Weyerhaeuser Company · NYSE:WY
Weyerhaeuser — Q4 2023 Earnings Presentation
38 slides from Weyerhaeuser's earnings presentation, Jan 26, 2024
Slide 1: 2023 Earnings Results, Fourth Quarter 2023
2023 EARNINGS RESULTS FOURTH 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 Consolidated Results
2023 CONSOLIDATED RESULTS $ Millions 2022 2023 $ Millions (except EPS) 2022 2023 Adjusted EBITDA FY FY Change Consolidated Statement of Operations FY FY Timberlands $ 784 $ 646 $ (138) Net sales $ 10,184 $ 7,674 Real Estate, Energy & Natural Resources 329 320 (9) Costs of sales 6,564 5,992 Wood Prod
Slide 4: 2023 Q4 Consolidated Results
2023 Q4 CONSOLIDATED RESULTS $ Millions 2023 2023 $ Millions (except EPS) 2023 2023 Adjusted EBITDA Q3 Q4 Change Consolidated Statement of Operations Q3 Q4 Timberlands $ 143 $ 143 $ — Net sales $ 2,022 $ 1,774 Real Estate, Energy & Natural Resources 94 67 (27) Costs of sales 1,520 1,432 Wood Product
Slide 5: Earnings Before Special Items
EARNINGS BEFORE SPECIAL ITEMS $ Millions (except EPS) 2023 Q3 2023 Q4 Pretax After-Tax Diluted Pretax After-Tax Diluted Earnings Earnings EPS Earnings Earnings EPS Earnings Before Special Items $ 293 $ 239 $ 0.33 $ 120 $ 121 $ 0.16 Special Items: Gain on sale of timberlands — — — 84 83 0.12 Insuranc
Slide 6: Adjusted EBITDA
ADJUSTED EBITDA1 TOTAL COMPANY2 REAL ESTATE & ENR $1,650 $150 $1,497 $125 $116 $1,320 $1,205 $107 $100 $94 $ Millions $89 $ Millions $990 $75 $70 $67 $60 $660 $583 $469 $509 $50 $46 $369 $395 $321 $330 $25 $0 $0 Q1.22 Q2.22 Q3.22 Q4.22 Q1.23 Q2.23 Q3.23 Q4.23 Q1.22 Q2.22 Q3.22 Q4.22 Q1.23 Q2.23 Q3.2
Slide 7: Timberlands Segment
TIMBERLANDS SEGMENT TIMBERLANDS ($ Millions) 2023 2023 TIMBERLANDS ($ Millions) 2023 2023 Adjusted EBITDA by Region Q3 Q4 Segment Statement of Operations Q3 Q4 West $ 72 $ 73 Third-party sales $ 380 $ 395 South 73 73 Intersegment sales 141 139 North 1 1 Total Sales 521 534 Other (3) (4) Costs of sal
Slide 8: Timberlands Key Drivers: 2023 Q4 vs. 2023 Q3
TIMBERLANDS KEY DRIVERS: 2023 Q4 vs. 2023 Q3 REGION KEY DRIVERS WEST • Fee Harvest Volumes: Slightly lower • Domestic Sales Volumes: Lower, flexed volumes to China • Export Sales Volumes: Significantly higher, primarily for China • Sales Realizations: Moderately higher, primarily due to higher China
Slide 9: 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 $37.49 $36.92 $37.15 Volumes (Thousands of tons) $161.29 $37.15 Volumes (Thousands of tons) 3,000 $158.59
Slide 10: Fee Harvest Volumes and Intersegment Sales Volumes
FEE HARVEST VOLUMES AND INTERSEGMENT SALES VOLUMES FEE HARVEST VOLUMES1 INTERSEGMENT LOG SALES VOLUMES1 7,500 1,500 6,432 6,430 6,159 6,112 6,216 6,146 6,169 1,225 1,189 1,206 1,186 1,188 6,250 5,842 1,172 1,200 1,151 1,106 Thousands of tons Thousands of tons 5,000 859 900 799 753 779 721 745 3,750
Slide 11: Real Estate, Energy & Natural Resources (ENR) Segment
REAL ESTATE, ENERGY & NATURAL RESOURCES (ENR) SEGMENT REAL ESTATE & ENR ($ Millions) 2023 2023 REAL ESTATE & ENR ($ Millions) 2023 2023 Adjusted EBITDA by Business Q3 Q4 Segment Statement of Operations Q3 Q4 Real Estate $ 71 $ 32 Total sales $ 105 $ 77 Energy & Natural Resources 23 35 Costs of sales
Slide 12: Real Estate, ENR Segment: Average Price per Acre
REAL ESTATE, ENERGY & NATURAL RESOURCES (ENR) SEGMENT AVERAGE PRICE PER ACRE $7,000 $6,316 $6,000 $5,550 $5,046 $4,790 $5,000 Price per acre $4,385 $4,202 $4,005 $3,785 $4,000 $3,803 $3,000 $3,227 $3,215 $3,241 $3,033 $1,992 $2,000 $1,501 $1,381 $1,000 Q1.20 Q2.20 Q3.20 Q4.20 Q1.21 Q2.21 Q3.21 Q4.21
Slide 13: Wood Products Segment
WOOD PRODUCTS SEGMENT WOOD PRODUCTS ($ Millions) 2023 2023 WOOD PRODUCTS ($ Millions) 2023 2023 Adjusted EBITDA by Business Q3 Q4 Segment Statement of Operations Q3 Q4 Lumber $ 58 $ (34) Total sales $ 1,537 $ 1,302 OSB 118 73 Costs of sales 1,195 1,127 Engineered Wood Products 125 104 Gross margin 3
Slide 14: Wood Products Key Drivers: 2023 Q4 vs. 2023 Q3
WOOD PRODUCTS KEY DRIVERS: 2023 Q4 vs. 2023 Q3 BUSINESS KEY DRIVERS LUMBER • Sales Realizations: Decreased 14% • Sales Volumes: Moderately lower, reduced production levels, partially driven by holiday downtime taken at Pacific Northwest mills • Unit Manufacturing Costs: Moderately higher • Log Costs
Slide 15: 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 $344 1,80
Slide 16: Unallocated Items
UNALLOCATED ITEMS 1 1 UNALLOCATED ITEMS ($ Millions) 2023 2023 UNALLOCATED ITEMS ($ Millions) 2023 2023 Q3 Q4 Q3 Q4 Unallocated corporate function expenses and variable Costs of sales4 $ (6) $ 6 $ (33) $ (35) compensation expense 5 G&A expense (38) (45) Liability classified share-based compensation
Slide 17: Financial Items
FINANCIAL ITEMS Cash Flow from Operations KEY FINANCIAL METRICS ($ Millions) 2023 2023 $1,500 Q3 Q4 $1,146 $1,200 Ending cash balance $ 1,173 $ 1,164 $957 $ Millions Ending short-term investments balance $ 668 $ — $900 Total debt $ 5,679 $ 5,069 $562 $523 Net debt to Adjusted EBITDA (LTM) 1 2.2 2.3
Slide 18: 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 19: Adjusted Funds Available for Distribution: 2023 Cash Return
ADJUSTED FUNDS AVAILABLE FOR DISTRIBUTION1 Returning $783 Million in Total Cash Based on 2023 Results RETURNING ~80% OF ADJUSTED FAD TO SHAREHOLDERS BASED ON 2023 RESULTS ADJUSTED FUNDS AVAILABLE FOR DISTRIBUTION $1,000 ($ millions) 2023 Net Cash from Operations $ 1,433 $800 Capital Expenditures2 (4
Slide 20: Returning Cash to Shareholders: $4.6 Billion
RETURNING CASH TO SHAREHOLDERS Demonstrating The Power of Our Cash Return Framework ALLOCATION OF CASH RETURNS BASED ON 2021-2023 RESULTS NEARLY $4.6 BILLION $1.6 Billion $2.2 Billion $775 Million Base Supplemental Share RETURNED Dividends Dividends1 Repurchase TO SHAREHOLDERS BASED ON Annual Payout
Slide 21: 2025 Year-End Targets
2025 YEAR-END TARGETS Making Progress Against Our Multi-Year Targets INVESTMENT THESIS TARGETS ACCOMPLISHMENTS Invested ~$530 million Grow Timberlands Portfolio including strategic acquisitions in Washington, UNMATCHED by $1 billion of disciplined investments the Carolinas and Mississippi in 2022 an
Slide 22: Timberlands Growth Strategy Update
TIMBERLANDS GROWTH STRATEGY UPDATE Disciplined Approach to Growing the Value of Our Timberlands 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 ~$530 Million1 Washington • Closed in 2022
Slide 23: Natural Climate Solutions
NATURAL CLIMATE SOLUTIONS Leveraging Our Scale and Growing EBITDA as Markets Develop KEY UPDATES GROWING OUR CURRENT BUSINESSES BUILDING A $100 MILLION BUSINESS • Initial growth primarily from Mitigation, BY YEAR-END 2025 Conservation and Renewable Energy Adjusted EBITDA1 businesses • Future upside
Slide 24: Outlook: 2024 Q1
OUTLOOK: 2024 Q1 EXPECTED EARNINGS1 SEGMENT KEY DRIVERS & ADJUSTED EBITDA TIMBERLANDS Comparable to 2023 Q4 West South North Fee Harvest Volumes: Fee Harvest Volumes: Fee Harvest Volumes: Moderately higher Moderately lower Comparable Sales Realizations: Sales Realizations: Sales Realizations: Slight
Slide 25: 2024 Outlook
2024 OUTLOOK DRIVER FY 2024 OUTLOOK Approximately 35.5 million tons • South: Slightly higher than 2023 FEE HARVEST VOLUMES • West: Slightly higher than 2023 • North: Slightly higher than 2023 REAL ESTATE & ENR ADJUSTED EBITDA Approximately $320 million BASIS OF REAL ESTATE SOLD 35-45% of Real Estate
Slide 26: Wood Products Sales Realizations: Current vs. 2023 Q4
WOOD PRODUCTS SALES REALIZATIONS: CURRENT VS. 2023 Q4 WEYERHAEUSER’S AVERAGE SALES REALIZATIONS Approximate Change As of January 19, 2024 LUMBER1 Q1 QTD vs. WY’s +$20/MBF HIGHER SENSITIVITY Q4 AVERAGE CHANGE IN REALIZATIONS $10/MBF ≈ $50 million CURRENT vs. EBITDA +$20/MBF HIGHER ANNUALLY Q4 AVERAGE
Slide 27: Supplemental Timberlands Information
SUPPLEMENTAL TIMBERLANDS INFORMATION Adjusted EBITDA1 Per Acre WESTERN TIMBERLANDS 2021 2022 2023 SOUTHERN TIMBERLANDS 2021 2022 2023 FY FY FY FY FY FY 1 1 Adjusted EBITDA ($ Millions) $ 387 $ 473 $ 344 Adjusted EBITDA ($ Millions) $ 301 $ 307 $ 306 Acres (Thousands) 2,577 2,546 2,539 Acres (Thousan
Slide 28: Earnings Summary
EARNINGS SUMMARY $ Millions (except EPS) 2022 2023 Adjusted EBITDA by Segment Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Timberlands $ 247 $ 219 $ 168 $ 150 $ 188 $ 172 $ 143 $ 143 Real Estate, Energy & Natural Resources 116 107 60 46 89 70 94 67 Wood Products 1,233 912 395 197 148 270 328 159 Unallocated Items (99) (
Slide 29: Earnings Per Share Reconciliation
EARNINGS PER SHARE RECONCILIATION 2022 2023 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Diluted EPS Before Special Items $ 1.31 $ 1.06 $ 0.42 $ 0.24 $ 0.21 $ 0.32 $ 0.33 $ 0.16 Special Items: Environmental remediation charge — — — — — (0.01) — — Gain on sale of timberlands — — — — — — — 0.12 Insurance recovery — — — —
Slide 30: Earnings Before Special Items Reconciliation
EARNINGS BEFORE SPECIAL ITEMS RECONCILIATION $ Millions (except EPS) 2022 2023 Pretax After-Tax Diluted Pretax After-Tax Diluted Earnings Earnings EPS Earnings Earnings EPS Earnings Before Special Items $ 2,796 $ 2,247 $ 3.02 $ 852 $ 749 $ 1.02 Special Items: Environmental remediation charge — — — (
Slide 31: Adjusted EBITDA Reconciliation: By Segment
ADJUSTED EBITDA RECONCILIATION By Segment $ Millions 2020 2021 2022 2023 FY FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Timberlands $ 610 $ 693 $ 247 $ 219 $ 168 $ 150 $ 784 $ 188 $ 172 $ 143 $ 143 $ 646 Real Estate & ENR 241 296 116 107 60 46 329 89 70 94 67 320 Wood Products 1,527 3,357 1,233 912 395 197 2,7
Slide 32: Adjusted EBITDA Reconciliation: Timberlands
ADJUSTED EBITDA RECONCILIATION Timberlands $ Millions 2022 2023 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 West $ 165 $ 144 $ 92 $ 72 $ 105 $ 94 $ 72 $ 73 South 80 75 75 77 81 79 73 73 North 4 2 3 5 4 — 1 1 Other (2) (2) (2) (4) (2) (1) (3) (4) Total Timberlands Adjusted EBITDA1 $ 247 $ 219 $ 168 $ 150 $ 188 $ 172 $ 1
Slide 33: 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 Q3 Q4 Real Estate $ 87 $ 83 $ 24 $ 12 $ 63 $ 40 $ 71 $ 32 Energy & Natural Resources 29 24 36 34 26 30 23 35 Total Real Estate & ENR Adjusted EBITDA1 $ 116 $ 107 $ 60 $ 46 $ 89 $ 70 $ 94 $ 6
Slide 34: Adjusted EBITDA Reconciliation: Wood Products
ADJUSTED EBITDA RECONCILIATION Wood Products $ Millions 2022 2023 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Lumber $ 648 $ 359 $ 88 $ 8 $ 8 $ 51 $ 58 $ (34) OSB 392 332 101 54 22 37 118 73 EWP 136 173 166 110 82 144 125 104 Distribution 72 48 41 23 22 34 31 16 Other (15) — (1) 2 14 4 (4) — Total Wood Products Adjuste
Slide 35: Adjusted EBITDA Reconciliation: Unallocated
ADJUSTED EBITDA RECONCILIATION Unallocated $ Millions 2022 2023 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1 Total Unallocated Adjusted EBITDA $ (99) $ (33) $ (40) $ (24) $ (30) $ (43) $ (56) $ (48) Total depletion, depreciation & amortization (2) (1) (2) (1) (2) (1) (2) (2) Special items included in operating loss —
Slide 36: Net Debt to Adjusted EBITDA Reconciliation
NET DEBT TO ADJUSTED EBITDA RECONCILIATION $ Millions 2022 2023 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1, 2 Net Debt to Adjusted EBITDA (LTM) 0.9 0.8 0.8 1.0 1.7 2.2 2.2 2.3 Total debt $ 5,053 $ 5,053 $ 5,053 $ 5,053 $ 5,053 $ 5,797 $ 5,679 $ 5,069 Less: cash and cash equivalents and short-term investments 1,205 1
Slide 37: Funds Available for Distribution Reconciliation
FUNDS AVAILABLE FOR DISTRIBUTION RECONCILIATION ADJUSTED FUNDS AVAILABLE FOR DISTRIBUTION ($ Millions) 2020 2021 2022 2023 FY FY FY FY Net Cash from Operations $ 1,529 $ 3,159 $ 2,832 $ 1,433 Capital Expenditures (281) (441) (468) (447) 1 Funds Available for Distribution $ 1,248 $ 2,718 $ 2,364 $ 98
Slide 38: Adjusted EBITDA Reconciliation: Natural Climate Solutions
ADJUSTED EBITDA RECONCILIATION Natural Climate Solutions $ Millions 2020 2021 2022 2023 FY FY FY FY Total Natural Climate Solutions Adjusted EBITDA1 $ 22 $ 38 $ 43 $ 47 Depletion, depreciation & amortization (1) (1) (1) (1) Basis of real estate sold (9) (10) (10) (11) Operating Income (GAAP) $ 12 $