Weyerhaeuser Company · NYSE:WY
Weyerhaeuser — Q3 2022 Earnings Presentation
29 slides from Weyerhaeuser's earnings presentation, 2022
Slide 1: 2022 Earnings Results - Third Quarter 2022
2022 EARNINGS RESULTS THIRD QUARTER 2022
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: 2022 Q3 Consolidated Results
2022 Q3 CONSOLIDATED RESULTS $ Millions 2022 2022 $ Millions (except EPS) 2022 2022 Adjusted EBITDA Q2 Q3 Change Consolidated Statement of Operations Q2 Q3 Timberlands $ 219 $ 168 $ (51) Net sales $ 2,973 $ 2,276 Real Estate, Energy & Natural Resources 107 60 (47) Costs of sales 1,789 1,694 Wood Pro
Slide 4: Adjusted EBITDA
ADJUSTED EBITDA1 TOTAL COMPANY2 REAL ESTATE & ENR $1,650 $1,573 $1,497 $150 $1,320 $1,205 $116 $ Millions $1,101 $107 $ Millions $100 $96 $91 $990 $746 $674 $583 $60 $60 $660 $49 $50 $330 $0 $0 Q1.21 Q2.21 Q3.21 Q4.21 Q1.22 Q2.22 Q3.22 Q1.21 Q2.21 Q3.21 Q4.21 Q1.22 Q2.22 Q3.22 Real Estate $ 76 66 38
Slide 5: Timberlands Segment
TIMBERLANDS SEGMENT TIMBERLANDS ($ Millions) 2022 2022 TIMBERLANDS ($ Millions) 2022 2022 Adjusted EBITDA by Region Q2 Q3 Segment Statement of Operations Q2 Q3 West $ 144 $ 92 Third-party sales $ 515 $ 441 South 75 75 Intersegment sales 156 133 North 2 3 Total Sales 671 574 Other (2) (2) Costs of sa
Slide 6: Timberlands Key Drivers: 2022 Q3 vs. 2022 Q2
TIMBERLANDS KEY DRIVERS: 2022 Q3 vs. 2022 Q2 REGION KEY DRIVERS WEST • Fee Harvest Volumes: Lower, work stoppage affected operations in September • Sales Volumes: Significantly lower, primarily for export, moderately lower for domestic • Sales Realizations: Significantly lower, resulting from reduce
Slide 7: Sales Volumes, Realizations and Export Revenue
SALES VOLUMES, REALIZATIONS AND EXPORT REVENUE 3rd-Party Log Sales and Realizations - South 3rd-Party Log Sales and Realizations - West1 $38.47 $38.59 $173.35 7,000 $36.55 $37.15 $40 3,600 $161.29 $158.59 $180 $34.50 $35.11 $35.56 Volumes (Thousands of tons) $145.64 $146.39 $137.80 Volumes (Thousand
Slide 8: Fee Harvest Volumes and Intersegment Sales Volumes
FEE HARVEST VOLUMES AND INTERSEGMENT SALES VOLUMES FEE HARVEST VOLUMES INTERSEGMENT LOG SALES VOLUMES 7,500 1,500 6,160 1,263 6,159 6,112 1,220 1,224 1,206 5,856 5,912 5,842 1,189 1,186 6,250 1,099 5,376 1,200 Thousands of tons Thousands of tons 5,000 900 779 799 761 741 733 721 3,750 555 2,240 600
Slide 9: Real Estate, Energy & Natural Resources (ENR) Segment
REAL ESTATE, ENERGY & NATURAL RESOURCES (ENR) SEGMENT REAL ESTATE & ENR ($ Millions) 2022 2022 REAL ESTATE & ENR ($ Millions) 2022 2022 Adjusted EBITDA by Business Q2 Q3 Segment Statement of Operations Q2 Q3 Real Estate $ 83 $ 24 Total sales $ 117 $ 68 Energy & Natural Resources 24 36 Costs of sales
Slide 10: Real Estate, Energy & Natural Resources (ENR) Segment: Acres
REAL ESTATE, ENERGY & NATURAL RESOURCES (ENR) SEGMENT ACRES SOLD AVERAGE PRICE PER ACRE 50 $7,000 $6,316 45 $6,000 40 35 $5,046 31 $5,000 Price per acre Acres (thousands) 30 $4,385 27 24 $3,785 $4,000 $3,803 $4,005 20 19 18 $3,000 $3,227 $3,215 11 $1,992 10 7 $2,000 5 $1,501 $1,381 1 0 $1,000 Q1.20
Slide 11: Wood Products Segment
WOOD PRODUCTS SEGMENT WOOD PRODUCTS ($ Millions) 2022 2022 WOOD PRODUCTS ($ Millions) 2022 2022 Adjusted EBITDA by Business Q2 Q3 Segment Statement of Operations Q2 Q3 Lumber $ 359 $ 88 Total sales $ 2,341 $ 1,767 OSB 332 101 Costs of sales 1,414 1,360 Engineered Wood Products 173 166 Gross margin 9
Slide 12: Wood Products Key Drivers: 2022 Q3 vs. 2022 Q2
WOOD PRODUCTS KEY DRIVERS: 2022 Q3 vs. 2022 Q2 BUSINESS KEY DRIVERS LUMBER • Sales Realizations: Decreased 28% • Sales and Production Volumes: Moderately lower, work stoppage affected Pacific Northwest mills in September • Unit Manufacturing Costs: Higher • Log Costs: Moderately lower ORIENTED • Sal
Slide 13: Third-Party Sales Volumes and Realizations
THIRD-PARTY SALES VOLUMES AND REALIZATIONS1 Lumber OSB $1,077 $1,041 $911 4,500 $1,100 5,000 $950 $787 $864 Volumes (Millions of Square Ft.) Volumes (Millions of Board Ft.) 3,600 $776 $880 $691 $676 Realizations ($/MBF) 4,000 $760 Realizations ($/M 3/8") $614 $592 $556 $490 2,700 $660 3,000 $570 $51
Slide 14: Unallocated Items
UNALLOCATED ITEMS UNALLOCATED ITEMS ($ Millions)1 2022 2022 UNALLOCATED ITEMS ($ Millions)1 2022 2022 Q2 Q3 Q2 Q3 Unallocated corporate function expenses and variable Costs of sales 3 $ 9$ (11) $ (36) $ (36) compensation expense G&A expense 4 (36) (33) Liability classified share-based compensation 2
Slide 15: Financial Items
FINANCIAL ITEMS KEY FINANCIAL METRICS ($ Millions) 2022 2022 Cash Flow from Operations Q2 Q3 $1,500 $1,308 Ending Cash Balance $ 1,723 $ 1,920 $1,146 $1,200 $957 Total Debt $ 5,053 $ 5,053 $900 $ Millions 1 $659 $562 Net Debt to Adjusted EBITDA (LTM) 0.8 0.8 $600 $698 Net Debt to Enterprise Value2 1
Slide 16: Adjusted Funds Available for Distribution
ADJUSTED FUNDS AVAILABLE FOR DISTRIBUTION Allocation Framework and Cash Return Calculation TARGETED RETURN OF CASH ADJUSTED FUNDS AVAILABLE FOR DISTRIBUTION1 TO SHAREHOLDERS ALLOCATION FRAMEWORK Calculated on an Annual Basis Return 75-80% of Adj. FAD to Shareholders Adjusted FAD SUSTAINABLE BASE DIV
Slide 17: Adjusted Funds Available for Distribution: Cash Return Update
ADJUSTED FUNDS AVAILABLE FOR DISTRIBUTION1 Cash Return To Shareholders Update TARGETED RETURN OF CASH TO SHAREHOLDERS Based on 2022 Q3 YTD Results and Activity ADJUSTED FUNDS AVAILABLE FOR DISTRIBUTION ($ Millions) 2022 Q3 Q3 YTD $ MM Net Cash from Operations $ 562 $ 2,665 Capital Expenditures 2 (94
Slide 18: 2022 Q4 Outlook
2022 Q4 OUTLOOK EXPECTED EARNINGS1 SEGMENT KEY DRIVERS & ADJUSTED EBITDA TIMBERLANDS Significantly lower than West South North 2022 Q3 Fee Harvest and Sales Volumes: Fee Harvest Volumes: Fee Harvest Volumes: Lower2 Slightly higher Moderately higher Sales Realizations: Sales Realizations: Sales Reali
Slide 19: 2022 Outlook: Update
2022 OUTLOOK: UPDATE DRIVER UPDATED 2022 OUTLOOK PRIOR 2022 OUTLOOK Approximately 33 million tons Approximately 34.5 million tons • South: Slightly higher than 2021 • South: Moderately higher than 2021 FEE HARVEST VOLUME • West: Slightly lower than 2021 • West: Slightly higher than 2021 • North: Unc
Slide 20: Wood Products Sales Realizations: Current vs. 2022 Q3
WOOD PRODUCTS SALES REALIZATIONS: CURRENT VS. 2022 Q3 WEYERHAEUSER’S AVERAGE SALES REALIZATIONS Approximate Change As of October 21, 2022 LUMBER1 Q4 QTD vs. WY’s -$50/MBF LOWER SENSITIVITY Q3 AVERAGE CHANGE IN REALIZATIONS $10/MBF ≈ $50 million CURRENT vs. EBITDA -$50/MBF LOWER ANNUALLY Q3 AVERAGE O
Slide 21: Earnings Summary
EARNINGS SUMMARY $ Millions (except EPS) 2021 2022 Adjusted EBITDA by Segment Q1 Q2 Q3 Q4 Q1 Q2 Q3 Timberlands $ 172 $ 180 $ 165 $ 176 $ 247 $ 219 $ 168 Real Estate, Energy & Natural Resources 96 91 60 49 116 107 60 Wood Products 889 1,386 565 517 1,233 912 395 Unallocated Items (56) (84) (44) (68)
Slide 22: Earnings Per Share Reconciliation
EARNINGS PER SHARE RECONCILIATION 2021 2022 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Diluted EPS Before Special Items $ 0.91 $ 1.37 $ 0.60 $ 0.49 $ 1.31 $ 1.06 $ 0.42 Special Items: Loss on debt extinguishment — — — — (0.28) — — Legal benefit — — — 0.01 — — — Product remediation recovery — — — 0.04 — — — Gain on sale o
Slide 23: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION By Segment $ Millions 2019 2020 2021 2022 FY FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 LTM1 Timberlands $ 680 $ 610 $ 172 $ 180 $ 165 $ 176 $ 693 $ 247 $ 219 $ 168 $ 810 Real Estate & ENR 274 241 96 91 60 49 296 116 107 60 332 Wood Products 476 1,527 889 1,386 565 517 3,357 1,233 912
Slide 24: Adjusted EBITDA Reconciliation: Timberlands
ADJUSTED EBITDA RECONCILIATION Timberlands $ Millions 2021 2022 Q1 Q2 Q3 Q4 Q1 Q2 Q3 West $ 101 $ 103 $ 90 $ 93 $ 165 $ 144 $ 92 South 69 76 76 80 80 75 75 North 3 2 1 3 4 2 3 Other (1) (1) (2) — (2) (2) (2) Total Timberlands Adjusted EBITDA1 $ 172 $ 180 $ 165 $ 176 $ 247 $ 219 $ 168 West (28) (28)
Slide 25: Adjusted EBITDA Reconciliation: Real Estate, Energy & Natural Resources
ADJUSTED EBITDA RECONCILIATION Real Estate, Energy & Natural Resources $ Millions 2021 2022 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Real Estate $ 76 $ 66 $ 38 $ 27 $ 87 $ 83 $ 24 Energy & Natural Resources 20 25 22 22 29 24 36 Total Real Estate & ENR Adjusted EBITDA1 $ 96 $ 91 $ 60 $ 49 $ 116 $ 107 $ 60 Depletion, dep
Slide 26: Adjusted EBITDA Reconciliation: Wood Products
ADJUSTED EBITDA RECONCILIATION Wood Products $ Millions 2021 2022 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Lumber $ 513 $ 804 $ 118 $ 195 $ 648 $ 359 $ 88 OSB 300 472 344 176 392 332 101 EWP 42 53 76 114 136 173 166 Distribution 39 75 22 40 72 48 41 Other (5) (18) 5 (8) (15) — (1) Total Wood Products Adjusted EBITDA 1,
Slide 27: Adjusted EBITDA Reconciliation: Unallocated
ADJUSTED EBITDA RECONCILIATION Unallocated $ Millions 2021 2022 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Total Unallocated Adjusted EBITDA1 $ (56) $ (84) $ (44) $ (68) $ (99) $ (33) $ (40) Total depletion, depreciation & amortization (2) (1) (2) — (2) (1) (2) Special items included in operating loss — — — 15 — — — Oper
Slide 28: Net Debt to Adjusted EBITDA Reconciliation
NET DEBT TO ADJUSTED EBITDA RECONCILIATION $ Millions 2021 2022 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Net Debt to Adjusted EBITDA (LTM) 1, 2 1.5 0.9 0.7 0.8 0.9 0.8 0.8 Total debt $ 5,475 $ 5,250 $ 5,250 $ 5,099 $ 5,053 $ 5,053 $ 5,053 Less: cash and cash equivalents 1,016 1,777 2,326 1,879 1,205 1,723 1,920 Net Deb
Slide 29: Funds Available for Distribution Reconciliation
FUNDS AVAILABLE FOR DISTRIBUTION RECONCILIATION ADJUSTED FUNDS AVAILABLE FOR DISTRIBUTION ($ Millions) 2019 2020 2021 2022 FY FY FY Q1 Q2 Q3 YTD Net Cash from Operations $ 966 $ 1,529 $ 3,159 $ 957 $ 1,146 $ 562 $ 2,665 Capital Expenditures (384) (281) (441) (70) (81) (94) (245) Funds Available for