Weyerhaeuser Company · NYSE:WY
Weyerhaeuser — Q1 2016 Earnings Presentation
29 slides from Weyerhaeuser's earnings presentation, May 6, 2016
Slide 1: Earnings Results | 1st Quarter 2016
EARNINGS RESULTS | 1st Quarter 2016 May 6, 2016
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation contains statements concerning the company's future results and performance that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on our current expectations and various
Slide 3: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES • During the course of this presentation, certain non-U.S. GAAP financial information will be presented. A reconciliation of those numbers to U.S. GAAP financial measures is included in this presentation which is available on the company’s website at www.weyerhaeuser.com
Slide 4: 2016 Q1 Key Developments
2016 Q1 KEY DEVELOPMENTS Merger with Plum Creek: • Weyerhaeuser merged with Plum Creek Timber Company, Inc. ("Plum Creek") on February 19, 2016. Our 2016 Q1 consolidated results include the former Plum Creek operations from the date of the merger through March 31, 2016. • The initial allocation of t
Slide 5: 2016 Q1 Consolidated Results
2016 Q1 CONSOLIDATED RESULTS Chart 1 $ Millions 2015 2016 $ Millions EXCEPT EPS 2015 2016 Adjusted EBITDA Q4 Q1 Change Consolidated Statement of Operations Q4 Q1 Before Special Items Timberlands $ 160 $ 199 $ 39 Net sales $ 1,741 $ 1,835 Real Estate, Energy and Natural 33 34 1 Resources Cost of prod
Slide 6: Earnings Before Special Items
EARNINGS BEFORE SPECIAL ITEMS Chart 2 $ Millions EXCEPT EPS 2015 Q4 2016 Q1 Pre-Tax After-Tax Diluted Pre-Tax After-Tax Diluted Earnings6 Earnings EPS Earnings6 Earnings EPS Earnings Before Special Items $ 157 $ 121 $ 0.24 $ 181 $ 150 $ 0.24 Special Items: Gain on sale of non-strategic asset — — — 3
Slide 7: Timberlands Segment
TIMBERLANDS SEGMENT7 Chart 3 TIMBERLANDS ($ Millions) 2015 2016 TIMBERLANDS ($ Millions) 2015 2016 Adjusted EBITDA by Region Q4 Q1 Segment Statement of Operations Q4 Q1 West $ 103 $ 118 Third party sales $ 297 $ 380 South 56 77 Intersegment sales 133 144 North — 3 Total Sales 430 524 Other 1 1 Cost
Slide 8: Sales Volumes and Realizations
SALES VOLUMES AND REALIZATIONS Chart 4 12 12,13 Volumes (Thousands of tons) Volumes (Thousands of tons) 12,14 Volumes (Thousands of tons) 12. Beginning in the first quarter of 2016, we report log sales and fee harvest volumes in tons. Prior period volumes have been converted from cubic meters to ton
Slide 9: Export Sales, Fee Harvest Volumes, and Intersegment Sales Volumes
EXPORT SALES, FEE HARVEST VOLUMES, Chart 5 AND INTERSEGMENT SALES VOLUMES 15 15,16 South West North 2016 Q1 Japan China Korea 15. Beginning in the first quarter of 2016, we report log sales and fee harvest volumes in tons. Prior period volumes have been converted from cubic meters to tons using annu
Slide 10: Real Estate, Energy and Natural Resources Segment (ENR)
REAL ESTATE, ENERGY AND Chart 6 NATURAL RESOURCES SEGMENT (ENR)17 Real Estate & ENR ($ Millions) 2015 2016 Real Estate & ENR ($ Millions) 2015 2016 Adjusted EBITDA by Business Q4 Q1 Segment Statement of Operations Q4 Q1 Real Estate $ 25 $ 26 Total sales 32 39 Energy and Natural Resources 8 8 Cost of
Slide 11: Real Estate, Energy and Natural Resources Segment (ENR) Adjusted EBITDA
REAL ESTATE, ENERGY AND Chart 7 NATURAL RESOURCES SEGMENT (ENR) 20 EBITDA20 (in Adjusted millions) Real Estate $27 $6 $15 $25 $26 ENR $6 $5 $6 $8 $8 20. A reconciliation to GAAP is set forth on Chart 22. See Chart 22 for our revised definition of Adjusted EBITDA. 11 05/06/2016
Slide 12: Wood Products Segment
WOOD PRODUCTS SEGMENT Chart 8 WOOD PRODUCTS ($ Millions) 2015 2016 WOOD PRODUCTS ($ Millions) 2015 2016 Adjusted EBITDA by Business Q4 Q1 Segment Statement of Operations Q4 Q1 Lumber21 $ 33 $ 51 Third party sales $ 922 $ 979 OSB 25 31 Intersegment sales 21 22 Engineered Wood Products22 14 31 Total s
Slide 13: 3rd-Party Sales Volumes and Realizations
3RD-PARTY SALES VOLUMES AND REALIZATIONS27 Chart 9 27. Sales volumes include sales of internally produced products and products purchased for resale primarily through our Distribution business. 13 05/06/2016
Slide 14: Cellulose Fibers Segment
CELLULOSE FIBERS SEGMENT Chart 10 CELLULOSE FIBERS ($ Millions) 2015 2016 1st Quarter Notes Segment Statement of Operations Q4 Q1 • Lower sales realizations for pulp Total Sales $ 475 $ 430 and liquid packaging board Cost of products sold 393 386 Gross margin 82 44 • Slightly lower pulp sales volume
Slide 15: Cellulose Fibers Segment
CELLULOSE FIBERS SEGMENT Chart 11 32 Pulp (ADMT) Liquid Packaging (metric tons) 32. Includes expenses for annual maintenance outages and other maintenance costs. 15 05/06/2016
Slide 16: Unallocated Items
UNALLOCATED ITEMS Chart 12 UNALLOCATED ITEMS ($ Millions)33 2015 2016 UNALLOCATED ITEMS ($ Millions) 2015 2016 Q4 Q1 By Natural Expense Q4 Q1 Unallocated corporate function expenses $ (7) $ (9) Credit to products sold34 $ 10 $ 7 Unallocated share-based compensation (4) (2) G&A expenses35 (15) (10) U
Slide 17: Financial Items
FINANCIAL ITEMS Chart 13 2014 includes discontinued operations KEY FINANCIAL METRICS 2015 2016 ($ Millions) Q4 Q1 Ending Cash Balance $ 1,012 $ 415 Long-Term Debt $ 4,875 $ 7,803 Gross Debt to Adjusted EBITDA (LTM)36 3.4 5.2 Net Debt to Enterprise Value37 20% 24% 2014: $1,088 million 2015: $1,074 mi
Slide 18: Share Repurchase
SHARE REPURCHASE Chart 14 • $2.5 billion share repurchase program effective February 19, 2016 • Repurchased $863 million, or 31 million shares, at an average price of $27.49 in the quarter COMMON SHARES OUTSTANDING (millions) 2016 Q1 Beginning of Period 510 Common shares repurchased (31) Shares issu
Slide 19: Plum Creek Acquisition Accounting
PLUM CREEK ACQUISITION ACCOUNTING Chart 15 Preliminary purchase price allocation39 ($ Millions) Assets acquired Timber & timberlands $ 8,124 Investments in joint ventures 964 Minerals & mineral rights 312 Property, plant & equipment 272 Other noncurrent assets 163 Current assets (working capital) 12
Slide 20: Outlook: 2016 Q2
OUTLOOK: 2016 Q2 Chart 16 SEGMENT COMMENTS TIMBERLANDS ● Higher fee harvest volumes from a full quarter of Plum Creek ● Seasonally higher silvicultural costs and Western logging expenses ● Slightly lower sales realizations for Western and Southern logs due to mix ● Higher non-cash depletion and amor
Slide 21: Appendix
APPENDIX APPENDIX 21 05/06/2016
Slide 22: Pension and Postretirement Expense
PENSION AND POSTRETIREMENT EXPENSE Chart 17 $ Millions 2015 2016 Net Pension and Postretirement Cost (Credit)40 Q1 Q2 Q3 Q4 Q1 Timberlands $ 3 $ 2 $ 2 $ 2 $ 2 Real Estate, Energy and Natural Resources — — — — — Wood Products 7 7 6 7 5 Cellulose Fibers 3 5 5 4 4 Pension and postretirement credits not
Slide 23: Earnings Summary
EARNINGS SUMMARY Chart 18 $ Millions 2015 2016 Adjusted EBITDA by Segment Q1 Q2 Q3 Q4 Q1 Timberlands $ 192 $ 168 $ 158 $ 160 $ 199 Real Estate, Energy and Natural Resources 33 11 21 33 34 Wood Products 88 98 111 75 117 Cellulose Fibers 78 72 123 105 68 Unallocated Items (48) 10 (36) (12) (5) Total A
Slide 24: Earnings Per Share Reconciliation
EARNINGS PER SHARE RECONCILIATION Chart 19 $ Millions EXCEPT EPS 2015 2016 Q1 Q2 Q3 Q4 Q1 Weighted Average Shares Outstanding, Diluted 527 520 517 514 635 Diluted EPS Before Special Items $ 0.19 $ 0.26 $ 0.35 $ 0.24 $ 0.24 Special Items: Gain on sale of non-strategic asset — — — — 0.03 Plum Creek me
Slide 25: EBITDA Reconciliation by Segment
EBITDA RECONCILIATION BY SEGMENT Chart 20 $ MILLIONS 2015 Q4 2016 Q1 Real Real Estate & Wood Cellulose Unallocated Estate & Wood Cellulose Unallocated Timberlands ENR Products Fibers Items Total Timberlands ENR Products Fibers Items Total Adjusted EBITDA46 $ 160 $ 33 $ 75 $ 105 $ (12) $ 361 $ 199 $
Slide 26: EBITDA Reconciliation - Timberlands
EBITDA RECONCILIATION - TIMBERLANDS Chart 21 $ MILLIONS 2015 Q4 2016 Q1 West South North Other Total West South North Other Total Adjusted EBITDA49 $ 103 $ 56 $ — $ 1 $ 160 $ 118 $ 77 $ 3 $ 1 $ 199 Depreciation, depletion & amortization (28) (18) — (7) (53) (30) (31) (1) (8) (70) Operating Income (G
Slide 27: EBITDA Reconciliation - Real Estate, Energy and Natural Resources
EBITDA RECONCILIATION - REAL ESTATE, Chart 22 ENERGY AND NATURAL RESOURCES $ Millions 2015 Q4 2016 Q1 Energy & Energy & Natural Natural Real Estate Resources Total Real Estate Resources Total Adjusted EBITDA50 $ 25 $ 8 $ 33 $ 26 $ 8 $ 34 Depletion, depreciation & amortization (1) — (1) (1) (1) (2) B
Slide 28: EBITDA Reconciliation - Wood Products
EBITDA RECONCILIATION - WOOD PRODUCTS Chart 23 $ Millions 2015 Q4 2016 Q1 Lumber OSB EWP Distribution Other Total Lumber OSB EWP Distribution Other Total Adjusted EBITDA51,52 $ 33 $ 25 $ 14 $ 2 $ 1 $ 75 $ 51 $ 31 $ 31 $ 4 $ — $ 117 Depletion, depreciation & amortization (11) (8) (7) (1) — (27) (13)
Slide 29: Gross Debt to EBITDA Reconciliation
GROSS DEBT TO EBITDA RECONCILIATION Chart 24 $ MILLIONS 2015 2016 Q4 Q1 Gross Debt to Adjusted EBITDA (LTM)53,55 3.4 5.2 Long-Term Debt54 $ 4,875 $ 7,803 Adjusted EBITDA (LTM)55 $ 1,442 $ 1,512 Depletion, depreciation & amortization (479) (498) Basis of real estate sold (20) (27) Non-operating pensi