Weyerhaeuser Company · NYSE:WY
Weyerhaeuser — Q3 2023 Earnings Presentation
30 slides from Weyerhaeuser's earnings presentation, Oct 27, 2023
Slide 1: 2023 Earnings Results Third Quarter 2023
2023 EARNINGS RESULTS THIRD QUARTER 2023
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 including, but not limited to, with respect to: future cash dividend
Slide 3: 2023 Q3 Consolidated Results
2023 Q3 CONSOLIDATED RESULTS $ Millions 2023 2023 $ Millions (except EPS) 2023 2023 Adjusted EBITDA Q2 Q3 Change Consolidated Statement of Operations Q2 Q3 Timberlands $ 172 $ 143 $ (29) Net sales $ 1,997 $ 2,022 Real Estate, Energy & Natural Resources 70 94 24 Costs of sales 1,528 1,520 Wood Produc
Slide 4: Earnings Before Special Items
EARNINGS BEFORE SPECIAL ITEMS $ Millions (except EPS) 2023 Q2 2023 Q3 Pretax After-Tax Diluted Pretax After-Tax Diluted Earnings Earnings EPS Earnings Earnings EPS Earnings Before Special Items $ 266 $ 238 $ 0.32 $ 293 $ 239 $ 0.33 Special Items: Environmental remediation charge 11 8 0.01 — — — Tota
Slide 5: Adjusted EBITDA
ADJUSTED EBITDA1 TOTAL COMPANY2 REAL ESTATE & ENR $1,650 $150 $1,497 $1,320 $125 $116 $1,205 $107 $100 $94 $ Millions $89 $ Millions $990 $75 $70 $60 $660 $583 $469 $509 $50 $46 $369 $395 $330 $25 $0 $0 Q1.22 Q2.22 Q3.22 Q4.22 Q1.23 Q2.23 Q3.23 Q1.22 Q2.22 Q3.22 Q4.22 Q1.23 Q2.23 Q3.23 Real Estate $
Slide 6: Timberlands Segment
TIMBERLANDS SEGMENT TIMBERLANDS ($ Millions) 2023 2023 TIMBERLANDS ($ Millions) 2023 2023 Adjusted EBITDA by Region Q2 Q3 Segment Statement of Operations Q2 Q3 West $ 94 $ 72 Third-party sales $ 417 $ 380 South 79 73 Intersegment sales 150 141 North — 1 Total Sales 567 521 Other (1) (3) Costs of sal
Slide 7: Timberlands Key Drivers: 2023 Q3 vs. 2023 Q2
TIMBERLANDS KEY DRIVERS: 2023 Q3 vs. 2023 Q2 REGION KEY DRIVERS WEST • Fee Harvest and Domestic Sales Volumes: Moderately lower, driven by higher elevation harvest operations and temporary harvest restrictions due to wildfire risk • Export Sales Volumes: Significantly lower, partially driven by fewe
Slide 8: Sales Volumes, Realizations and Export Revenue
SALES VOLUMES, REALIZATIONS AND EXPORT REVENUE 3rd-Party Log Sales and Realizations - West1 3rd-Party Log Sales and Realizations - South 3,600 $200 7,000 $45 $173.35 $38.47 $38.59 $38.67 $38.23 $37.15 $37.49 Volumes (Thousands of tons) $161.29 $36.92 Volumes (Thousands of tons) 3,000 $158.59 $160 5,
Slide 9: Fee Harvest Volumes and Intersegment Sales Volumes
FEE HARVEST VOLUMES AND INTERSEGMENT SALES VOLUMES FEE HARVEST VOLUMES1 INTERSEGMENT LOG SALES VOLUMES1 7,500 1,500 6,432 6,430 6,159 6,112 6,216 6,146 1,225 1,189 1,206 1,186 1,188 6,250 5,842 1,172 1,200 1,106 Thousands of tons Thousands of tons 5,000 859 900 799 753 745 721 3,750 555 600 2,292 48
Slide 10: Real Estate, Energy & Natural Resources (ENR) Segment
REAL ESTATE, ENERGY & NATURAL RESOURCES (ENR) SEGMENT REAL ESTATE & ENR ($ Millions) 2023 2023 REAL ESTATE & ENR ($ Millions) 2023 2023 Adjusted EBITDA by Business Q2 Q3 Segment Statement of Operations Q2 Q3 Real Estate $ 40 $ 71 Total sales $ 80 $ 105 Energy & Natural Resources 30 23 Costs of sales
Slide 11: Real Estate, ENR Segment: Acres Sold and Price per Acre
REAL ESTATE, ENERGY & NATURAL RESOURCES (ENR) SEGMENT ACRES SOLD AVERAGE PRICE PER ACRE 50 $7,000 45 $6,316 $6,000 40 $5,550 35 $5,046 Acres (Thousands) $5,000 $4,790 31 Price per acre 30 $4,385 27 26 $4,005 24 $4,000 $3,785 21 19 $3,803 20 18 $3,000 $3,227 $3,215 $3,241 $3,033 11 10 9 $1,992 7 $2,0
Slide 12: Wood Products Segment
WOOD PRODUCTS SEGMENT WOOD PRODUCTS ($ Millions) 2023 2023 WOOD PRODUCTS ($ Millions) 2023 2023 Adjusted EBITDA by Business Q2 Q3 Segment Statement of Operations Q2 Q3 Lumber $ 51 $ 58 Total sales $ 1,500 $ 1,537 OSB 37 118 Costs of sales 1,218 1,195 Engineered Wood Products 144 125 Gross margin 282
Slide 13: Wood Products Key Drivers: 2023 Q3 vs. 2023 Q2
WOOD PRODUCTS KEY DRIVERS: 2023 Q3 vs. 2023 Q2 BUSINESS KEY DRIVERS LUMBER • Sales Realizations: Comparable • Sales Volumes: Slightly lower, reduced production at several mills, partially driven by temporary operational disruptions • Unit Manufacturing Costs: Comparable • Log Costs: Moderately lower
Slide 14: Third-Party Sales Volumes and Realizations
THIRD-PARTY SALES VOLUMES AND REALIZATIONS1 Lumber2 OSB 4,500 $1,200 5,000 $950 $1,041 $787 Volumes (Millions of Square Ft.) Volumes (Millions of Board Ft.) 3,600 4,000 $760 $900 $676 Realizations ($/M 3/8") $776 Realizations ($/MBF) 2,700 3,000 $570 $556 $600 $416 $495 $479 $481 $401 $450 1,800 2,0
Slide 15: Unallocated Items
UNALLOCATED ITEMS UNALLOCATED ITEMS ($ Millions)1 1 2023 2023 UNALLOCATED ITEMS ($ Millions) 2023 2023 Q2 Q3 Q2 Q3 Unallocated corporate function expenses and variable Costs of sales 4 $ — $ (6) $ (32) $ (33) compensation expense G&A expense5 (40) (38) Liability classified share-based compensation (
Slide 16: Financial Items
FINANCIAL ITEMS Cash Flow from Operations $1,500 KEY FINANCIAL METRICS ($ Millions) 2023 2023 Q2 Q3 $1,200 $1,146 Ending Cash Balance $ 1,095 $ 1,173 $957 $ Millions Ending Short-term Investments Balance $ 665 $ 668 $900 Total Debt $ 5,797 $ 5,679 $562 $600 $496 $523 Net Debt to Adjusted EBITDA (LTM
Slide 17: Adjusted Funds Available for Distribution: Allocation Framework
ADJUSTED FUNDS AVAILABLE FOR DISTRIBUTION Allocation Framework and Cash Return Calculation ADJUSTED FUNDS AVAILABLE FOR DISTRIBUTION1 TARGETED RETURN OF Allocation Framework CASH TO SHAREHOLDERS Calculated on an Annual Basis Return 75-80% of Adjusted FAD to Shareholders SUSTAINABLE BASE DIVIDEND Adj
Slide 18: Adjusted Funds Available for Distribution: Cash Return Update
ADJUSTED FUNDS AVAILABLE FOR DISTRIBUTION1 Cash Return To Shareholders Update TARGETED RETURN OF CASH TO SHAREHOLDERS Based on 2023 YTD Results and Activity ADJUSTED FUNDS AVAILABLE FOR DISTRIBUTION ($ Millions) 2023 Q3 YTD $ MM Net Cash from Operations $ 523 $ 1,145 2023 YTD Adjusted FAD $894 Capit
Slide 19: Outlook: 2023 Q4
OUTLOOK: 2023 Q4 EXPECTED EARNINGS1 SEGMENT KEY DRIVERS & ADJUSTED EBITDA TIMBERLANDS Comparable to 2023 Q3 West South North Fee Harvest Volumes: Fee Harvest Volumes: Fee Harvest Volumes: Comparable Comparable Significantly higher Sales Realizations: Sales Realizations: Sales Realizations: Comparabl
Slide 20: Wood Products Sales Realizations: Current vs. 2023 Q3
WOOD PRODUCTS SALES REALIZATIONS: CURRENT VS. 2023 Q3 WEYERHAEUSER’S AVERAGE SALES REALIZATIONS Approximate Change As of October 20, 2023 LUMBER1 Q4 QTD vs. WY’s -$50/MBF LOWER SENSITIVITY Q3 AVERAGE CHANGE IN REALIZATIONS $10/MBF ≈ $50 million CURRENT vs. EBITDA -$55/MBF LOWER ANNUALLY Q3 AVERAGE O
Slide 21: Supplemental Timberlands Information
SUPPLEMENTAL TIMBERLANDS INFORMATION Adjusted EBITDA1 Per Acre WESTERN TIMBERLANDS 2021 2022 2023 SOUTHERN TIMBERLANDS 2021 2022 2023 FY FY Q1 Q2 Q3 YTD FY FY Q1 Q2 Q3 YTD 1 Adjusted EBITDA ($ Millions) $ 387 $ 473 $ 105 $ 94 $ 72 $ 271 1 Adjusted EBITDA ($ Millions) $ 301 $ 307 $ 81 $ 79 $ 73 $ 233
Slide 22: Earnings Summary
EARNINGS SUMMARY $ Millions (except EPS) 2022 2023 Adjusted EBITDA by Segment Q1 Q2 Q3 Q4 Q1 Q2 Q3 Timberlands $ 247 $ 219 $ 168 $ 150 $ 188 $ 172 $ 143 Real Estate, Energy & Natural Resources 116 107 60 46 89 70 94 Wood Products 1,233 912 395 197 148 270 328 Unallocated Items (99) (33) (40) (24) (3
Slide 23: Earnings Per Share Reconciliation
EARNINGS PER SHARE RECONCILIATION 2022 2023 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Diluted EPS Before Special Items $ 1.31 $ 1.06 $ 0.42 $ 0.24 $ 0.21 $ 0.32 $ 0.33 Special Items: Environmental remediation charge — — — — — 0.01 — Loss on debt extinguishment 0.28 — — — — — — Pension settlement charge — — — 0.21 — — —
Slide 24: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION By Segment $ Millions 2020 2021 2022 2023 FY FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 LTM1 Timberlands $ 610 $ 693 $ 247 $ 219 $ 168 $ 150 $ 784 $ 188 $ 172 $ 143 $ 653 Real Estate & ENR 241 296 116 107 60 46 329 89 70 94 299 Wood Products 1,527 3,357 1,233 912 395 197 2,737 148 270
Slide 25: Adjusted EBITDA Reconciliation: Timberlands
ADJUSTED EBITDA RECONCILIATION Timberlands $ Millions 2022 2023 Q1 Q2 Q3 Q4 Q1 Q2 Q3 West $ 165 $ 144 $ 92 $ 72 $ 105 $ 94 $ 72 South 80 75 75 77 81 79 73 North 4 2 3 5 4 — 1 Other (2) (2) (2) (4) (2) (1) (3) 1 Total Timberlands Adjusted EBITDA $ 247 $ 219 $ 168 $ 150 $ 188 $ 172 $ 143 West (28) (26
Slide 26: Adjusted EBITDA Reconciliation: Real Estate, ENR
ADJUSTED EBITDA RECONCILIATION Real Estate, Energy & Natural Resources $ Millions 2022 2023 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Real Estate $ 87 $ 83 $ 24 $ 12 $ 63 $ 40 $ 71 Energy & Natural Resources 29 24 36 34 26 30 23 1 Total Real Estate & ENR Adjusted EBITDA $ 116 $ 107 $ 60 $ 46 $ 89 $ 70 $ 94 Depletion, de
Slide 27: Adjusted EBITDA Reconciliation: Wood Products
ADJUSTED EBITDA RECONCILIATION Wood Products $ Millions 2022 2023 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Lumber $ 648 $ 359 $ 88 $ 8 $ 8 $ 51 $ 58 OSB 392 332 101 54 22 37 118 EWP 136 173 166 110 82 144 125 Distribution 72 48 41 23 22 34 31 Other (15) — (1) 2 14 4 (4) Total Wood Products Adjusted EBITDA1, 2 $ 1,233 $
Slide 28: Adjusted EBITDA Reconciliation: Unallocated
ADJUSTED EBITDA RECONCILIATION Unallocated $ Millions 2022 2023 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Total Unallocated Adjusted EBITDA1 $ (99) $ (33) $ (40) $ (24) $ (30) $ (43) $ (56) Total depletion, depreciation & amortization (2) (1) (2) (1) (2) (1) (2) Special items included in operating loss — — — — — (11) —
Slide 29: Net Debt to Adjusted EBITDA Reconciliation
NET DEBT TO ADJUSTED EBITDA RECONCILIATION $ Millions 2022 2023 Q1 Q2 Q3 Q4 Q1 Q2 Q3 1, 2 Net Debt to Adjusted EBITDA (LTM) 0.9 0.8 0.8 1.0 1.7 2.2 2.2 Total debt $ 5,053 $ 5,053 $ 5,053 $ 5,053 $ 5,053 $ 5,797 $ 5,679 Less: cash and cash equivalents and short-term investments 1,205 1,723 1,920 1,58
Slide 30: Funds Available for Distribution Reconciliation
FUNDS AVAILABLE FOR DISTRIBUTION RECONCILIATION ADJUSTED FUNDS AVAILABLE FOR DISTRIBUTION ($ Millions) 2020 2021 2022 2023 FY FY FY Q1 Q2 Q3 YTD Net Cash from Operations $ 1,529 $ 3,159 $ 2,832 $ 126 $ 496 $ 523 $ 1,145 Capital Expenditures (281) (441) (468) (71) (81) (99) (251) 1 Funds Available fo