Weyerhaeuser Company · NYSE:WY
Weyerhaeuser — Merger or Acquisition (May 2014)
34 slides from Weyerhaeuser's merger presentation, May 29, 2014
Slide 1: Building a Best-in-Class Homebuilder
“Building a Best-in-Class Homebuilder”Investor Presentation May 2014
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains forward-looking statements concerning Weyerhaeuser Company (“Weyerhaeuser”) and TRI Pointe Homes, Inc. (“TRI Pointe”). These statements are based on various assumptions and the current expectations of the management of Weyerhaeuser and TRI Pointe
Slide 3: Additional Disclaimer
Additional Disclaimer Additional Information and Where to Find It In connection with the proposed “Reverse Morris Trust” transaction between TRI Pointe Homes, Inc. (“TRI Pointe”) and Weyerhaeuser Company (“Weyerhaeuser”), pursuant to which the homebuilding subsidiary of Weyerhaeuser, Weyerhaeuser Re
Slide 4: Transaction Overview
s11| Pointe HOMES Transaction Overview Weyerhaeuser Real Estate Company
Slide 5: Transaction Summary
Transaction Summary In November 2013, TRI Pointe Homes (“TPH” or “TRI Pointe”) and Weyerhaeuser Company (“Weyerhaeuser”) entered into a definitive agreement whereby Weyerhaeuser Real Estate Company (“WRECO”) will be combined with TRI Pointe in a “Reverse Morris Trust” transaction TRI Pointe will iss
Slide 6: Key Transaction Terms
Key Transaction Terms Structure and Consideration WRECO to merge with a subsidiary of TRI Pointe in a “Reverse Morris Trust” transaction Total transaction value of approximately $2.9 billion(1), including $2.1 billion in TPH stock and approximately $739 million in cash Pro Forma Ownership Weyerhaeus
Slide 7: The Exchange Offer
The Exchange Offer Investors Eligible To Exchange Holders of Weyerhaeuser Common Stock Offer to Exchange Weyerhaeuser common shares for common shares of WRECO, which will convert automatically into the right to receive shares of TRI Pointe common stock 100 million shares of WRECO common stock At the
Slide 8: Weyerhaeuser Company Overview
s11| Pointe HOMES Weyerhaeuser Company Overview Real Estate Company
Slide 9: Best-in-Class Executive Leadership Team
Best-in-Class Executive Leadership Team Working together for over 20 years, TRI Pointe senior management has significant experience running a large, geographically diverse, growth-oriented public homebuilder. Deep managerial talent at each operating division with key local relationships supports dyn
Slide 10: TRI Pointe Standalone Business Overview
TRI Pointe Standalone Business Overview Overview Founded in 2009 by three partners who worked together for over 17 years at a notable Southwest regional builder Next generation homebuilder unburdened by legacy issues and focused on growth markets in the Southwestern U.S. Backed by Barry Sternlicht a
Slide 11: WRECO Standalone Business Overview
WRECO Standalone Business Overview Overview Founded in 1969, WRECO was the 13th largest homebuilder in the U.S. by revenue in 2013 Operates five subsidiaries and primary brands in ten key markets Key markets are Los Angeles/Ventura, San Diego, Inland Empire, Las Vegas, Phoenix, Seattle, Houston, Tuc
Slide 12: Combined Company At-A-Glance
Combined Company “At-A-Glance” Top 10 homebuilder with expected combined market equity value of ~$2.7 billion (1) Significantly enhanced scale, with over 3,400 LTM closings and $1.6 billion in combined LTM revenue Approximately 31,000 lots owned or controlled to support future growth and profitabili
Slide 13: Leading Brand Names Targeted to Specific Markets
Leading Brand Names Targeted to Specific Markets Markets: Orange County, Los Angeles, San Diego, San Francisco Bay Area, Denver LTM Single-Family Closings: 440 Lots Owned or Controlled: 3,472 Markets: Los Angeles/Ventura, Inland Empire, San Diego, Las Vegas LTM Single-Family Closings: 1,134 Lots Own
Slide 14: Investment Highlights
s11| Pointe HOMES Investment Highlights Weyerhaeuser Real Estate Company
Slide 15: TRI Pointe & WRECO: A Powerful Combination and Strong Fit
TRI Pointe & WRECO: A Powerful Combination and Strong Fit 1 Best-in-Class Management Team Forming a Top 10 National Homebuilder with Expected Combined Equity Market Value of ~$2.7bn(1) 2 Significant Land Supply to Fuel Growth at the Right Point in the Housing Recovery 3 Complementary Footprint: Merc
Slide 16: Creates Top National Homebuilder
1 Creates Top 10 National Homebuilder Equity Market Capitalization Companies with market capitalization greater than $1bn ($ in billions) $9.1 LEN $8.5 DHI $7.2 PHM $6.4 TOL $5.2 NVR $2.9 SPF #7 $2.7 PF TPH (1) $2.5 TMHC $2.0 RYL $1.5 MTH $1.4 MDC $1.4 KBH LTM Closings Companies with market capitali
Slide 17: Significant Land Supply to Fuel Growth
2 Significant Land Supply to Fuel Growth… Combined Lot Position As of March 31, 2014 TRI Pointe WRECO Combined Company Market Owned Controlled Owned Controlled Total Lots % Owned Southern California 1,210 558 15,054 74 16,896 96.3% Northern California 930 203 1,372 -- 2,505 91.9% Colorado 369 202 --
Slide 18: At the Right Point in the Housing Recovery
At the Right Point in the Housing Recovery High Demand – New home sales currently at 429,000 in 2013, well below 30 year average of 688,024 – 2.4 jobs created for every homebuilding permit issued U.S. New Single-Family Home Sales (in millions) 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 1970 1973 1976 1979 1982
Slide 19: Complementary California Footprint
3 Complementary California Footprint Primary California Markets TRI POINTE Northern California PARDEE Los Angeles / Ventura TRI POINTE Southern California PARDEE Inland Empire PARDEE San Diego · ~2,900 lots, majority in Southern California, with ~75% owned / ~25% controlled · Predominantly in highly
Slide 20: Important Land Owner and Developer Partnerships
4 Important Land Owner and Developer Partnerships · Diverse product expertise and premium brands will continue to make the combined company an attractive homebuilding partner for master plan communities · Entitlement, land development and community planning expertise, which adds value to land throug
Slide 21: Lifestyle Builder Focused on Move-Up Segment
5 Lifestyle Builder Focused on Move-Up Segment Average Selling Price (Last Reported Quarter, $ in ‘000s, companies with market cap > $1.0bn) $694 TOL $525 PF TPH $449 SPF $422 TMHC $377 MDC $366 MTH $361 NVR $327RYL $317 PHM $307 LEN $305 KBH $271 DHI Median: $364 U.S. 5-Year Forecasted vs. LTM Dema
Slide 22: Leadership Positions in Long Term Growth Markets
6 Leadership Positions in Long Term Growth Markets Leading Local Presence Overall Target Segment Location Position Position Definition Pardee Homes San Diego #1 #1 $650K – $1.25MM LA County #15 #11 $450K – $ 700K Inland Empire #5 #1 $200K – $ 350K Las Vegas #9 #8 $200K – $ 550K Maracay Homes Phoenix
Slide 23: Attractive Gross Margin Profile
7 Attractive Gross Margin Profile · Entitlement and development expertise enhance margin potential · Long land position enables optionality for land sales to optimize cash flow and profit · Focus on efficient operating cost structure ensures profitability flows through to bottom line · Synergy oppor
Slide 24: Prudent Capitalization To Invest in Recovery
8 Prudent Capitalization To Invest in Recovery · Pro forma Debt-to-Capital ratio of 42%, below peer median · Expected new revolving credit facility to provide liquidity to invest in growth opportunities Debt-to-Capital(1) Most recent quarter; Companies with market capitalization greater than $1bn 78
Slide 25: Financial Overview
HOMES Financial Overview
Slide 26: Pro Forma Combined Financial Summary
Pro Forma Combined Financial Summary Home Closings(1) Home Sales Revenue(1) ($ in millions) Homebuilding Gross Profit (1) ($ in millions) % Margin 21.7 % 20.1% 22.0% Adj. EBITDA(2)(3) ($ in millions) % Margin 11.1% 13.7% 13.5% Source: Company filings. Note: Figures represent owned projects and home
Slide 27: 1Q 2014 Financial Results
1Q 2014 Financial Results TRI Pointe ($ in millions) 1Q14 1Q13 Y-O-Y Change Orders 138 123 12.2% Closings 92 48 91.7% ASP ($ in 000’s) $791 $497 59.2% Total Revenues (1) $72.8 $23.9 205.2% Total Gross Margin (1) 22.5% 18.5% 400bps Pre-Tax Income $7.4 $0.3 NM Key Highlights Significant increase in or
Slide 28: Synergy Opportunity is Meaningful
Synergy Opportunity is Meaningful We expect to achieve annual synergies of $21mm by 2015 and $30mm annually thereafter. Additionally, there is significant opportunity to enhance stockholder value through executing a focused and disciplined homebuilding strategy. Purchasing leverage with increased sc
Slide 29: Conclusion
s11| Pointe HOMES Weyerhaeuser Conclusion Real Estate Company
Slide 30: TRI Pointe & WRECO: A Powerful Combination and Strong Fit
TRI Pointe & WRECO: A Powerful Combination and Strong Fit Top 10 National Homebuilder with Expected Combined Equity Market Value of ~$2.7bn(1) TRI Pointe’s Industry-Leading Management + WRECO’s Strong Local Market Franchises Significant Land Supply to Fuel Growth at the Right Point in the Housing Re
Slide 31: Appendix
Appendix
Slide 32: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures In this report, we utilize certain financial measures that are non-GAAP financial measures as defined by the Securities and Exchange Commission. We present these measures because we believe they and similar measures are useful to management and investors
Slide 33: Reconciliation of Non-GAAP Financial Measures (cont'd)
Reconciliation of Non-GAAP Financial Measures (cont’d) The following table reconciles the ratio of debt-to-capital to the ratio of net debt-to-capital. We believe that the ratio of net debt-to-capital is a relevant financial measure for management and investors to understand the leverage employed in
Slide 34: Board of Directors
Board of Directors TRI Pointe’s Board will expand from seven to nine directors, with four being appointed by Weyerhaeuser. Barry Sternlicht will remain Chairman, leading a highly qualified and distinguished group of directors. Barry S. Sternlicht Chairman of Board Age 53 Chairman and CEO of Starwood