Weyerhaeuser Company · NYSE:WY
Weyerhaeuser — Q2 2023 Earnings Presentation
32 slides from Weyerhaeuser's earnings presentation, Jul 28, 2023
Slide 1: 2023 Earnings Results Second Quarter 2023
2023 EARNINGS RESULTS SECOND 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 Q2 Consolidated Results
2023 Q2 CONSOLIDATED RESULTS $ Millions 2023 2023 $ Millions (except EPS) 2023 2023 Adjusted EBITDA Q1 Q2 Change Consolidated Statement of Operations Q1 Q2 Timberlands $ 188 $ 172 $ (16) Net sales $ 1,881 $ 1,997 Real Estate, Energy & Natural Resources 89 70 (19) Costs of sales 1,512 1,528 Wood Prod
Slide 4: Earnings Before Special Items
EARNINGS BEFORE SPECIAL ITEMS $ Millions (except EPS) 2023 Q1 2023 Q2 Pretax After-Tax Diluted Pretax After-Tax Diluted Earnings Earnings EPS Earnings Earnings EPS Earnings Before Special Items $ 173 $ 151 $ 0.21 $ 266 $ 238 $ 0.32 Special Items: Environmental remediation charge — — — 11 8 0.01 Tota
Slide 5: Adjusted EBITDA
ADJUSTED EBITDA1 $1,650 $1,497 TOTAL COMPANY2 REAL ESTATE & ENR $150 $1,320 $1,205 $116 $107 $ Millions $100 $ Millions $990 $89 $70 $660 $583 $60 $469 $50 $46 $369 $395 $330 $0 $0 Q1.22 Q2.22 Q3.22 Q4.22 Q1.23 Q2.23 Q1.22 Q2.22 Q3.22 Q4.22 Q1.23 Q2.23 Real Estate $ 87 83 24 12 63 40 ENR $ 29 24 36
Slide 6: Timberlands Segment
TIMBERLANDS SEGMENT TIMBERLANDS ($ Millions) 2023 2023 TIMBERLANDS ($ Millions) 2023 2023 Adjusted EBITDA by Region Q1 Q2 Segment Statement of Operations Q1 Q2 West $ 105 $ 94 Third-party sales $ 462 $ 417 South 81 79 Intersegment sales 142 150 North 4 — Total Sales 604 567 Other (2) (1) Costs of sa
Slide 7: Timberlands Key Drivers: 2023 Q2 vs. 2023 Q1
TIMBERLANDS KEY DRIVERS: 2023 Q2 vs. 2023 Q1 REGION KEY DRIVERS WEST • Fee Harvest Volumes: Slightly higher • Sales Volumes: Significantly higher for domestic and significantly lower for China • Sales Realizations: Lower, primarily for export, comparable for domestic • Per Unit Log and Haul Costs: L
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 Volumes (Thousands of tons) $37.49 Volumes (Thousands of tons) $161.29 $158.59 3,000 5,600 $36 $141
Slide 9: Fee Harvest Volumes and Intersegment Sales Volumes
FEE HARVEST VOLUMES AND INTERSEGMENT SALES VOLUMES FEE HARVEST VOLUMES1 INTERSEGMENT LOG SALES VOLUMES1 7,500 1,500 6,432 6,430 6,159 6,112 6,216 1,206 6,250 1,189 1,186 1,188 1,172 5,842 1,200 1,106 Thousands of tons Thousands of tons 5,000 900 859 799 753 721 3,750 555 600 2,292 481 2,500 2,240 2,
Slide 10: Real Estate, Energy & Natural Resources (ENR) Segment
REAL ESTATE, ENERGY & NATURAL RESOURCES (ENR) SEGMENT REAL ESTATE & ENR ($ Millions) 2023 2023 REAL ESTATE & ENR ($ Millions) 2023 2023 Adjusted EBITDA by Business Q1 Q2 Segment Statement of Operations Q1 Q2 Real Estate $ 63 $ 40 Total sales $ 101 $ 80 Energy & Natural Resources 26 30 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 $7,000 50 $6,316 45 $6,000 $5,550 40 $5,046 35 Price per acre $5,000 Acres (Thousands) $4,790 31 $4,385 30 27 $4,005 24 $4,000 $3,785 21 $3,803 20 19 18 $3,000 $3,227 $3,215 $3,241 11 10 9 $1,992 7 $2,000 5 $1,50
Slide 12: Wood Products Segment
WOOD PRODUCTS SEGMENT WOOD PRODUCTS ($ Millions) 2023 2023 WOOD PRODUCTS ($ Millions) 2023 2023 Adjusted EBITDA by Business Q1 Q2 Segment Statement of Operations Q1 Q2 Lumber $ 8$ 51 Total sales $ 1,318 $ 1,500 OSB 22 37 Costs of sales 1,159 1,218 Engineered Wood Products 82 144 Gross margin 159 282
Slide 13: Wood Products Key Drivers: 2023 Q2 vs. 2023 Q1
WOOD PRODUCTS KEY DRIVERS: 2023 Q2 vs. 2023 Q1 BUSINESS KEY DRIVERS LUMBER • Sales Realizations: Increased 6% • Sales Volumes: Moderately higher • Unit Manufacturing Costs: Slightly higher • Log Costs: Slightly lower, primarily for western logs ORIENTED • Sales Realizations: Increased 11% STRAND BOA
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 Volumes (Millions of Square Ft.) $787 4,000 $760 Volumes (Millions of Board Ft.) 3,600 Realizations ($/M 3/8") $676 $900 Realizations ($/MBF) $776 2,700 3,000 $570 $556 $600 $401 $495 $479 $450 1,800 2,000 $335 $3
Slide 15: Unallocated Items
UNALLOCATED ITEMS UNALLOCATED ITEMS ($ Millions)1 2023 2023 UNALLOCATED ITEMS ($ Millions)1 2023 2023 Q1 Q2 Q1 Q2 Unallocated corporate function expenses and variable Costs of sales4 $ 7 $ — $ (27) $ (32) compensation expense G&A expense5 (33) (40) Liability classified share-based compensation — (2)
Slide 16: Financial Items
FINANCIAL ITEMS Cash Flow from Operations KEY FINANCIAL METRICS ($ Millions) 2023 2023 $1,500 Q1 Q2 Ending Cash Balance $ 797 $ 1,095 $1,200 $1,146 Ending Short-term Investments Balance $ — $ 665 $957 $ Millions $900 Total Debt $ 5,053 $ 5,797 Net Debt to Adjusted EBITDA (LTM) 1 1.7 2.2 $600 $562 $4
Slide 17: Adjusted Funds Available for Distribution: Allocation Framework
ADJUSTED FUNDS AVAILABLE FOR DISTRIBUTION Allocation Framework and Cash Return Calculation ADJUSTED FUNDS AVAILABLE FOR DISTRIBUTION1 TARGETED RETURN OF Allocation Framework CASH TO SHAREHOLDERS Calculated on an Annual Basis Return 75-80% of Adjusted FAD to Shareholders SUSTAINABLE BASE DIVIDEND Adj
Slide 18: Adjusted Funds Available for Distribution: Cash Return Update
ADJUSTED FUNDS AVAILABLE FOR DISTRIBUTION1 Cash Return To Shareholders Update TARGETED RETURN OF CASH TO SHAREHOLDERS Based on 2023 Q2 YTD Results and Activity ADJUSTED FUNDS AVAILABLE FOR DISTRIBUTION ($ Millions) 2023 $ MM Q2 Q2 YTD Net Cash from Operations $ 496 $ 622 2023 Q2 YTD Adjusted FAD $47
Slide 19: Outlook: 2023 Q3
OUTLOOK: 2023 Q3 EXPECTED EARNINGS1 SEGMENT KEY DRIVERS & ADJUSTED EBITDA TIMBERLANDS Approximately $25 million West South North lower than 2023 Q2 Fee Harvest Volumes: Fee Harvest Volumes: Fee Harvest Volumes: Moderately lower Comparable Significantly higher Sales Realizations: Sales Realizations:
Slide 20: 2023 Outlook: Update
2023 OUTLOOK: UPDATE DRIVER UPDATED 2023 OUTLOOK PRIOR 2023 OUTLOOK Approximately 35 million tons Unchanged • South: Moderately higher than 2022 FEE HARVEST VOLUME • West: Moderately higher than 2022 • North: Slightly higher than 2022 REAL ESTATE & ENR ADJUSTED EBITDA Unchanged $300 million BASIS OF
Slide 21: Wood Products Sales Realizations: Current vs. 2023 Q2
WOOD PRODUCTS SALES REALIZATIONS: CURRENT VS. 2023 Q2 WEYERHAEUSER’S AVERAGE SALES REALIZATIONS Approximate Change As of July 21, 2023 LUMBER1 Q3 QTD vs. WY’s +$25/MBF HIGHER SENSITIVITY Q2 AVERAGE CHANGE IN REALIZATIONS $10/MBF ≈ $50 million CURRENT vs. EBITDA +$35/MBF HIGHER ANNUALLY Q2 AVERAGE OS
Slide 22: Timberlands Growth Strategy Update
TIMBERLANDS GROWTH STRATEGY UPDATE Disciplined Approach to Growing the Value of Our Timber Holdings TARGET WEST SOUTH $1 Billion of Disciplined Investments from 2022 to 2025 Carolinas • Closed in 2022 Q2 • $265 million deployed • 80,800 acres acquired PROGRESS $360 Million Deployed Coastal Washingto
Slide 23: Supplemental Timberlands Information
SUPPLEMENTAL TIMBERLANDS INFORMATION Adjusted EBITDA1 Per Acre WESTERN TIMBERLANDS 2021 2022 2023 SOUTHERN TIMBERLANDS 2021 2022 2023 FY FY Q1 Q2 YTD FY FY Q1 Q2 YTD 1 Adjusted EBITDA ($ Millions) $ 387 $ 473 $ 105 $ 94 $ 199 1 Adjusted EBITDA ($ Millions) $ 301 $ 307 $ 81 $ 79 $ 160 2 Acres (Thousa
Slide 24: Earnings Summary
EARNINGS SUMMARY $ Millions (except EPS) 2022 2023 Adjusted EBITDA by Segment Q1 Q2 Q3 Q4 Q1 Q2 Timberlands $ 247 $ 219 $ 168 $ 150 $ 188 $ 172 Real Estate, Energy & Natural Resources 116 107 60 46 89 70 Wood Products 1,233 912 395 197 148 270 Unallocated Items (99) (33) (40) (24) (30) (43) Total Ad
Slide 25: Earnings Per Share Reconciliation
EARNINGS PER SHARE RECONCILIATION 2022 2023 Q1 Q2 Q3 Q4 Q1 Q2 Diluted EPS Before Special Items $ 1.31 $ 1.06 $ 0.42 $ 0.24 $ 0.21 $ 0.32 Special Items: Environmental remediation charge — — — — — 0.01 Loss on debt extinguishment 0.28 — — — — — Pension settlement charge — — — 0.21 — — Restructuring, i
Slide 26: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION By Segment $ Millions 2020 2021 2022 2023 FY FY Q1 Q2 Q3 Q4 FY Q1 Q2 LTM1 Timberlands $ 610 $ 693 $ 247 $ 219 $ 168 $ 150 $ 784 $ 188 $ 172 $ 678 Real Estate & ENR 241 296 116 107 60 46 329 89 70 265 Wood Products 1,527 3,357 1,233 912 395 197 2,737 148 270 1,010 Unall
Slide 27: Adjusted EBITDA Reconciliation: Timberlands
ADJUSTED EBITDA RECONCILIATION Timberlands $ Millions 2022 2023 Q1 Q2 Q3 Q4 Q1 Q2 West $ 165 $ 144 $ 92 $ 72 $ 105 $ 94 South 80 75 75 77 81 79 North 4 2 3 5 4 — Other (2) (2) (2) (4) (2) (1) Total Timberlands Adjusted EBITDA1 $ 247 $ 219 $ 168 $ 150 $ 188 $ 172 West (28) (26) (24) (23) (28) (29) So
Slide 28: Adjusted EBITDA Reconciliation: Real Estate, Energy & Natural Resources
ADJUSTED EBITDA RECONCILIATION Real Estate, Energy & Natural Resources $ Millions 2022 2023 Q1 Q2 Q3 Q4 Q1 Q2 Real Estate $ 87 $ 83 $ 24 $ 12 $ 63 $ 40 Energy & Natural Resources 29 24 36 34 26 30 Total Real Estate & ENR Adjusted EBITDA1 $ 116 $ 107 $ 60 $ 46 $ 89 $ 70 Depletion, depreciation & amor
Slide 29: Adjusted EBITDA Reconciliation: Wood Products
ADJUSTED EBITDA RECONCILIATION Wood Products $ Millions 2022 2023 Q1 Q2 Q3 Q4 Q1 Q2 Lumber $ 648 $ 359 $ 88 $ 8 $ 8 $ 51 OSB 392 332 101 54 22 37 EWP 136 173 166 110 82 144 Distribution 72 48 41 23 22 34 Other (15) — (1) 2 14 4 Total Wood Products Adjusted EBITDA1, 2 $ 1,233 $ 912 $ 395 $ 197 $ 148
Slide 30: Adjusted EBITDA Reconciliation: Unallocated
ADJUSTED EBITDA RECONCILIATION Unallocated $ Millions 2022 2023 Q1 Q2 Q3 Q4 Q1 Q2 1 Total Unallocated Adjusted EBITDA $ (99) $ (33) $ (40) $ (24) $ (30) $ (43) Total depletion, depreciation & amortization (2) (1) (2) (1) (2) (1) Special items included in operating loss — — — — — (11) Operating Loss
Slide 31: Net Debt to Adjusted EBITDA Reconciliation
NET DEBT TO ADJUSTED EBITDA RECONCILIATION $ Millions 2022 2023 Q1 Q2 Q3 Q4 Q1 Q2 Net Debt to Adjusted EBITDA (LTM) 1, 2 0.9 0.8 0.8 1.0 1.7 2.2 Total debt $ 5,053 $ 5,053 $ 5,053 $ 5,053 $ 5,053 $ 5,797 Less: cash and cash equivalents and short-term investments 1,205 1,723 1,920 1,581 797 1,760 Net
Slide 32: 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 YTD Net Cash from Operations $ 1,529 $ 3,159 $ 2,832 $ 126 $ 496 $ 622 Capital Expenditures (281) (441) (468) (71) (81) (152) Funds Available for Distribution 1 $