Joining me this morning are Dan Fulton, President and Chief Executive Officer; and Patty Bedient, Executive Vice President and Chief Financial Officer.Additional information has been added to the analyst package and web slides. This includes EBITDA and operating margin data as well as business-specific metrics. In the web slide package, the charts and tables have been redesigned. I will note some of the graph changes as we review first quarter results. Corporate and Other has been renamed Unallocated to more accurately reflect the nature of these items. Chart 13 details unallocated items. We hope these changes help you in your analysis of Weyerhaeuser. As summarized on Chart 1, this morning, Weyerhaeuser reported first quarter 2012 net earnings of $41 million or $0.08 per diluted share on net sales of $1.5 billion. Earnings for the first quarter include aftertax gains of $32 million from special items. A GAAP reconciliation of earnings before special items can be found on Chart 2. This table now details special items on a pretax and an aftertax basis. The special items for the first quarter are: a gain of $34 million or $0.06 per share for a postretirement plan amendment; a gain of $8 million or $0.02 per share for income tax settlements; and a charge of $10 million or $0.02 per share for restructuring, impairments and other items. Excluding these items, the company reported net earnings of $9 million or $0.02 per diluted share. Turning to our business segment discussion. My comments reviewing the first quarter of 2012 refer to changes from the fourth quarter of 2011. This will be the same for all segments. Beginning with Timberlands, Charts 3 and 4. The graph on Chart 4 had been redesigned. The West and the South are now on separate charts, each graphing third-party log sales versus realizations. Graph on intersegment log sales, West and South, and fee harvest volume, West and South, have also been excluded. Timberlands contributed $71 million to pretax earnings, $1 million more than in Q4. Income from operations increased $13 million. This increase was primarily due to lower equipment and road maintenance cost in the West. This increase was largely offset by a $12 million reduction in earnings from the disposition of non-strategic Timberland. Western log sale volumes were flat. Third-party sales volumes declined 6%, primarily due to fewer log sales to China. Log exports to Japan, however, have increased. Japan accounted for 78% of log exports in Q1 versus 68% in Q4.
Exports to Korea, a small market, also increased. Price realizations for logs in the West declined less than $1 per 1,000 cubic meters. Price realizations for logs exported to Japan slightly increased. Southern log sales volumes were flat. Third-party sales decreased as internal sales increased due to strong Southern yellow pine lumber demand. The combined fee harvest volumes of the West and South rose 2%.Wood Products, Charts 5 and 6. Chart 6 has been reorganized into 4 product graphs of price and volume. First quarter operating income improved $39 million from fourth quarter. Sales volumes and price realizations increased across all product lines. Operating rates were higher. Lumber volumes were up 9%, and lumber prices increased 5% or $15 per 1,000 board feet. Oriented strand board volumes were up 9%. Price realizations rose 14% or $24 per 1,000 square feet. Engineered wood solid section volumes increased 16%. Solid section price realizations were up 3%. Engineered wood TJI volume was 7% higher. TJI prices increased 2%. Manufacturing costs were lower due to more mill uptime and product throughput. Freight expense increased largely due to higher shipment volumes and an increase in fuel costs. Cellulose Fibers, Charts 7 and 8. Pulp sales volumes and price realizations are on the same graph on Chart 8. The pretax contribution to earnings from Cellulose Fibers decreased $90 million in Q1 from Q4. Average pulp price realizations declined 9% or $76 per air-dry metric ton. Pulp sales volumes decreased 4%. Q1 had 2 scheduled annual maintenance outages totaling 27 days of downtime. There were no scheduled maintenance outages in Q4. Due to the scheduled downtime, maintenance costs increased significantly, and pulp production volumes were 5% lower. Real Estate, Charts 9 and 10. Chart 10 contains graphic representations of the metrics formally presented in a table format. The pretax contribution to earnings from Real Estate declined $49 million from fourth quarter. First quarter is seasonally the weakest quarter of the year for single-family home closings. In Q1, single-family home closings declined to 349 from 582 in Q4. Closings were 4% lower than a year-ago first quarter. The average home sales price was $376,000, 6% lower than in Q4 and 10% below the first quarter of 2011. Read the rest of this transcript for free on seekingalpha.com