Weyerhaeuser Company · NYSE:WY
Weyerhaeuser — Investor Day (May 2012)
104 slides from Weyerhaeuser's investor day presentation, May 16, 2012
Slide 1: Weyerhaeuser Analyst Meeting
1 | 05/10/2012 WEYERHAEUSER Analyst Meeting | May 10, 2012
Slide 2: Kathy McAuley, Vice President, Investor Relations
2 | 05/10/2012 Kathy McAuley Vice President, Investor Relations
Slide 3: Forward-Looking Statement
3 | 05/10/2012 FORWARD-LOOKING STATEMENT 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 various assumptions and
Slide 4: Introduction
4 | 05/10/2012 Dan Fulton INTRODUCTION President and Chief Executive Officer
Slide 5: Weyerhaeuser Overview
5 | 05/10/2012 WEYERHAEUSER OVERVIEW
Slide 6: Total Company Recordable Incident Rate
6 | 05/10/2012 TOTAL COMPANY RECORDABLE INCIDENT RATE RIR YTD
Slide 7: Weyerhaeuser Overview
7 | 05/10/2012 WEYERHAEUSER OVERVIEW
Slide 8: Third-Party Awards and Recognitions
8 | 05/10/2012 THIRD-PARTY AWARDS AND RECOGNITIONS Most Admired Companies FORTUNE Magazine, 2006–2012 World’s Most Ethical Companies Ethisphere Institute, 2009, 2010, 2012 Top 100 S&P 500 Clean Capitalism Ranking Corporate Knights, 2012 100 Best Corporate Citizens Corporate Responsibility Magazine,
Slide 9: Weyerhaeuser Overview
9 | 05/10/2012 WEYERHAEUSER OVERVIEW
Slide 10: Housing Recovery Beginning
10 | 05/10/2012 HOUSING RECOVERY BEGINNING • Current level of starts remains well below historic levels – gradual pace of improvement • Housing will return to long-term trend levels 0.0 0.5 1.0 1.5 2.0 2.5 1995 1997 1999 2001 2003 2005 2007 2009 2011 U.S. Total Housing Starts Million Units Annual AM
Slide 11: U.S. Housing Forecasts
11 | 05/10/2012 U.S. HOUSING FORECASTS *Estimate based on forecast of total starts U.S. Housing Starts Forecasts 2012 2013 Single Multi Total Single Multi Total John Burns (04/12) 498 235 733 615 304 919 RISI (03/12) 460 220 680 500 300 800 Global Insight (03/12) 511* 229 740 680* 310 990 Moody’s (0
Slide 12: Agenda
12 | 05/10/2012 TOM GIDEON: Timberlands LARRY BURROWS: Wood Products PETER ORSER: Real Estate (WRECO) SHAKER CHANDRASEKARAN: Cellulose Fibers PATTY BEDIENT: Financial Progress and Capital Allocation DAN FULTON: Conclusion and Q&A AGENDA
Slide 13: Timberlands
13 | 05/10/2012 Tom Gideon Executive Vice President, Timberlands TIMBERLANDS
Slide 14: Competitive Advantages
14 | 05/10/2012 COMPETITIVE ADVANTAGES • World-class timber holdings • Strong presence in international markets • Long-standing customer relationships • Innovative silviculture – Prioritization of sawlogs – Increasing harvest volume and value • Operational excellence at scale
Slide 15: Timberlands in Productive, Diverse Regions
15 | 05/10/2012 TIMBERLANDS IN PRODUCTIVE, DIVERSE REGIONS • Nearly two million acres west of the Cascade Range, primarily high-value Douglas fir • Over four million acres in seven states across the U.S. South, primarily loblolly pine • In Uruguay we have over 300,000 acres of loblolly pine and euca
Slide 16: Growing Timberlands EBITDA
16 | 05/10/2012 GROWING TIMBERLANDS EBITDA 76 57 250 193 - 200 400 600 800 1,000 1,200 2012-2015 2016-2020 2021-2025 M ill io n $ Timberlands EBITDA Inflation Price Execution Volume & Mix 2011 Base 1.5%/ year inflation Higher projected prices Improved margin, lower cost Increased harvest • Trends in
Slide 17: Sources of Revenue
17 | 05/10/2012 SOURCES OF REVENUE
Slide 18: U.S. Trend Log Demand Exceeds Domestic Supply
18 | 05/10/2012 U.S. TREND LOG DEMAND EXCEEDS DOMESTIC SUPPLY • Recovery in U.S. lumber demand follows housing return to trend in 2015–2020 • Canadian lumber imports will not return to prior peaks • Rising lumber / log demand will lead to higher prices 0 10 20 30 40 50 60 70 1976 1985 1995 2005 2011
Slide 19: Canada: Diminishing Share of U.S. Market
19 | 05/10/2012 CANADA: DIMINISHING SHARE OF U.S. MARKET • Canadian lumber available to U.S. lower due to mountain pine beetle and growth in offshore exports Source: International Wood Markets, RISI Billion Board Feet 2005 2010 2015 2020 Canadian Lumber Production 35 24 29 28 Domestic Consumption (1
Slide 20: Uniquely Advantaged to Serve International Markets
20 | 05/10/2012 UNIQUELY ADVANTAGED TO SERVE INTERNATIONAL MARKETS • Strategically located timberlands • Well-developed infrastructure and sales relationships • 22% of timberlands revenue from export log sales – Japan is a premium market for Weyerhaeuser logs – Pursuing other international log marke
Slide 21: Sourcing Largest Sawmills in Japan
21 | 05/10/2012 SOURCING LARGEST SAWMILLS IN JAPAN • Our largest export market • Leveraging supply chain efficiencies – Unique infrastructure – One-port loading and discharge – Approximately one ship per week • Direct sales relationship with largest customer
Slide 22: Log Sales to China
22 | 05/10/2012 LOG SALES TO CHINA • Sell directly to a mix of customer types – primarily larger wholesalers and sawmill owners • Focus on specific customers (well-funded, strong market presence, likely long-term success) • Reputation is a Weyerhaeuser strength – Preferred North American log supplie
Slide 23: Silviculture Enables Value-Optimized Rotation
23 | 05/10/2012 Sustainability SILVICULTURE ENABLES VALUE-OPTIMIZED ROTATION • Silviculture focus on growing high-value sawtimber as quickly as possible US WEST US SOUTH URUGUAY Financial Optimization Site Preparation, Fertilizer, Thinning and Pruning Seedlings Genetics Stand Management Final Harves
Slide 24: Seedlings
24 | 05/10/2012 SEEDLINGS • Our loblolly pine and Douglas fir have been through more cycles of improvement than competitor seedlings – More volume growth – Superior solid wood characteristics – Well adapted • Flexibility to mix / match traits – Stem straightness – Disease resistance
Slide 25: Volume Growth Improvement
25 | 05/10/2012 VOLUME GROWTH IMPROVEMENT • Weyerhaeuser has dramatically improved sawlog growth over time – Overall we produce a richer mix faster • Industry leader in tree breeding and orchard / nursery management • Timberlands managed using sophisticated blend of silviculture and technology 0 50
Slide 26: High-Value Grade Logs
26 | 05/10/2012 HIGH-VALUE GRADE LOGS • Weyerhaeuser’s timber resource and tree-growing strategy enables a high proportion of high-value grade logs – improving over time % SAWTIMBER GRADE LOGS NOW 2020+ South 60% 65–70% West 93% Steady International 30% 40–50%
Slide 27: Value of Sawtimber Grade Logs Is Higher
27 | 05/10/2012 VALUE OF SAWTIMBER GRADE LOGS IS HIGHER • Sawtimber logs consistently trade at a higher price than chip-n-saw and pulpwood 10 20 30 40 50 60 2005 2006 2007 2008 2009 2010 2011 2012 2013 Delivered Southern Average Prices $/ Green Ton Delivered Quarterly Source: Timber Mart-South, Wood
Slide 28: Harvest Expected to Increase in All Geographies
28 | 05/10/2012 WEYERHAEUSER HARVEST EXPECTED TO INCREASE IN ALL GEOGRAPHIES 10 15 20 25 2012-15 2016-20 2021-25 2026-30 An nu al H ar ve st (M ill io n Cu bi c M et er s) Weyerhaeuser Global Fee Harvest Volume International US
Slide 29: Operational Excellence at Scale
29 | 05/10/2012 OPERATIONAL EXCELLENCE AT SCALE • Harvesting • Merchandising • Hauling / dispatch trucking Scale, Infrastructure and Logistics Provide Cost Advantages
Slide 30: Additional Value Streams
30 | 05/10/2012 ADDITIONAL VALUE STREAMS • Oil and gas – ~$40 million revenue and 1,000 wells in 2011 • Minerals and aggregates – ~$10 million revenue and 35 mines in 2011 • Recreational – Hunting leases (on nearly 90% of U.S. South ownership) • Renewable energy / biomass – Catchlight Energy (agreem
Slide 31: Conclusion
31 | 05/10/2012 CONCLUSION • World-class timber holdings • Favorable trends in demand support higher projected prices • Strong presence in international markets • Long-standing customer relationships • Innovative silviculture – Prioritization of sawlogs – Increasing harvest volume and value • Operat
Slide 32: Wood Products
32 | 05/10/2012 Larry Burrows Senior Vice President, Wood Products WOOD PRODUCTS
Slide 33: Returning to Profitability
33 | 05/10/2012 RETURNING TO PROFITABILITY • Second quarter outlook is breakeven EBIT, approximately $30 million EBITDA • Assuming current volumes and prices for the remainder of the year, we would generate approximately $100 million EBITDA in 2012 • Significant future upside potential through: – Ex
Slide 34: Wood Products Initiatives
34 | 05/10/2012 WOOD PRODUCTS INITIATIVES • Deepen and broaden customer base and market reach • Innovate with new products • Improve operating performance and reduce costs Focused on All Aspects of Our P&L
Slide 35: Wood Products Business Model
35 | 05/10/2012 WOOD PRODUCTS BUSINESS MODEL • Operating four businesses under Weyerhaeuser and TrusJoist® brands – Lumber • 18 manufacturing mills – 4.5 Billion Board Feet Capacity – OSB • 6 manufacturing mills – 3.0 Billion Square Feet Capacity – Engineered Lumber Business • 10 manufacturing mills
Slide 36: 2011 Sales: $2.3 Billion
36 | 05/10/2012 2011 SALES: $2.3 BILLION Export 6% Broad Market Reach Non-Residential / Other 26 % Residential 68% Diverse Product Mix
Slide 37: Lumber: Scale, Product Diversity and Market Reach
37 | 05/10/2012 LUMBER: SCALE, PRODUCT DIVERSITY AND MARKET REACH Grande Prairie Drayton Valley Princeton Raymond Longview Santiam Cottage Grove SPF EXPORT SPRUCE-PINE-FIR DOUGLAS-FIR GREEN HEM-FIR DOUGLAS-FIR KILN DRIED SOUTHERN YELLOW PINE DOUG-FIR GREEN & KILN DRIED Idabel Dierks Dodson Holden Mc
Slide 38: Canada: Diminishing Share of U.S. Market
38 | 05/10/2012 CANADA: DIMINISHING SHARE OF U.S. MARKET • Canadian lumber available to U.S. lower due to mountain pine beetle and growth in offshore exports Source: International Wood Markets, RISI Billion Board Feet 2005 2010 2015 2020 Canadian Lumber Production 35 24 29 28 Domestic Consumption (1
Slide 39: OSB: Scale, Product Diversity and Market Reach
39 | 05/10/2012 OSB: SCALE, PRODUCT DIVERSITY AND MARKET REACH Grayling Arcadia Sutton Elkin Edson Hudson Bay EXPORT • Edge Gold® Flooring • Edge® Sheathing • Webstock • Radiant Barrier Sheathing • Stair treads
Slide 40: Engineered Wood: Scale, Product Diversity and Market Reach
40 | 05/10/2012 ENGINEERED WOOD: SCALE, PRODUCT DIVERSITY AND MARKET REACH Eugene (Microllam/TJI mill) ELP Mills Natchitoches (Microllam/TJI mill) Kenora (TimberStrand mill) Buckhannon (Microllam/ Parallam mill) Vancouver (Parallam mill) Emerson Foster Veneer Supply Zwolle Colbert –( Parallam mill)
Slide 41: Distribution: Scale, Product Diversity and Market Reach
41 | 05/10/2012 DISTRIBUTION: SCALE, PRODUCT DIVERSITY AND MARKET REACH Salt Lake City Boise Tacoma Eugene Stockton Fresno Santa Clarita Fontana Phoenix Henderson St. Paul Naperville Dallas Houston Gulfport Easton Murrysville Baltimore Richmond Concord Atlanta Jacksonville
Slide 42: Growing with Existing Customers
42 | 05/10/2012 GROWING WITH EXISTING CUSTOMERS
Slide 43: Securing New Customers – Entering New Markets
43 | 05/10/2012 SECURING NEW CUSTOMERS – ENTERING NEW MARKETS
Slide 44: Innovating with New Products
44 | 05/10/2012 INNOVATING WITH NEW PRODUCTS • Commercialize quickly • Value-add products – Framer SeriesTM Lumber – Edge Gold with Down PoreTM drainage grooves – TJI® Joists with Flak JacketTM fire protection
Slide 45: Improved Operating Performance
45 | 05/10/2012 IMPROVED OPERATING PERFORMANCE • Mills running at higher utilization rates • 2011 cost reductions, compared to 2010 – 5–9% for lumber, OSB and TJI® per unit manufacturing – 23% in SG&A 2012 2010 2011 Stated Capacity Utilization Rate Lumber 4.5 BBF 63% 79% OSB 3.0 BSF 49% 71% TJI® 380
Slide 46: Executing Our Initiatives
46 | 05/10/2012 EXECUTING OUR INITIATIVES • Deepening and broadening customer base and market reach • Introducing new products and innovations • Improving operating performance and reducing costs Improving in Today’s Market – Well Positioned for the Housing Recovery
Slide 47: Real Estate
47 | 05/10/2012 Peter Orser REAL ESTATE President, Weyerhaeuser Real Estate Company (WRECO)
Slide 48: WRECO Competitive Advantages
48 | 05/10/2012 WRECO COMPETITIVE ADVANTAGES • Seasoned leadership with homebuilding and land developer expertise • Unique brands with local value propositions • Desirable markets with long-term positive growth trends • Scale and operational excellence • Industry-leading customer satisfaction and ma
Slide 49: Overview
49 | 05/10/2012 OVERVIEW • Top 20 builder of single-family homes • Operate in select markets with positive long-term trends
Slide 50: Areas of Focus
50 | 05/10/2012 AREAS OF FOCUS • Control the controllables • Distinguish through innovative products and services • Reposition land portfolio • Leverage the homebuilding platforms in existing markets
Slide 51: Profitable on Low Volume in 2011
51 | 05/10/2012 PROFITABLE ON LOW VOLUME IN 2011 -22,000 -19,000 -16,000 -13,000 -10,000 -7,000 -4,000 -1,000 2,000 5,000 8,000 11,000 14,000 17,000 -$300 -$200 -$100 $0 $100 $200 Singl e -F a m ily C lo si n g s P re -T a x Income (Los s) in M illi o n s WRECO Compared to 14 Publicly Traded Homebui
Slide 52: Disciplined Production Processes
52 | 05/10/2012 DISCIPLINED PRODUCTION PROCESSES • Cost-effective new product designs • National contract leverage • Subcontractor relationships, quality control and supervision • Cycle time focus – Production – Product development
Slide 53: Reducing SG&A Expenses
53 | 05/10/2012 REDUCING SG&A EXPENSES • SG&A and production capacity aligned with local market conditions • Well-positioned to leverage SG&A framework at higher sales volumes SG&A / Headcount A ve ra g e H e a dcoun t SG&A D o ll a rs in M illi o n s
Slide 54: Product Innovation Puget Sound
54 | 05/10/2012 PRODUCT INNOVATION PUGET SOUND • Homes offered from $280,000 to $400,000 (compared to median new home price in Seattle of $335,000) • Customized structural options available in home sizes ranging from 1,700 to 3,400 square feet • Infill community located close to arterials and employ
Slide 55: Product Innovation Las Vegas
55 | 05/10/2012 PRODUCT INNOVATION LAS VEGAS • Homes offered from $360,000 to $410,000 (compared to median new home price of $185,000) • Square footage range: 3,000 to 4,100 • Lots scaled to accommodate 4-bay garages and detached casitas as options • Averaging seven sales per month (since opening in
Slide 56: Product Innovation
56 | 05/10/2012 PRODUCT INNOVATION • “Living Smart” package includes value-oriented sustainable features and components • Pioneered and refined at Pardee Homes • “Living Smart” brand now adopted across WRECO
Slide 57: Embracing the Customer
57 | 05/10/2012 EMBRACING THE CUSTOMER Source: Woodland-O’Brien Willingness to Refer Well Above Industry Average
Slide 58: Embracing the Customer
58 | 05/10/2012 EMBRACING THE CUSTOMER Note: Cancellation rate calculated as contracts cancelled divided by total contracts
Slide 59: Service Innovation
59 | 05/10/2012 SERVICE INNOVATION • Smart Move Advantage – Qualifying buyers receive rent for three years on existing home • Mortgage payment protection – Job loss insurance for six months if buyer is involuntarily unemployed within 24 months of closing • Credit repair – Credit counseling for mortg
Slide 60: Homebuilder and Land Developer
60 | 05/10/2012 HOMEBUILDER AND LAND DEVELOPER • Land entitlement and development skills enhance homebuilding margins • Selling land to builders and developers is a long-held core strategy • Relatively stable revenue driver over the last several years – Cross Creek transaction unusual in size 5% 6%
Slide 61: Leveraging the Platform
61 | 05/10/2012 0.5 1.5 2.5 3.5 2011Q1 2012Q1 Sales Per Community Per Month Source: SEC filings LEVERAGING THE PLATFORM +32% Outstanding Sales Efficiency
Slide 62: Mix Impact to Margins
62 | 05/10/2012 MIX IMPACT TO MARGINS • Influences – Market: state, submarket, community – Product – Form of land purchase (e.g. raw land entitled, option) – Detached / attached mix – Affordable units • Margin Outlook: 20–25% – Modest price increases in most active submarkets – Volume growth will re
Slide 63: Summary
63 | 05/10/2012 SUMMARY • Control the controllables • Differentiate through innovative products and services • Reposition land portfolio • Leverage the homebuilding platforms Profitable Today and Positioned for the Housing Recovery
Slide 64: Cellulose Fibers
64 | 05/10/2012 Shaker Chandrasekaran CELLULOSE FIBERS Senior Vice President, Cellulose Fibers
Slide 65: Concentrating on Our Strengths
65 | 05/10/2012 CONCENTRATING ON OUR STRENGTHS • Focused on value-added grades • Nurturing global partnerships with key customers • Selling direct through global sales team • Innovating for higher margins • Operational excellence • Strategically located manufacturing sites Focused on Disciplined Exe
Slide 66: How Our Products Are Used
66 | 05/10/2012 HOW OUR PRODUCTS ARE USED • Fluff – 42% of sales – Diapers and personal care products • Specialty (Crosslink, Pearl®) – 19% of sales – Textiles, nonwovens, and industrial applications • Pulp for Premium Towel and Tissue – 22% of sales • Liquid Packaging Board – 17% of sales – Dairy,
Slide 67: Focused on Value-Added Grades
67 | 05/10/2012 FOCUSED ON VALUE-ADDED GRADES Global Market Size $$$ 18 5 5 5 0 5 10 15 20 25 30 35 $ V al u e per To n Papergrade Towel & Tissue Fluff Dissolving Wood Pulp MM Tons Pearl® (launched in 2011) Crosslink 24% of global share 10% of global share Not our focus WY Market Share
Slide 68: Fluff Demand Growth Rate Forecast
68 | 05/10/2012 FLUFF DEMAND GROWTH RATE FORECAST Source: WY estimates Emerging Markets Leading Growth Projected global growth
Slide 69: Globally Distributed Products
69 | 05/10/2012 GLOBALLY DISTRIBUTED PRODUCTS 2011 Revenues – $2.1 Billion * EMEA = Eastern Europe, Middle East and Africa Growing With Customers – Growing Globally • 60% of revenues from outside North America • Export to over 60 countries • 15% of revenues from China • Strategic relationships • Foc
Slide 70: Liquid Packaging Board Positioned to Grow
70 | 05/10/2012 LIQUID PACKAGING BOARD POSITIONED TO GROW • 84% of revenue from outside North America • Export to six countries • Over 40 years in Japan • Growing global demand • Growing in Pacific Rim 2011 Revenues $440 Million Leader in Japan
Slide 71: Innovation Strategy
71 | 05/10/2012 INNOVATION STRATEGY • Introduced “next generation” crosslink fibers • Developing “next generation” Pearl® • Developing proprietary fibers for specialty applications • Delivering innovative liquid packaging board solutions Innovate with Targeted Customers
Slide 72: Crosslink: Growing with Key Global Customers
72 | 05/10/2012 • Crosslink fibers enhance the absorbent characteristic of fluff pulp – Developed and patented by Weyerhaeuser – Requires high-quality Weyerhaeuser fluff pulp – Closely aligned with customer requirements and demand • Strong long-term demand – Meets need for thinner diapers in emergin
Slide 73: Pearl: Value-Added Products
73 | 05/10/2012 PEARL®: VALUE-ADDED PRODUCTS • Pearl® – dissolving wood pulp extender – Cost-effective substitute for dissolving wood pulp – Successful launch last year – Product is produced at our existing pulp mill – 2011 sales volume of 64,000 tons – Took advantage of spike in dissolving wood pul
Slide 74: Operational Excellence
74 | 05/10/2012 OPERATIONAL EXCELLENCE • World-Class Industry Efficiency – Maximize uptime and prime quality • Competitive cash manufacturing cost position • Moving mill maintenance outages from 12 to 18 months – Making progress to ensure compliance with boiler inspection requirements – Cost savings
Slide 75: Operational Excellence
75 | 05/10/2012 OPERATIONAL EXCELLENCE • Reduced cash manufacturing cost • All mills now in 1st and 2nd quartile • Reduced energy cost by 39% since 2008 • Increased fluff production by 8% • Executing high-return capital projects Disciplined Execution Cash Manufacturing Cost
Slide 76: Consistent Financial Performance
76 | 05/10/2012 CONSISTENT FINANCIAL PERFORMANCE • Achieved record earnings in 2010 and 2011 • Delivered nearly $600 million EBITDA in 2011* • Generating strong cash flow in 2012 despite softer market conditions * A reconciliation to GAAP is set forth on slide 103
Slide 77: Strategically Located Manufacturing Facilities
77 | 05/10/2012 STRATEGICALLY LOCATED MANUFACTURING FACILITIES GRANDE PRAIRIE, AB NEW BERN FLINT RIVER COLUMBUS LONGVIEW PORT WENTWORTH FEDERAL WAY GDANSK, POLAND Pulp Mills Liquid Packaging Board Corporate Headquarters Converting Facilities Production 2011 Pulp (M ADMT) 1,769 Liquid Packaging Board
Slide 78: Journey to Excellence Continues
78 | 05/10/2012 JOURNEY TO EXCELLENCE CONTINUES • Executing our dual strategy: – Innovating for higher margins – Operational excellence • Prudently investing capital • Strengthening relationships with key global customers
Slide 79: Financial Progress and Capital Allocation
79 | 05/10/2012 Patty Bedient FINANCIAL PROGRESS AND CAPITAL ALLOCATION Executive Vice President and Chief Financial Officer
Slide 80: Weyerhaeuser Structure
80 | 05/10/2012 WEYERHAEUSER STRUCTURE Weyerhaeuser Company Timberlands (REIT) Taxable REIT Subsidiary Non-REIT Timber Business Wood Products Weyerhaeuser Real Estate Company (WRECO) Cellulose Fibers Over 6 million acres of timberlands Specialty Absorbent Pulp Single-Family Homebuilding Land Develop
Slide 81: Benefits of REIT Structure
81 | 05/10/2012 BENEFITS OF REIT STRUCTURE • Significant cash flow benefits from lower overall tax burden – No taxes on qualified timberland earnings – Eventual elimination of tax on the sale of timberlands (built in gains) • REIT rules are manageable • Aligned with timberlands-focused strategy – En
Slide 82: Companywide Focus Areas
82 | 05/10/2012 COMPANYWIDE FOCUS AREAS • Growing our revenue • Managing costs • Disciplined use of capital
Slide 83: Growing Our Sales in Global Markets
83 | 05/10/2012 GROWING OUR SALES IN GLOBAL MARKETS $1,210 $1,593 $1,806 % of Total Revenue 24% 27% 29% South America / Other
Slide 84: Relentless Focus on SG&A Costs
84 | 05/10/2012 RELENTLESS FOCUS ON SG&A COSTS SG&A Expense from Continuing Operations (excluding Pension & OPEB) Reduced SG&A by Nearly $200 Million While Growing Revenue by ~$1.1 Billion, or 23% *A reconciliation to GAAP is set forth on slide 104 *
Slide 85: SG&A Headcount Reduction
85 | 05/10/2012 SG&A HEADCOUNT REDUCTION SG&A Headcount as of 12/31 Reduced Headcount by 45%
Slide 86: Looking Forward: Growing EBITDA
86 | 05/10/2012 LOOKING FORWARD: GROWING EBITDA • Operational excellence – Disciplined cost management – Business scale creates leverage • Continued innovation – “Next generation” products – Differentiated services • Increasing demand – Economic recovery drives improvement in U.S. housing – Growth f
Slide 87: Priorities for Capital Allocation
87 | 05/10/2012 PRIORITIES FOR CAPITAL ALLOCATION • Returning cash to shareholders • Improving capital structure – Strong liquidity and reducing interest expense – Managing retirement liabilities • Investing in our businesses – Disciplined capital expenditures – Growth opportunities
Slide 88: Dividend Payout Policy
88 | 05/10/2012 DIVIDEND PAYOUT POLICY • Targeting a dividend payout ratio of 75% of Funds Available for Distribution (FAD) over cycle – FAD defined as cash flow before debt repayment and dividends – Will consider repurchasing shares • Current quarterly dividend of 15 cents per share, or 60 cents pe
Slide 89: Strong Liquidity and Debt Reduction
89 | 05/10/2012 STRONG LIQUIDITY AND DEBT REDUCTION • Cash balance as of 12/31/2011: $953 million • 4-year, $1 billion credit facility – no outstanding borrowings Strong Capital Structure Supports Sustainability of Dividend $ millions 2012 2013 2014 2015 2016 2017 Total Debt Beginning of Year $4,478
Slide 90: Managing Retirement Liabilities
90 | 05/10/2012 MANAGING RETIREMENT LIABILITIES • Low discount rate adversely affects funded status – A 1% increase to discount rate in U.S. Qualified Pension Plan increases funded status by over $500 million – 2011 discount rate of 4.5%, down from 5.4% in 2010 • After 2013, required cash contributi
Slide 91: Disciplined Use of Capital
91 | 05/10/2012 DISCIPLINED USE OF CAPITAL $218 $238 $290 % of Depreciation 41% 47% 50% 62% $232 Estimated CapEx: Depreciation
Slide 92: Growth Opportunities
92 | 05/10/2012 GROWTH OPPORTUNITIES • Priority is timberland acquisition • Focus on cash flow generation • Creating shareholder value
Slide 93: Conclusion / Q&A
93 | 05/10/2012 Dan Fulton CONCLUSION / Q&A President and Chief Executive Officer
Slide 94: Reasons to Own Weyerhaeuser
94 | 05/10/2012 REASONS TO OWN WEYERHAEUSER • The most attractive, sustainably managed timberlands in the world • Leader in adding and extracting value from timberlands • All businesses have the size and scale to compete and generate cash and returns – Positioned to benefit from the recovery in hous
Slide 95: Biographies
95 | 05/10/2012 BIOGRAPHIES
Slide 96: Dan Fulton
96 | 05/10/2012 DAN FULTON Dan Fulton was elected chief executive officer and a member of the board of directors in April 2008. He remains as president of Weyerhaeuser Company, a position he assumed in January 2008. From May 2001 until March 2008 he was president and chief executive officer of Weyer
Slide 97: Patty Bedient
97 | 05/10/2012 PATTY BEDIENT Patty Bedient was named Executive Vice President and Chief Financial Officer in April 2007. She became senior vice president of Finance and Strategic Planning in February 2006 and from February 2003 to 2006 she served as vice president of Strategic Planning. Prior to jo
Slide 98: Tom Gideon
98 | 05/10/2012 TOM GIDEON Tom Gideon was named executive vice president, Timberlands, in October 2010. He had been executive vice president, Forest Products, since July 2008. Gideon became senior vice president of Containerboard Packaging and Recycling in March 2007. From 2005 to 2007 he held the p
Slide 99: Larry Burrows
99 | 05/10/2012 LARRY BURROWS Lawrence Burrows was appointed senior vice president, Residential Wood Products, in October 2010. He had been president and CEO of Weyerhaeuser Real Estate Company (WRECO) since March 2008. Previously he was president of Winchester Homes Inc., Weyerhaeuser’s homebuildin
Slide 100: Peter Orser
100 | 05/10/2012 PETER ORSER Peter Orser was appointed president and CEO of Weyerhaeuser Real Estate Company (WRECO) in October 2010. He oversees five real estate companies and the company’s builder financing operation. Previously he was president of Quadrant Corporation, Weyerhaeuser’s homebuilding
Slide 101: Shaker Chandrasekaran
101 | 05/10/2012 SHAKER CHANDRASEKARAN Shaker Chandrasekaran was appointed senior vice president, Cellulose Fibers business in December 2006. He assumed additional responsibilities for Liquid Packaging Board and Newsprint businesses in June 2007, and in 2009, Westwood Shipping and Weyerhaeuser Engin
Slide 102: Appendix
102 | 05/10/2012 APPENDIX APPENDIX
Slide 103: Reconciliation to GAAP: EBITDA
103 | 05/10/2012 RECONCILIATION TO GAAP: EBITDA 1EBITDA is a non-GAAP measure that management uses to evaluate the performance of the company. EBITDA , as we define it, is operating income from continuing operations adjusted for depreciation, depletion, amortization, special items and interest inclu
Slide 104: Reconciliation to GAAP: SG&A Expense
104 | 05/10/2012 RECONCILIATION TO GAAP: SG&A EXPENSE $ millions 2009 2010 2011 SG&A Expense, Excluding Pension & OPEB $746 $653 $562 Pension & Postretirement Costs (Credits) (65) (3) 39 SG&A Expense (GAAP) $681 $650 $601