Weyerhaeuser Company · NYSE:WY
Weyerhaeuser — Investor Day (August 2018)
38 slides from Weyerhaeuser's investor day presentation, Aug 13, 2018
Slide 1: 2018 Western Timberlands Tour
WEYERHAEUSER 2018 Western Timberlands Tour August 13-14, 2018 | Eugene, OR 1
Slide 2: Forward-Looking Statements and Non-GAAP Financial Measures
FORWARD-LOOKING STATEMENTS AND NON-GAAP FINANCIAL MEASURES This presentation contains statements and depictions that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, including, without limitation, with respect to future goa
Slide 3: Timberlands Overview
TIMBERLANDS OVERVIEW Devin Stockfish, SVP Timberlands 33
Slide 4: Timberlands at a Glance
TIMBERLANDS AT A GLANCE WE ARE THE LARGEST PRIVATE OWNER OF TIMBERLANDS IN NORTH AMERICA Species Mix in Each Region NORTH WEST West South North 2.9 2.5 7% 24% 12.4 16% MILLION 46% 1,416 ACRES 54% TALENTED 77% 76% SOUTH PEOPLE 7.0 Douglas fir Southern Yellow Pine Softwood Whitewood Hardwood WORK FOR
Slide 5: Timberlands Strategy for Success
TIMBERLANDS STRATEGY FOR SUCCESS STRONG BEST SUPERIOR CUSTOMER WINNING TIMBERLANDS EXECUTION FOCUS . Unparalleled scale . Provide superior . Create value Sustainable, and market access reliability and through genetics industry-leading consistency of and silviculture EBITDA . Exceptional supply at sc
Slide 6: Best Timberlands
BEST TIMBERLANDS Scale and Market Access • Highly Productive • Sustainable 6 6
Slide 7: Timberlands: Largest private U.S. owner
TIMBERLANDS Largest private U.S. owner with unmatched quality, diversity and scale NORTH NORTHERN 2.5 MILLION TIMBERLANDS ACRES . 50 hardwood and softwood species . Diverse lumber and fiber markets SOUTH WEST . Premium value 7.0 MILLION 2.9 MILLION hardwood sawlogs ACRES ACRES WESTERN SOUTHERN TIMBE
Slide 8: Sustainable Forestry
SUSTAINABLE FORESTRY More than a century of industry-leading practices WE PLANTED 100% WE HARVEST 100% + OF OUR OF OUR 1 BILLION TIMBERLANDS JUST 2% TIMBERLANDS SEEDLINGS ARE CERTIFIED OF OUR ARE IN THE LAST TO THE TIMBERLANDS TEN YEARS EACH YEAR REFORESTED AFTER HARVEST WE TAKE OUR STRONG WE’VE BEE
Slide 9: Strong Customer Focus
STRONG CUSTOMER FOCUS Competitive Advantage • Customers and Markets 9
Slide 10: Timberlands: Our Competitive Advantage
TIMBERLANDS: OUR COMPETITIVE ADVANTAGE WE LEVERAGE SCALE AND Why we are a preferred supplier: SUPPLY-CHAIN . Reliable, consistent supply at scale volumes EXCELLENCE . Ability to provide extra volume to meet customer requests TO DELIVER . Geographic diversity of ownership RELIABLE, . Focus on deliver
Slide 11: Customer Strategy: Reliable and Flexible
CUSTOMER STRATEGY: Reliable and Flexible Establish reliable, scaled Maintain diverse mix of additional 1 customer base in each market 2 customers in each market This allows for: This creates: . Consistent volume baseload . Operational flexibility . Low cost supply chain . Risk mitigation . Planning
Slide 12: Domestic Markets
DOMESTIC MARKETS Growing customer demand in the U.S. South ▪ Rising Southern lumber capacity will drive improved log pricing ▪ WY timberlands are uniquely positioned to capitalize • Well aligned with capacity additions • Well positioned in markets with greatest pricing runway ▪ Southern log export o
Slide 13: Asian Export Markets
ASIAN EXPORT MARKETS We are unparalleled in scale, quality, and market share Douglas fir and Western Hemlock to Japan, China and Korea Southern Yellow Pine to China and India SAWLOG EXPORT REVENUE $450 MILLION IN 2017 Korea, 7% China, 26% China, 2% WEST SOUTH India, 0.3% Japan, 65% 13
Slide 14: Superior Execution
SUPERIOR EXECUTION Create & Capture Value • Innovate 14 14
Slide 15: Deliver the Most Value from Every Acre
DELIVER THE MOST VALUE FROM EVERY ACRE SEEDLINGS PLANTING SILVICULTURE HARVEST TRANSPORT MARKETING 1. CREATE 2. CAPTURE MAXIMUM VALUE ON EVERY ACRE MAXIMUM VALUE ON EVERY ACRE THROUGH GENETICS & SILVICULTURE EXPERTISE THROUGH FOCUSED EXECUTION & OPX 15
Slide 16: Creating Maximum Value: Advanced Genetics & Nurseries
CREATING MAXIMUM VALUE: Advanced Genetics & Nurseries ADVANCED GENETICS . Develop, select and deploy the best genetic material for each acre on our land base . Select for growth, wood quality and survival characteristics NURSERIES & SEED ORCHARDS . Reliable, consistent, high-quality supply of seedli
Slide 17: Creating Maximum Value: Silviculture
CREATING MAXIMUM VALUE: Silviculture MARKET TARGETED SUPERIOR ANALYSIS SILIVICULTURE EXECUTION & MODELING REGIME Know the Grow the Create more MAXIMIZE customers right logs volume in VALUE in every for the less time with of each geography right markets better mix ACRE 17
Slide 18: Capturing Maximum Value: Harvest & Transportation
CAPTURING MAXIMUM VALUE: Harvest & Transportation $34 2017 MILLION OpX ON HARVEST AND HAUL ACHIEVED THROUGH ▪ Steep slope technology in the West ▪ Contractor management systems ▪ New applications to improve wood flows 18
Slide 19: Capturing Maximum Value: Sorting for Value and Woodflow
CAPTURING MAXIMUM VALUE: Sorting for Value and Woodflow EXAMPLE SORTING-FOR-VALUE RESULTS Poles 1% OVER 2017 $10 MILLION Japan Japan OpX 42% IN THE WEST 44% HIGHER VALUE HIGHER Other Exports 8% Other Exports 12% ACHIEVED THROUGH Domestic 45% Domestic 38% ▪ Bucking and sorting-for-value initiatives ▪
Slide 20: Capturing Maximum Value: Timberlands OpX
CAPTURING MAXIMUM VALUE: Timberlands OpX OPX IMPROVEMENTS SINCE 2014 IN MILLIONS IN 2017 $101-104 >50% $92-96 OF OUR OPX $24$24-28 CAME FROM 2018 $14-18 Target $14 HARVEST AND HAUL OUR $27$27 $8-10 $35$35 $8 COMPETITIVE 2017 Actual $2$2-4 ADVANTAGE Scale Operations $4 Log & Haul Expertise 2014-2016
Slide 21: Shareholder Value
SHAREHOLDER VALUE Leader in generating cash from timberland assets ADJUSTED EBITDA* / ACRE OWNED ADJUSTED EBITDA* / ACRE OWNED U.S. WEST U.S. SOUTH $240 $80 $200 $60 $160 $40 $120 $20 $80 $40 $0 2011 2012 2013 2014 2015 2016 2017 2018 2011 2012 2013 2014 2015 2016 2017 2018 Q1 LTM Q1 LTM Weyerhaeuse
Slide 22: Innovation: Near-term opportunities
INNOVATION Near-term opportunities to fully leverage across timberlands business Steep Slope Logging Drones Central Tire Inflation 22 22
Slide 23: Innovation: Future opportunities
INNOVATION Future opportunities to drive step change improvements Robotics Artificial Intelligence Remote-Control Next-Gen LIDAR Harvesters 23 23
Slide 24: Timberlands Strategy for Success
TIMBERLANDS STRATEGY FOR SUCCESS STRONG BEST SUPERIOR CUSTOMER WINNING TIMBERLANDS EXECUTION FOCUS . Unparalleled scale . Provide superior . Create value Sustainable, and market access reliability and through genetics industry-leading consistency of and silviculture EBITDA . Exceptional supply at sc
Slide 25: Wood Products Overview
WOOD PRODUCTS OVERVIEW Adrian Blocker, SVP Wood Products LUMBER ORIENTED STRAND BOARD ENGINEERED WOOD DISTRIBUTION 25
Slide 26: Wood Products Strategy for Success
WOOD PRODUCTS STRATEGY FOR SUCCESS RIGHT RIGHT RIGHT WINNING ALIGNMENT CUSTOMERS COST Strong focus and Preferred supplier Top-quartile cost INDUSTRY- alignment with our: for targeted markets structure: LEADING . Raw material supply and customers: . Manufacturing and MARGINS . Manufacturing . Attract
Slide 27: Wood Products Overview
WOOD PRODUCTS OVERVIEW Industry leading North American wood products producer BILLION $5 REVENUE 3rd 4th LUMBER OSB PRODUCTION PRODUCTION 19 LUMBER MILLS 6 ORIENTED STRAND BOARD MILLS 1st 18 6 ENGINEERED WOOD MILLS ENGINEERED DISTRIBUTION 3 VENEER / PLYWOOD FACILITIES WOOD FACILITIES 1 MEDIUM DENSIT
Slide 28: Wood Products: Our Competitive Advantage
WOOD PRODUCTS: OUR COMPETITIVE ADVANTAGE WE LEVERAGE SCALE AND Why we are a preferred supplier: SUPPLY-CHAIN . Product mix and scale EXCELLENCE . Reliability in supply-chain excellence TO DELIVER . Strong reputation RELIABLE, . Sustainability CONSISTENT SUPPLY TO CUSTOMERS 28
Slide 29: Wood Products: Targeted Markets
WOOD PRODUCTS: TARGETED MARKETS Adjusted EBITDA* Adjusted ORIENTED ENGINEERED WOOD LUMBER DISTRIBUTION STRAND BOARD PRODUCTS 2017 $459 MILLION $359 MILLION $173 MILLION $38 MILLION Repair & Export Remodel Export Other Industrial & Other Repair & Remodel Industrial Industrial Industrial New 3rd Party
Slide 30: Right Cost: Wood Products OpX
RIGHT COST: Wood Products OpX 120 100 $10-15 $20-25 $40-$60MM $16 2018 TARGET 80 $5-10 $21 $5-10 $20 60 $14 $71MM 2017 ACTUAL $ millions 40 $81 $62 $55 $58 20 $256MM 2014-16 0 PROGRESS LUMBER OSB EWP DISTRIBUTION KEY INITIATIVES . Controllable cost . Reliability . Controllable cost . Product margins
Slide 31: "Black at the Bottom"
“BLACK AT THE BOTTOM” ACHIEVE WOOD PRODUCTS ADJUSTED EBITDA* $ MILLIONS OVER BLACK AT THE 90% BOTTOM IN OF THE WAY 2018 “BLACK AT THE THROUGH BOTTOM” 2017 PRINCIPLES: OUR GOAL IS TO BE ▪ Mill “roadmaps” “BLACK AT THE target top quartile BOTTOM” cost structure OF THE CYCLE ▪ Invest in proven teams an
Slide 32: Right Cost
RIGHT COST LUMBER OSB 100% 100% 12% 15% 95% Reduction 95% Reduction 90% 90% Indexed 2013 to Indexed 85% 2013 to Indexed 85% Cost net of logs/MBF net Cost Controllable Controllable M38 cost/ 80% 80% 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 EWP I-JOIST DISTRIBUTION $50 100% 5% $40 Reduction 9
Slide 33: Wood Products Competitive Performance
WOOD PRODUCTS COMPETITIVE PERFORMANCE ADJUSTED EBITDA MARGIN* LUMBER+ ORIENTED STRAND BOARD 30% 50% 25% 40% 20% 30% 15% 20% 10% 10% 5% 0% 0% -5% -10% 2011 2012 2013 2014 2015 2016 2017 2018 2011 2012 2013 2014 2015 2016 2017 2018 ^ ^ Weyerhaeuser vs West Fraser, Canfor, Interfor Q1 YTD Weyerhaeuser
Slide 34: Wood Products Strategy for Success
WOOD PRODUCTS STRATEGY FOR SUCCESS RIGHT RIGHT RIGHT WINNING ALIGNMENT CUSTOMERS COST Strong focus and Preferred supplier Top-quartile cost INDUSTRY- alignment with our: for targeted markets structure: LEADING . Raw material supply and customers: . Manufacturing and MARGINS . Manufacturing . Attract
Slide 35: Appendix
APPENDIX 35
Slide 36: Our Vision and How We Win
Working together to be the wor OUR VISION HOW WE WIN wv KEY BEHAVIORS + Act with urgency + Safety + Develop our people + Integrity + Be accountable + Delver the most + Citizenship value from every acre + Be courageous + Sustainability + Drive operational + Keep it simple excellence + Be innovative +
Slide 37: Adjusted EBITDA Reconciliation: Timberlands
ADJUSTED EBITDA RECONCILIATION: Timberlands 2018 $ Millions 2011 2012 2013 2014 2015 2016 2017 Q1 LTM1 West $279 $258 $373 $571 $459 $443 $508 $540 South 226 298 328 410 430 426 383 385 North 29 28 32 47 41 26 23 21 Other (15) (8) 46 2 7 6 22 16 Adjusted EBITDA including Legacy $519 $576 $779 $1,030
Slide 38: Adjusted EBITDA Reconciliation: Wood Products
ADJUSTED EBITDA RECONCILIATION: Wood Products 2018 Q1 $ Millions 2009 2010 2011 2012 2013 2014 2015 20161 2017 YTD Lumber ($7) $130 $317 $319 $212 $289 $459 $140 OSB (4) 143 247 46 41 183 359 92 EWP 6 17 45 79 114 145 173 45 Distribution (37) (29) (33) 2 10 25 38 15 Other (1) (15) (2) - (5) (1) (12)