Weyerhaeuser showed strong growth in wood products, the company's largest business, which posted a 54% year-over-year increase in revenue, rising 18% sequentially. On a sequential basis, timberland sales advanced only 7%. Sale of cellulose fibers were roughly flat year over year, but up only 2% sequentially.
Although Weyerhaeuser's real estate business was up 43% year over year, revenue plummeted by more than half (-51.8%) since the January quarter.
Weyerhaeuser's profitability, which tripled in the first quarter, more than made up for any near-term revenue concerns. Net income arrived at $144 million, or 26 cents per share, beating estimates of 23 cents. This was Weyerhaeuser's strongest profit showing in almost eight years, or three years before the housing crash.
Gross margin jumped 8 points to 21.4%, even as input costs rose 19%.How much of Weyerhaeuser's second-quarter profits will be impacted if input costs continue to rise? That would have a negative impact on gross margins, especially because gross margin, which was up year over year, were flat from the fourth quarter. Management doesn't expect margins to sway much in the second quarter, though, even as the company projects higher selling-related expenses due to the number of homes that the company anticipates will be closed. At the end of the first quarter, there was a backlog of more than 1,100 homes that were sold but not closed. Of these, management expects to close more than half, which would boost second-quarter revenue and profits.