Slide 1: Growing a Truly Great Company – Investor Meetings August 2014
0 WEYERHAEUSER Growing a Truly Great Company 0 Investor Meetings | August 2014
Slide 2: Forward-Looking Statements and Non-GAAP Financial Measures
1 FORWARD-LOOKING STATEMENTS AND NON-GAAP FINANCIAL MEASURES • 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, b
Slide 3: Reasons to Own Weyerhaeuser
2 REASONS TO OWN WEYERHAEUSER • Industry leader with unique and valuable timberlands • Capitalizing on recovery of U.S. housing market • Focused on growing earnings and creating value for shareholders
Slide 4: Driving Value for Shareholders
3 DRIVING VALUE FOR SHAREHOLDERS LEVERS – Portfolio – Performance: Operational excellence – Capital Allocation Growing a Truly Great Company
Slide 5: Portfolio
4 PORTFOLIO
Slide 6: Focused Portfolio
5 FOCUSED PORTFOLIO *Pro forma as if WRECO divesture had been completed at June 30, 2014. Pro forma common shares exclude 13.8 million mandatory convertible preference shares, which convert to common shares on July 1, 2016. Total Assets $11.1B 528 MM common shares Pro Forma 2014 Q2* Timberlands Cell
Slide 7: Portfolio Supports a Growing and Sustainable Dividend
6 PORTFOLIO Supports a growing and sustainable dividend • TIMBERLANDS Strong, productive asset base • COMPLEMENTARY MANUFACTURING OPERATIONS Enhance timberlands cash flow – Well-positioned businesses with improving cost structures – Wood Products: Strong upside from US housing – Cellulose Fibers: St
Slide 8: Weyerhaeuser Segments Overview
7 WEYERHAEUSER TIMBERLANDS • 7 MM acres • $783 MM EBITDA* WOOD PRODUCTS • Lumber: 18 mills • OSB**: 6 mills • ELP**: 9 facilities • Distribution: 21 sites • $423 MM EBITDA* CELLULOSE FIBERS • 6 mills • 2 converting facilities • $407 MM EBITDA* *Adjusted EBITDA, LTM as of 2014 Q2. Unallocated items n
Slide 9: Market Outlook: Positive Trends for Our Products
8 MARKET OUTLOOK: Positive Trends for Our Products • Higher demand and prices for US timber and wood products: – Rebound in US housing – Growing off-shore demand – Canadian timber supply shortage • Growing markets for fluff products driven by emerging country demand and global growth
Slide 10: Performance
9 PERFORMANCE
Slide 11: Timberlands Strategic Initiatives
10 50 75 100 125 150 175 200 225 2011 2012 2013 2014 (LTM) U.S. West NCREIF Rayonier Pope Resources WY** 0 200 400 600 800 2012 2016 - 2018 (Outlook) TIMBERLANDS STRATEGIC INITIATIVES • Maximize cash flow through Operational Excellence improvements • Capture full value of the Longview Timber acquisi
Slide 12: Wood Products: Lumber
11 -5% 0% 5% 10% 15% 20% 2011 2012 2013 2014 YTD Q2 Canfor Lumber Interfor Lumber West Fraser Lumber WY Lumber 0 50 100 Current Benchmark WOOD PRODUCTS: Lumber STRATEGIC INITIATIVES • Reduce controllable manufacturing costs to achieve industry-leading cost structure • Maintain value-added product mi
Slide 13: Wood Products: OSB
12 WOOD PRODUCTS: OSB STRATEGIC INITIATIVES • Drive down controllable costs by improving reliability • Grow higher margin products EBITDA MARGIN* 50 75 100 Current Benchmark $50 MM % Reli a b ilit y **Note: Reliability benchmark is mill Best in Class. Current is based on Q3 2013 YTD data. Improve Pr
Slide 14: Wood Products: ELP & Distribution Turnaround
13 -10% -8% -6% -4% -2% 0% 2% 4% 2011 2012 2013 2014 YTD Q2 Boise Distribution Blue Linx Distribution WY Distribution WOOD PRODUCTS: ELP & Distribution Turnaround TURNAROUND INITIATIVES ELP DISTRIBUTION • Capture value of products & services • Improve manufacturing cost and productivity • Reduce war
Slide 15: Cellulose Fibers Strategic Initiatives
14 CELLULOSE FIBERS STRATEGIC INITIATIVES • Reduce cost • Grow with global customers • Innovate high-margin products EBITDA MARGIN* OPERATIONAL EXCELLENCE** Reduce Controllable Cost 625 675 725 Current Goal $ / T o n $100 MM **Cost of Goods Sold, excluding inflation. Current is based on Q3 2013 YTD
Slide 16: SG&A Reduction
15 SG&A Note: SG&A includes R&D *Pro-forma is total company 3Q YTD 2013 annualized, less WRECO direct SG&A of $141 MM STRATEGIC INITIATIVE • All cost reductions have been identified • Highly confident will achieve $75 MM run rate reduction goal by year end REDUCTION GOAL 200 250 300 350 400 450 500
Slide 17: Capital Allocation
16 CAPITAL ALLOCATION
Slide 18: Capital Allocation Priorities
17 CAPITAL ALLOCATION PRIORITIES • Return cash to shareholders • Invest in our businesses • Maintain appropriate capital structure
Slide 19: Sustainable and Growing Dividend
18 • Quarterly dividend increased to $0.29 per common share effective September 2014 – Up 32% from prior level, or 93% since 2011 • Target payout of 75% of Funds Available for Distribution (FAD) over cycle* SUSTAINABLE AND GROWING DIVIDEND *Funds Available for Distribution: cash flow before major ac
Slide 20: Share Repurchase
19 SHARE REPURCHASE • $700 million share repurchase program authorized August 2014 • Approximates cash proceeds received as part of WRECO divestiture Returning cash to shareholders
Slide 21: Investing in Our Businesses
20 INVESTING IN OUR BUSINESSES • Disciplined capital investment – Approximately $400 million in 2014 – Focus: reduce cost structure and improve EBITDA • Growth through acquisition – Targeted, value-creating opportunities – e.g. Longview Timber
Slide 22: Capital Structure and Liquidity
21 CAPITAL STRUCTURE AND LIQUIDITY* • Significant liquidity – $845 million cash balance as of June 30, 2014 – $1 billion revolving credit facility • Long-term debt of approximately $4.9 billion – No scheduled maturities until 2017 • Investment grade rating * All metrics exclude discontinued operatio
Slide 23: Summary
22 SUMMARY • Focused portfolio • Improving performance • Delivering on priorities for capital allocation – Return cash to shareholders – Invest in our businesses – Maintain appropriate capital structure Growing earnings and shareholder value
Slide 24: Weyerhaeuser Growing a Truly Great Company
23 WEYERHAEUSER Growing a Truly Great Company
Slide 25: Appendix
24 APPENDIX
Slide 26: 2011 EBITDA Reconciliation: By Segment
25 2011 EBITDA RECONCILIATION: By Segment $ Millions 2011 Timberlands Lumber OSB ELP Distribution WP Other Wood Products Cellulose Fibers Unallocated Items Total Adjusted EBITDA 1 $472 ($7) ($4) $6 ($37) ($1) ($43) $597 ($108) $918 Depletion, Depreciation & Amortization (137) (47) (34) (61) (6) (3)
Slide 27: 2012 EBITDA Reconciliation: By Segment
26 2012 EBITDA RECONCILIATION: By Segment 1. Adjusted EBITDA is a non-GAAP measure that management uses to evaluate the performance of the company. Adjusted EBITDA, as we define it, is operating income adjusted for depreciation, depletion, amortization, pension and postretirement costs not allocated
Slide 28: 2013 EBITDA Reconciliation: By Segment
27 2013 EBITDA RECONCILIATION: By Segment $ Millions 2013 Timberlands Lumber OSB ELP Distribution WP Other Wood Products Cellulose Fibers Unallocated Items Total Adjusted EBITDA 1 $632 $317 $247 $45 ($33) ($2) $574 $353 ($61) $1,498 Depletion, Depreciation & Amortization (166) (40) (31) (46) (5) (1)
Slide 29: 2014 Q2 YTD EBITDA Reconciliation: By Segment
28 $ Millions 2014 Q2 YTD Timberlands Lumber OSB ELP Distribution WP Other Wood Products Cellulose Fibers Unallocated Items Total Adjusted EBITDA 1 $437 $161 $28 $38 ($2) $0 $225 $222 ($40) $844 Depletion, Depreciation & Amortization (103) (20) (16) (21) (2) -- (59) (77) (6) (245) Non-Operating Pens
Slide 30: 2014 Q2 LTM EBITDA Reconciliation: By Segment
29 $ Millions 2014 Q2 LTM(1) Timberlands Lumber OSB ELP Distribution WP Other Wood Products Cellulose Fibers Unallocated Items Total Adjusted EBITDA 1 $783 $286 $91 $65 ($19) $0 $423 $407 ($54) $1,559 Depletion, Depreciation & Amortization (199) (39) (32) (44) (5) -- (120) (155) (12) (486) Non-Opera
Slide 31: EBITDA Reconciliation: Timberlands
30 EBITDA RECONCILIATION: Timberlands $ Millions 2011 2012 2013 2014 Q2 (LTM) West1 $273 $250 $361 $537 South 214 218 225 253 Other1 (15) (8) 46 (7) Adjusted EBITDA2 $472 $460 $632 $783 Depletion, Depreciation & Amortization (137) (142) (166) (199) Special Items 152 -- -- -- Operating Income (GAAP)