the Longview Timber buyout in 2013, includes high elevation land in the North Cascades Range, with 25% of the acres located in Chelan County on the eastern side of the mountains.
The surrendered acres do not supply Weyerhaeuser’s in-house sawmills or its strategic export customers, but supply the neighboring Hampton sawmill in Darrington, WA. The property incurs the highest operating costs and the lowest site productivity and Douglas fir blend in the Company’s western portfolio. It does not expect the building to contribute significantly to short-term or future Adjusted EBITDA.
Meanwhile, the company remains on track to seek prudent opportunities to enhance its portfolio with high-quality, well-managed forest land that will generate long-term shareholder value.
Focus on strategic portfolio optimization
Weyerhaeuser has optimized the woodland portfolio through acquisitions and divestitures, thereby boosting the core timber, land and forest products businesses. On April 27, 2021, it completed the acquisition of 69,200 acres of woodland in southwest Alabama for approximately $ 149 million.
On November 19, 2020, Weyerhaeuser completed the purchase of Oregon’s Mid-Coast Forests for $ 425 million. On November 17, 2020, she finalized the sale of the forests of southern Oregon for $ 381 million in cash.
Share price return
Weyerhaeuser, one of the largest private owners of forest land in the world, has benefited from improving housing market activity. Despite rapidly changing market conditions due to the COVID-19 outbreak, the company’s first quarter 2021 results have improved significantly year over year. Adjusted earnings were up more than five times from the 18 cents per share figure a year ago and Adjusted EBITDA increased 166.6%.
For the second quarter of 2021, he expects earnings and Adjusted EBITDA for the Timberland segment to be in line with the first quarter.
However, the lumber market is very volatile and market fluctuations have negatively impacted various operations which are primarily focused on variable price products. Lately, lumber prices have fallen from their all-time highs reached in May. On the last trading day in June, prices fell 45%, experiencing their biggest monthly drop since 1978.
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The company’s shares were down 6.1% from the industry’s 5% decline in the past three months. Nonetheless, it has outperformed other industry players like Louisiana-Pacific Society (LPX – Free report), UFP Industries, Inc. (UFPI – Free report) and PotlatchDeltic Corporation (PCH – Free Report) during the said period. Lumber prices rebounded strongly in July (to July 7, 2021), after falling more than 50% from record highs. As of July 7, lumber prices have risen 11% to $ 820.40 per thousand board feet from their June 30 low. This may be due to the surge in demand in commercial construction, given the growing emphasis on return to work, infrastructure construction and leisure activities.
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