Weyerhaeuser Co. (NYSE:WY) Q2 2020 Earnings Conference Call - Final Transcript

Jul 31, 2020 • 10:00 am ET

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Weyerhaeuser Co. (NYSE:WY) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Ladies and gentlemen, thank you for standing by and welcome to the Weyerhaeuser Second Quarter 2020 Earnings Conference Call. [Operator Instructions] [Operator Instructions]. [Operator Instructions]

I would now like to hand the conference over to Beth Baum, Vice President of Investor Relations and Enterprise Planning. Please go ahead.

Executive
Beth Baum

Thank you, Regina. Good morning, everyone. Thank you for joining us today to discuss Weyerhaeuser's second quarter 2020 earnings. This call is being webcast at www.weyerhaeuser.com. Our earnings release and presentation materials can also be found on our website. Please review the warning statements in our press release and on the presentation slides concerning the risks associated with forward-looking statements, as forward-looking statements will be made during this conference call. We will discuss non-GAAP financial measures, and a reconciliation of GAAP can be found in the earnings materials on our website. On the call this morning are Devin Stockfish, Chief Executive Officer; and Russell Hagen, Chief Financial Officer.

I will now turn the call over to Devin Stockfish.

Executive
Devin Stockfish

Thanks, Beth. Good morning, everyone, and thank you for joining us today. I hope everyone is staying safe and is well. This morning, Weyerhaeuser reported second quarter GAAP earnings of $72 million or $0.10 per diluted share, our net sales of $1.6 billion. Excluding next charges of $5 million for special items, we generated earnings of $77 million or $0.11 per diluted share. Adjusted EBITDA of total $386 million in the second quarter, this is approximately 7% lower than the first quarter, but 13% higher than a year ago. Our teams delivered strong operational and safety results, despite the disruptions from COVID-19 and the unprecedented volatility caused by the pandemic. In a moment, I'll dive into our business results. But first let me set the stage with some comments on the housing market.

New residential construction activity declined sharply in March and April as the COVID-19 pandemic triggered stay-at-home orders and rising unemployment across the nation. April housing starts where the lowest and over five years and over 25% lower than April, 2019. The rapid decline in new residential construction activity quickly translated to weaker order files for building products and significant production curtailments by wood products manufacturers. Over the last few months, demand for housing and wood products have shown unexpected resiliency in the face of broad economic disruption in late may States began to reopen their economies and us housing activity, rebounded sharply, despite the continued, extreme weakness and broader macro economic conditions. Housing starts improved sequentially and June starts we're only 4% lower than a year ago.

Repair and remodel activity has also shown remarkable strength driven by robust do-it-yourself demand. Collectively, these factors drove a sharp uptick in wood products pricing and demand as the quarter progressed. As we look to the back half of the year, we're cautiously optimistic regarding a continued improvement in U.S. housing. Mortgage rates are at historic lows demand for housing exceeds the available supply and societal preferences are shifting in favor of larger single family