Weyerhaeuser Company · NYSE:WY
Weyerhaeuser — Non-Deal Roadshow (June 2016)
41 slides from Weyerhaeuser's roadshow presentation, Jun 7, 2016
Slide 1: Investor Meetings | June 2016
Working together to be the world’s premier timber, land, and forest products company Investor Meetings | June 2016 1
Slide 2: Forward-Looking Statements and Non-GAAP Financial Measures
FORWARD-LOOKING STATEMENTS AND NON-GAAP FINANCIAL MEASURES 2 This presentation contains statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, with respect to future prospects, business strategies, rev
Slide 3: Merger with Plum Creek
MERGER WITH PLUM CREEK 3 SHAREHOLDER APPROVAL INTEGRATION UNDERWAY CAPITAL STRUCTURE • Overwhelming shareholder approval • Closed on February 19, 2016 • New Senior Management Team working well together • $100 million “run rate” cost synergies by end of year one • Operational synergies rolled into OP
Slide 4: Cellulose Fibers: Strategic Alternatives
• Announced sale of pulp mills to International Paper for $2.2 billion • Expect transaction to close in fourth quarter of 2016 • Review of liquid packaging and publishing papers facilities is ongoing CELLULOSE FIBERS: STRATEGIC ALTERNATIVES 4 Creating the World’s Premier Timber, Land & Forest Produc
Slide 5: Weyerhaeuser's Transformation
WEYERHAEUSER’S TRANSFORMATION 5 TIMBERLANDS WOOD PRODUCTS CELLULOSE FIBERS WOOD PRODUCTS WRECO • Acquired Longview Timber • Divested WRECO • Merged with Plum Creek • Divesting Cellulose Fibers *Book value of assets by business segment. Excludes Unallocated Items. Timberlands includes Real Estate and
Slide 6: How We Win / What It Looks Like
HOW WE WIN WHAT IT LOOKS LIKE Vv vW KEY WEYERHAEUSER BEHAVIORS A TRULY GREAT COMPANY + Safety + Develop + Act with urgency our people « Integrity + | + Be accountable = Deliver the most + Citizenship : excellence + Be innovative | | + Sustainability * Drive operational | + Keep it simple | | | * Opt
Slide 7: Weyerhaeuser's Investment Thesis
WEYERHAEUSER’S INVESTMENT THESIS FOCUSED ON DRIVING VALUE FOR SHAREHOLDERS 7 • Operational excellence • Most value from every acre • Return cash to shareholders • Invest in our businesses • Maintain appropriate capital structure • Premier timber, land, and wood products assets Superior relative tota
Slide 8: Three Business Segments
THREE BUSINESS SEGMENTS TIMBERLANDS REAL ESTATE, ENERGY & NATURAL RESOURCES WOOD PRODUCTS 8 LARGEST PRIVATE TIMBERLAND OWNER IN THE U.S. • 13 million acres • Unparalleled scale • Highly productive • Sustainably certified LEADER IN MAXIMIZING VALUE FROM EVERY ACRE • Premium recreation and conservatio
Slide 9: Unmatched Timberland Portfolio
UNMATCHED TIMBERLAND PORTFOLIO Note: 13 million acres includes 323,000 acres owned in Uruguay (not shown). Source: WY 2015 10-K, PCL 2015 10-K 9 13 MILLION ACRES Western Region Southern Region Northern Region
Slide 10: Real Estate and Energy & Natural Resources
10 REAL ESTATE: Maximize value of each of our 13 million acres ENERGY & NATURAL RESOURCES • Capture value of all surface and subsurface assets – Oil and natural gas – Construction materials and minerals – Wind resources HIGHER AND BETTER USE (HBU) • Capture premium values above timberland value – Re
Slide 11: Leading Wood Products Portfolio
• Continued improvement through operational excellence • Well-positioned to benefit from improving housing markets 11 LEADING WOOD PRODUCTS PORTFOLIO * Capacity if mills produce exclusively solid section product. Three engineered wood products facilities also produce engineered I-Joists to meet mark
Slide 12: Weyerhaeuser's Investment Thesis
WEYERHAEUSER’S INVESTMENT THESIS FOCUSED ON DRIVING VALUE FOR SHAREHOLDERS 12 • Operational excellence • Most value from every acre • Return cash to shareholders • Invest in our businesses • Maintain appropriate capital structure • Premier timber, land, and wood products assets Superior relative tot
Slide 13: Gains from Operational Excellence
GAINS FROM OPERATIONAL EXCELLENCE 13 Timberlands Lumber OSB ELP Distribution Cellulose Fibers $39 MM $21 MM $24 MM $35 MM EBITDA* $8 MM EBITDA* $47 MM $25 MM $25 MM $10 MM $35 MM EBITDA* $28 MM $34 MM EBITDA* OpX CAPTURED THROUGH 2015 $157 MM $174 MM $330 MILLION 2014 RESULTS 2015 RESULTS *Adjusted
Slide 14: Timberlands: Relative Performance
14 TIMBERLANDS: Relative Performance EBITDA* / ACRE OWNED U.S. WEST EBITDA* / ACRE OWNED U.S. SOUTH Source for competitor data: public SEC filings, National Council of Real Estate Investment Fiduciaries (NCREIF). *Adjusted EBITDA. See appendix for reconciliation to GAAP amounts. **Data for Rayonier
Slide 15: Timberlands: What Does OpX Mean
TIMBERLANDS: What Does OpX Mean WE PRODUCE LOGS AND WE HAVE OPPORTUNITIES TO IMPROVE AT EVERY STAGE OF THE PROCESS SEEDLINGS PLANTING SILVICULTURE HARVEST TRANSPORT MARKETING 15
Slide 16: Timberlands: OpX Performance
16 TIMBERLANDS: OpX Performance 2016 INITIATIVES • SEEDLINGS • Nursery & orchard operating cost • Seedling handling efficiency • PLANTING & SILVICULTURE • Benchmark both companies to improve treatment costs and product yield • HARVEST & TRANSPORTATION • Harvest technology, planning & methods • Trans
Slide 17: Lumber: OpX Performance
17 LUMBER: OpX Performance EBITDA MARGIN* RELATIVE PERFORMANCE Source for competitor data: public SEC filings | *Adjusted EBITDA. See appendix for reconciliation to GAAP amounts Note: WY results do not include any Plum Creek amounts. . 2016 INITIATIVES • Rigorous cost control • Improved recovery • C
Slide 18: OSB: OpX Performance
18 OSB: OpX Performance EBITDA MARGIN* RELATIVE PERFORMANCE Source for competitor data: public SEC filings | *Adjusted EBITDA. See appendix for reconciliation to GAAP amounts. 2016 INITIATIVES • Reliability • Controllable costs • Enhanced product mix OPERATIONAL EXCELLENCE CONTROLLABLE MANUFACTURING
Slide 19: Engineered Wood Products: OpX Performance
ENGINEERED WOOD PRODUCTS: OpX Performance EBITDA MARGIN* RELATIVE PERFORMANCE Source for competitor data: public SEC filings | *Adjusted EBITDA. See appendix for reconciliation to GAAP amounts. Note: WY results do not include any Plum Creek amounts. 2016 INITIATIVES • Controllable manufacturing cost
Slide 20: Distribution: Turnaround Performance
20 DISTRIBUTION: Turnaround Performance EBITDA MARGIN* RELATIVE PERFORMANCE Source for competitor data: public SEC filings | *Adjusted EBITDA. See appendix for reconciliation to GAAP amounts. 2016 INITIATIVES • Improved product margins • Reduced operating costs (warehouse and delivery) • Lower selli
Slide 21: Real Estate: Delivering the Most Value from Each Acre
REAL ESTATE: Delivering the Most Value from Each Acre 21 21 Growing & Harvesting Timber Conservation HBU Determine Where Opportunities Exist to Capture Premium Value (Asset Value Optimization — AVO) ASSESS PROPERTY ATTRIBUTES distance to cities and amenities, access to roads, water, percent uplands
Slide 22: Weyerhaeuser's Investment Thesis
WEYERHAEUSER’S INVESTMENT THESIS FOCUSED ON DRIVING VALUE FOR SHAREHOLDERS 22 • Operational excellence • Most value from every acre • Return cash to shareholders • Invest in our businesses • Maintain appropriate capital structure • Premier timber, land, and wood products assets Superior relative tot
Slide 23: Returning Cash to Shareholders
RETURNING CASH TO SHAREHOLDERS 23 $0.15 $0.17 $0.20 $0.22 $0.29 $0.31 2011 Q1 2012 Q4 2013 Q2 2013 Q3 2014 Q3 2015 Q3 • MORE THAN DOUBLED quarterly dividend since 2011 • COMMITTED to a sustainable and growing dividend QUARTERLY DIVIDEND PER SHARE $2.5 BILLION AUTHORIZED $1.25 BILLION COMPLETE THROUG
Slide 24: Investing in Our Businesses
• Timberlands – Silviculture – Roads and infrastructure • Wood Products – Projects to reduce costs and improve productivity – Maintenance CAPEX • Real Estate, Energy and Natural Resources – Primarily entitlement activities 24 INVESTING IN OUR BUSINESSES * Excludes Cellulose Fibers. 2015 capital expe
Slide 25: Capital Structure
• Committed to solid investment grade credit rating – Target net debt / Adjusted EBITDA < 3.5x • Post-transaction financing completed – $2.5 billion of 18-month bank term loans at favorable floating rate (LIBOR +1.05%) – Term loans to be paid down primarily through asset sales 25 CAPITAL STRUCTURE $
Slide 26: Weyerhaeuser's Investment Thesis
WEYERHAEUSER’S INVESTMENT THESIS FOCUSED ON DRIVING VALUE FOR SHAREHOLDERS 26 • Operational excellence • Most value from every acre • Return cash to shareholders • Invest in our businesses • Maintain appropriate capital structure • Premier timber, land, and wood products assets Superior relative tot
Slide 27: Continued Growth in U.S. Housing Market
TOTAL U.S. HOUSING STARTS SEASONALLY ADJUSTED ANNUAL RATE 27 CONTINUED GROWTH IN U.S. HOUSING MARKET • U.S. housing starts still well below trend levels • Strength in domestic economy and rising employment boost household formations • Anticipate over 1.2 million starts in 2016 • Growth in single-fam
Slide 28: Western Sawlogs: Positive Outlook
0 100 200 300 400 500 600 700 800 900 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 $/ M BF Annual Forecast* Source: Log Lines, *FEA, *RISI RISI FEA 28 WESTERN SAWLOGS: POSITIVE OUTLOOK • Stable demand for Japan wood housing • Positive long-term growth in China market • Significant runway f
Slide 29: Southern Sawlogs: Positive Outlook
20 30 40 50 60 70 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 $/ G re en T on Annual Forecast* Source: Timber Mart-South, *FEA, *RISI RISI FEA 29 SOUTHERN SAWLOGS: POSITIVE OUTLOOK • Continued growth in U.S. housing starts and repair and remodel • Canadian lumber supply limited due t
Slide 30: Lumber: Improving Demand and Pricing
30 LUMBER: IMPROVING DEMAND AND PRICING • Continued growth in U.S. housing • Growth in repair & remodel • Rising operating rates • Pine beetle drives decline in Canadian log supply and lumber production SENSITIVITY $10/MBF ≈ $40 MM U.S. Repair & Remodel Expenditures KEY DRIVERS Canadian Share of U.S
Slide 31: OSB: Improving Demand and Pricing
31 OSB: IMPROVING DEMAND AND PRICING • Improving housing starts and increasing single-family share • Rising operating rates Single-Family Share of U.S. Total Housing Starts PRICING OUTLOOK NORTH CENTRAL OSB KEY DRIVERS OSB Effective Operating Rate SENSITIVITY $10/MSF ≈ $30 MM 40 50 60 70 80 90 100 2
Slide 32: Summary
• Well positioned to capitalize on housing recovery • Driving enhanced performance through combination of two best in class industry leaders • 13 million acres of diverse and productive timberland • Low-cost manufacturing assets • Committed to disciplined capital allocation • Focused on driving valu
Slide 33: Appendix
APPENDIX
Slide 34: Solid Dividend Coverage
34 SOLID DIVIDEND COVERAGE • Increasing cash flow from synergies and operational excellence • Significant reduction in shares outstanding following $2.5 billion repurchase • Improving markets and pricing leverage provide upside *See appendix for reconciliation to GAAP. **Excludes improvements associ
Slide 35: 2015 Adjusted EBITDA Reconciliation: Legacy WY by Segment
35 2015 ADJUSTED EBITDA RECONCILIATION: Legacy WY by Segment $ Millions 2015 Timberlands Lumber OSB ELP Distribution WP Other Wood Products Cellulose Fibers Unallocated Items Total Adjusted EBITDA1 $758 $212 $41 $114 $10 ($5) $372 $378 ($86) $1,422 Depletion, Depreciation & Amortization (209) (44) (
Slide 36: Adjusted EBITDA Reconciliation: Timberlands
ADJUSTED EBITDA RECONCILIATION: TIMBERLANDS Legacy WY by Segment $ Millions 2011 2012 2013 2014 2015 West1 $273 $250 $361 $556 $467 South 214 218 225 262 284 Other1 (15) (8) 46 2 7 Adjusted EBITDA2 $472 $460 $632 $820 $758 Depletion, Depreciation & Amortization (137) (142) (166) (207) (209) Special
Slide 37: 2014 Adjusted EBITDA Reconciliation: Legacy WY by Segment
$ Millions 2014 Timberlands Lumber OSB ELP Distribution WP Other Wood Products Cellulose Fibers Unallocated Items Total Adjusted EBITDA1 $820 $319 $46 $79 $2 $-- $446 $447 ($79) $1,634 Depletion, Depreciation & Amortization (207) (41) (31) (41) (6) -- (119) (155) (12) (493) Non-Operating Pension & P
Slide 38: 2013 Adjusted EBITDA Reconciliation: Legacy WY by Segment
2013 ADJUSTED EBITDA RECONCILIATION: Legacy WY by Segment $ Millions 2013 Timberlands Lumber OSB ELP Distribution WP Other Wood Products Cellulose Fibers Unallocated Items Total Adjusted EBITDA1 $632 $317 $247 $45 ($33) ($2) $574 $353 ($61) $1,498 Depletion, Depreciation & Amortization (166) (40) (3
Slide 39: 2012 Adjusted EBITDA Reconciliation: Legacy WY by Segment
2012 ADJUSTED EBITDA RECONCILIATION: Legacy WY by Segment 1. Adjusted EBITDA for legacy WY is a non-GAAP measure that management uses to evaluate the performance of the company. Adjusted EBITDA, as legacy WY has historically defined it, is operating income adjusted for depreciation, depletion, amort
Slide 40: 2011 Adjusted EBITDA Reconciliation: Legacy WY by Segment
2011 ADJUSTED EBITDA RECONCILIATION: Legacy WY by Segment $ Millions 2011 Timberlands Lumber OSB ELP Distribution WP Other Wood Products Cellulose Fibers Unallocated Items Total Adjusted EBITDA1 $472 ($7) ($4) $6 ($37) ($1) ($43) $597 ($108) $918 Depletion, Depreciation & Amortization (137) (47) (34
Slide 41: Reconciliation: 2015 Funds Available for Distribution
RECONCILIATION: 2015 FUNDS AVAILABLE FOR DISTRIBUTION 41 $ Millions 2015 Legacy Weyerhaeuser Legacy Plum Creek Pro Forma Combined Weyerhaeuser Funds Available for Distribution1 $577 $397 $974 Cash for Investing Activities 487 66 553 Cash from Operations (GAAP) $1,064 $463 $1,527 $ Millions 2015 Cell