Weyerhaeuser Company · NYSE:WY
Weyerhaeuser — Investor Day (May 2013)
91 slides from Weyerhaeuser's investor day presentation, May 10, 2013
Slide 1: Weyerhaeuser Analyst Meeting
1 | 05/10/2013 WEYERHAEUSER Analyst Meeting | May 10, 2013
Slide 2: Kathy McAuley, Vice President, Investor Relations
2 | 05/10/2013 Kathy McAuley Vice President, Investor Relations
Slide 3: Forward-Looking Statement
3 | 05/10/2013 FORWARD-LOOKING STATEMENT 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. These statements are based on various assumptions and
Slide 4: Agenda
4 | 05/10/2013 DAN FULTON: Weyerhaeuser Overview DON HAID: Industry Outlook PATTY BEDIENT: Timberlands, Wood Products and Financial Overview DAN FULTON: Real Estate, Cellulose Fibers Q&A Session AGENDA
Slide 5: Welcome & Introduction
5 | 05/10/2013 Dan Fulton WELCOME & INTRODUCTION President and Chief Executive Officer
Slide 6: Weyerhaeuser Overview
6 | 05/10/2013 WEYERHAEUSER OVERVIEW • Industry leader with unique and valuable timberlands • Capitalizing on strong recovery of U.S. housing market • Focused on growing earnings and creating value for shareholders
Slide 7: West Coast Timberlands
7 | 05/10/2013 High-Value Douglas Fir Uniquely Positioned for Export & Domestic Markets WEST COAST TIMBERLANDS
Slide 8: Southern Timberlands
8 | 05/10/2013 High-Quality Southern Yellow Pine Sawlogs Well Positioned for Wood Products Markets SOUTHERN TIMBERLANDS
Slide 9: Wood Products
9 | 05/10/2013 Improvement Efforts Driving Profits as Housing Market Recovers WOOD PRODUCTS
Slide 10: Cellulose Fibers
10 | 05/10/2013 CELLULOSE FIBERS Innovative Manufacturer of Fluff and Value-Added Pulp Products
Slide 11: Real Estate
11 | 05/10/2013 Top 20 U.S. Homebuilder and Developer with Leading Brands in Desirable Markets REAL ESTATE
Slide 12: Housing Recovery Underway
12 | 05/10/2013 HOUSING RECOVERY UNDERWAY 0.0 0.5 1.0 1.5 2.0 2.5 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 *RISI *John Burns *Global Insight TOTAL U.S. HOUSING STARTS (Seasonally Adjusted Annual Rate) Source: Cens
Slide 13: Industry Outlook
13 | 05/10/2013 Don Haid INDUSTRY OUTLOOK Corporate Economist & Director of Industry Analysis
Slide 14: Key Messages
14 | 05/10/2013 KEY MESSAGES • U.S. housing is recovering and contributing to economic growth • Strong and improving market fundamentals in wood products • Timberlands benefiting from strength in export markets and rising domestic log use • Cellulose fibers improving with global economies
Slide 15: Housing Market Overview
15 | 05/10/2013 HOUSING MARKET OVERVIEW • Housing has begun its return to long-term trend levels • Fundamentals coming back into balance – Inventories falling – Prices rising – Improving employment prospects – Household formations returning to trend levels – Echo boom creating demographic push – Sin
Slide 16: Signs of a Healing Housing Market
16 | 05/10/2013 SIGNS OF A HEALING HOUSING MARKET • Distressed properties declining • Rising prices increase wealth of homeowners 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 QUARTERLY Percent (Seasonally Adjusted) Source: Mortgage Bankers Association of
Slide 17: U.S. Housing Affordability
17 | 05/10/2013 40 80 120 160 200 240 1971 1976 1981 1986 1991 1996 2001 2006 2011 U.S. HOUSING AFFORDABILITY INDEX ANNUAL Source: National Association of Realtors X 2013 Q1 HOME AFFORDABILITY AT ALL-TIME HIGH • Current affordability level without historic precedent • Positive economics will drive h
Slide 18: Housing Contributing to Economic Growth
18 | 05/10/2013 • Construction-related employment becoming a bright spot • Rising demand for furniture and related expenditures as number of homes sold increases -200 -150 -100 -50 0 50 100 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: BLS GROWTH IN U.S. EMPLOYMENT FOR TOTAL CONSTRUCTION MONT
Slide 19: Ownership Rate Stabilizing
19 | 05/10/2013 OWNERSHIP RATE STABILIZING: Underpins return to trend starts • Significant adjustment has already taken place – Homeownership rates do not need to rebound to prerecession levels in order to sustain recovery – Prudent lending standards now the norm – Government policy plays a role 50
Slide 20: Higher Share of Multi-Family Construction Within Historic Norms
20 | 05/10/2013 HIGHER SHARE OF MULTI-FAMILY CONSTRUCTION WITHIN HISTORIC NORMS • Fall in home ownership boosted rentership • Most renters aspire to be owners • As financial circumstances improve expect shift to ownership 0 10 20 30 40 50 1 9 6 0 1 9 6 4 1 9 6 8 1 9 7 2 1 9 7 6 1 9 8 0 1 9 8 4 1 9 8
Slide 21: Outlook for Wood Products
21 | 05/10/2013 OUTLOOK FOR WOOD PRODUCTS • Industry recovering from largest cycle in postwar history • Wood products demand closely linked to housing • Industry supply outlook has changed since housing bubble burst • As housing recovers, additional production will be needed to meet rising demand
Slide 22: Wood Products Recovering from Largest Cycle in Postwar Period
22 | 05/10/2013 0 10 20 30 40 50 60 70 80 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 DEMAND ON NORTH AMERICAN LUMBER MILLS Billion Board Feet (BBF) Forecast Source: FEA ANNUAL 0 10 20 30 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 NORTH AMERICAN OSB DEMAND Billion Sq
Slide 23: Industry Supply: A Lot Has Changed
23 | 05/10/2013 INDUSTRY SUPPLY: A lot has changed • Capacity has closed and some dismantled – Lumber: • 17 BBF of 2005 production not operating in 2012 • 12 BBF of which has been dismantled – OSB: • 44 sites operating in 2013 of 67 original sites • 14 dismantled, 9 curtailed facilities • British Co
Slide 24: Wood Product Prices: Recent Volatility
24 | 05/10/2013 100 200 300 400 500 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 FRAMING LUMBER COMPOSITE PRICE INDEX $/MBF MONTHLY Source: Random Lengths 2004-2006 Average $372 +45% Year-over-Year Gain WOOD PRODUCT PRICES: Recent volatility characteristic of commodity markets • Seasonal f
Slide 25: Wood Is a Small Part of Cost of Building a Home
25 | 05/10/2013 WOOD IS A SMALL PART OF THE OVERALL COST OF BUILDING A HOME Framing & Sheathing 15% Windows, Doors, Cabinets, Countertops & Trim 14% Excavation, Foundation and Other 26% Plumbing, Electrical & HVAC 15% Exterior and Landscape 14% Interior: Drywall, Floor Finish, Paint & Appliances 16%
Slide 26: OSB Demand a Function of Housing Starts
26 | 05/10/2013 OSB DEMAND A FUNCTION OF HOUSING STARTS • OSB market position now established – initially plywood substitution drove demand growth • Residential construction accounts for more than half of demand
Slide 27: Lumber Demand: Significant Upside
27 | 05/10/2013 LUMBER DEMAND: Significant upside, not just from housing starts • Residential construction accounts for 1/3 of demand but most of the cyclical movement • Demand growth in both new construction and remodeling as housing market heals 0 0.5 1 1.5 2 2.5 0 10 20 30 40 50 60 70 1975 1978 1
Slide 28: Engineered Wood Demand Growing
28 | 05/10/2013 ENGINEERED WOOD DEMAND GROWING: Late-cycle recovery • More than 80% of demand driven by new residential construction 40 42 44 46 48 50 52 54 56 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Market Share Percent I-JOIST SHARE OF RAISED FLOOR U.S. SINGLE FAMILY – FIRST FLOOR O
Slide 29: Lumber Prices Moved Upward as Housing Recovery Lifted Demand
29 | 05/10/2013 LUMBER PRICES MOVED UPWARD AS HOUSING RECOVERY LIFTED DEMAND • Production growth has not kept pace with demand, driving prices • Will require additional log supplies 100 150 200 250 300 350 400 450 500 550 2000 2002 2004 2006 2008 2010 2012 2014 Southern Pine West Spruce-Pine-Fir Dou
Slide 30: Lower Canadian Lumber Supply Supports U.S. Timber Values
30 | 05/10/2013 LOWER CANADIAN LUMBER SUPPLY SUPPORTS U.S. TIMBER VALUES • Canadian lumber production declines due to mountain pine beetle • Offshore exports grow with Asian economies • Decline in available supplies to U.S. 0% 5% 10% 15% 20% 25% 30% 35% 40% 0 5 10 15 20 25 30 35 40 2005 2010 2015 20
Slide 31: U.S. South Has Gained Share as Lumber Demand Recovered
31 | 05/10/2013 U.S. SOUTH HAS GAINED SHARE AS LUMBER DEMAND HAS RECOVERED • Southern lumber producers well located to serve end use markets • Competitive raw material markets have helped 0.00 0.50 1.00 1.50 2.00 2.50 0.0 5.0 10.0 15.0 20.0 25.0 2004 2005 2006 2007 2008 2009 2010 2011 2012 US South
Slide 32: Southern Log Prices Improve with Rising Demand
32 | 05/10/2013 SOUTHERN LOG PRICES IMPROVE WITH RISING DEMAND • Sawlog prices lag lumber • Deferred volumes consumed as demand rises and Canadian import share declines 150 200 250 300 350 400 450 500 1990 1993 1996 1999 2002 2005 2008 2011 2014 SYP 2x4 Sawtimber SOUTHERN PINE WEST 2X4 LUMBER PRICE
Slide 33: Southern Log and Fiber Prices
33 | 05/10/2013 10 20 30 40 50 60 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 $/Green Ton Delivered QUARTERLY Source: Timber Mart-South Pulpwood Chip-N-Saw Sawtimber SAWLOGS COMMAND HIGHEST PRICE SOUTHERN LOG AND FIBER PRICES
Slide 34: U.S. Timberland: West Coast Has Highest Values
34 | 05/10/2013 U.S. TIMBERLAND: West Coast has highest values • Pacific Northwest region has two distinct zones: Coast and Inland • West Coast dominated by Douglas fir, a preferred species in export and domestic markets • Majority of sawtimber in the Inland and South goes to domestic mills U.S. FOR
Slide 35: West Coast Rebound Started with Export Market
35 | 05/10/2013 200 300 400 500 600 700 800 2008 2009 2010 2011 2012 2013 Japan Export (FAS) China Export (FAS) Domestic (Delivered) Source: Log Lines WESTERN DOUGLAS FIR LOG PRICES $/MBF QUARTERLY WEST COAST REBOUND STARTED WITH EXPORT MARKET • West Coast timberlands supply both export and domestic
Slide 36: West Coast Captures Growth in Asian Imports
36 | 05/10/2013 WEST COAST CAPTURES GROWTH IN ASIAN IMPORTS 0 250 500 750 1000 1250 1500 1750 2000 2000 2002 2004 2006 2008 2010 2012 WEST COAST SOFTWOOD LOG EXPORTS TO ASIA MMBF Scribner ANNUAL Source: Random Lengths Yardstick, U.S. Dept of Commerce Japan Korea China • Long history of log exports t
Slide 37: High-Value Japanese Wooden Housing Market
37 | 05/10/2013 0.0 0.3 0.6 2002 2004 2006 2008 2010 2012 JAPANESE WOODEN HOUSING STARTS Million Units Source: MLIT ANNUAL HIGH-VALUE JAPANESE WOODEN HOUSING MARKET • Japan housing starts: 6% increase in 2012 • Demographics: households continue to grow through 2020 • Wooden share has increased post-
Slide 38: China Growth a Major Driver of Export Demand
38 | 05/10/2013 CHINA GROWTH A MAJOR DRIVER OF NORTH AMERICAN EXPORT DEMAND • China market is for industrial wood (concrete forms, etc.) not structural lumber • Supplies from many regions needed to meet rising wood deficit 0 5 10 15 20 25 30 35 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Slide 39: Russian Logs: No Competitive Advantage in China
39 | 05/10/2013 • Pacific Rim logs advantaged over Russian logs in China – Sustainable – Economical • Economic wood supply in decline – Poor regeneration – Difficult transportation RUSSIAN LOGS: No competitive advantage in China Source: International Wood Markets, Weyerhaeuser 180 190 200 210 220 23
Slide 40: Attractive Fundamentals for Wood Products and Timber
40 | 05/10/2013 ATTRACTIVE FUNDAMENTALS FOR WOOD PRODUCTS AND TIMBER • Rising demand: U.S. housing returning to trend and export markets growing • Wood products demand drives log demand • Domestic log demand bolstered by diminished Canadian lumber supply
Slide 41: Global Factors Affect Cellulose Fibers Markets
41 | 05/10/2013 GLOBAL FACTORS AFFECT CELLULOSE FIBERS MARKETS • Export businesses benefit from growth in Asian economies and weaker U.S. dollar – Fluff market growth 3.6% per year, driven by emerging economies • Eurozone debt issues driving near-term currency volatility but southern pine pulp compe
Slide 42: Fluff Pulp: World Demand Growth
42 | 05/10/2013 450 550 650 750 850 950 1050 1150 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Fluff Pulp Northern Softwood FLUFF VS. NBSK PRICES DELIVERED NORTHERN EUROPE $/Metric Ton QUARTERLY Source: RISI FLUFF PULP: World demand growth 3.6% per year, primarily from emerging countries 0
Slide 43: Key Messages
43 | 05/10/2013 KEY MESSAGES • U.S. housing is recovering and contributing to economic growth • Strong and improving market fundamentals in wood products • Timberlands benefiting from strength in export markets and rising domestic log use • Cellulose fibers improving with global economies
Slide 44: Patty Bedient, EVP and Chief Financial Officer
44 | 05/10/2013 Patty Bedient Executive Vice President, and Chief Financial Officer
Slide 45: Timberlands
45 | 05/10/2013 TIMBERLANDS
Slide 46: Weyerhaeuser Timberlands: Competitive Advantages
46 | 05/10/2013 WEYERHAEUSER TIMBERLANDS: Competitive advantages • World-class timber holdings • Increasing harvest volume and improving mix • Innovative silviculture • Scale operations • Unique position on U.S. West Coast
Slide 47: Growing Timberlands EBITDA
47 | 05/10/2013 GROWING TIMBERLANDS EBITDA • Trends in demand support higher projected prices – Domestic – Export • Increasing harvest • Improving mix • Operational excellence • Additional income sources 0 200 400 600 800 1,000 1,200 1,400 1,600 2013-2017 2018-2022 2023-2027 2028-2032 M ill io n $ T
Slide 48: Timberlands in Productive Regions
48 | 05/10/2013 TIMBERLANDS IN PRODUCTIVE REGIONS • U.S. West Coast – Nearly two million acres – High-value Douglas fir – Well-located for export markets • U.S. South – More than four million acres – Primarily southern yellow pine • Uruguay – More than 300,000 acres – Loblolly pine and eucalyptus •
Slide 49: Weyerhaeuser Harvest: Volume Increasing and Mix Improving
49 | 05/10/2013 WEYERHAEUSER HARVEST: Volume increasing and mix improving • Harvest volume increasing in all geographies • Large and increasing proportion of high-value-grade sawlogs FINAL HARVEST VOLUME* % INCREASE TO 2030 ESTIMATED % SAWTIMBER GRADE LOGS 2013 – 15 2030 U.S. West Coast 25% 90% Stea
Slide 50: Innovative Silviculture and Scale Operations
50 | 05/10/2013 INNOVATIVE SILVICULTURE AND SCALE OPERATIONS • Innovative silviculture – Superior seedlings – Faster growth rate – High-value sawtimber • Scale operations – Effective deployment of technology – Cost-effective harvesting and hauling – Strategic port access
Slide 51: Public Timber REIT Ownership by Geography
51 | 05/10/2013 0 1 2 3 4 5 6 7 Acres (Millions) International Southeast Appalachia Lake States Northeast Intermountain West Pacific Northwest (west of Cascades) Source: 2012 10Ks PUBLIC TIMBER REIT OWNERSHIP BY GEOGRAPHY
Slide 52: Uniquely Positioned on West Coast
52 | 05/10/2013 UNIQUELY POSITIONED ON WEST COAST 0 500 1000 1500 2000 Thousands of Acres LARGEST PACIFIC NORTHWEST TIMBERLAND OWNERS (WEST OF THE CASCADES) Source: WY, Atterbury Consultants (1/1/2013)
Slide 53: U.S. West Coast Value Higher Than Other Geographies
53 | 05/10/2013 U.S. WEST COAST VALUE HIGHER THAN OTHER GEOGRAPHIES Sources: National Council of Real Estate Investment Fiduciaries (NCREIF) 4Q 2012, Public Information 0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000 Pacific Northwest South Northeast Lake States $ / Acre TIMBERLANDS MARKET VALUE
Slide 54: U.S. West Coast Focused on Higher-Value Douglas Fir
54 | 05/10/2013 U.S. WEST COAST FOCUSED ON HIGHER-VALUE DOUGLAS FIR • Douglas fir lumber – High strength and stiffness for its weight – Does not have to be dried – Stays straight – Easy to machine and finish – Holds nails and screws – Resistant to splitting • Uniquely valued in premium Japanese mark
Slide 55: Weyerhaeuser Advantaged in International Log Markets
55 | 05/10/2013 WEYERHAEUSER ADVANTAGED IN INTERNATIONAL LOG MARKETS • Strategically located West Coast timberlands • Well-developed infrastructure and sales relationships • 21% of Timberlands revenue from export log sales – Japan is a premium market for Weyerhaeuser logs – Pursuing other internatio
Slide 56: Additional Value Streams
56 | 05/10/2013 ADDITIONAL VALUE STREAMS • Seven million acres of mineral rights – Oil and gas: ~$22MM revenue and 1,000 wells in 2012 – Minerals and aggregates: ~$9MM revenue and 38 mines in 2012 • Recreational – Hunting leases generated $19MM revenue in 2012 (on more than 90% of U.S. South ownersh
Slide 57: Weyerhaeuser Timberlands: Competitive Advantages
57 | 05/10/2013 • World-class timber holdings • Increasing harvest volume and improving mix • Innovative silviculture • Scale operations • Unique position on U.S. West Coast – Greater value and volume per acre – Higher-value Douglas fir – Export capability WEYERHAEUSER TIMBERLANDS: Competitive advan
Slide 58: Wood Products
58 | 05/10/2013 WOOD PRODUCTS
Slide 59: Successfully Executing Wood Products Improvement Strategy
59 | 05/10/2013 SUCCESSFULLY EXECUTING WOOD PRODUCTS IMPROVEMENT STRATEGY • Operating improvements – Reduce costs throughout the system – Sustainably improve manufacturing reliability and uptime – Increase operating rates at manufacturing sites and throughput at distribution centers – Optimize raw m
Slide 60: Diverse Wood Products Business with Broad Market Reach
60 | 05/10/2013 Product Mix Lumber, 48% Specialty Products & Other, 8% Engineered Wood Products, 15% OSB / Plywood Panels, 29% Markets DIVERSE WOOD PRODUCTS BUSINESS WITH BROAD MARKET REACH Source: Weyerhaeuser 2012 FY data Residential 71% Treater 14% HIW 9% Export 5% Industrial 1% FY 2012 SALES OF
Slide 61: Improving Operating Efficiency
61 | 05/10/2013 IMPROVING OPERATING EFFICIENCY • Increasing throughput • Incremental productivity enhancements • Improving grade recovery • Innovating with high-value products 2013 2011 2012 2013 Q1 CAPACITY UTILIZATION RATE Lumber 4.5 BBF 79% 85% 90% OSB 3.0 BSF 71% 83% 88% TJI 260* / 380 MMLF 47%*
Slide 62: Strategy Delivering Profitable Results
62 | 05/10/2013 ($40) ($20) $0 $20 $40 $60 $80 $100 $120 Q1 Q2 Q3 Q4 Q1 EBITDA ($ millions) Lumber OSB ELP Distribution 2012 $246MM $209MM Wood Products Segment EBITDA 2013 STRATEGY DELIVERING PROFITABLE RESULTS: Tenfold EBITDA increase from 1Q12 to 1Q13
Slide 63: Further Improvements to Leverage Housing Recovery
63 | 05/10/2013 FURTHER IMPROVEMENTS TO LEVERAGE HOUSING RECOVERY • Maintain operational excellence in high-demand market • Align with customers that value scale and pay for consistency and service • Strategically deploy capital to optimize operations All Businesses Driving Operational Improvement a
Slide 64: Real Estate
64 | 05/10/2013 REAL ESTATE
Slide 65: Top Builder of Single-Family Homes
65 | 05/10/2013 TOP 20 BUILDER OF SINGLE-FAMILY HOMES • Operating in select markets with positive long-term trends • Land development integral to strategy • Profits from homebuilding and lot sales
Slide 66: Strong Land Pipeline
66 | 05/10/2013 2.0 17.7 3.2 1.6 1.2 1.3 0 4 8 12 16 20 AZ CA MD and VA NV* TX WA Thousands STRONG LAND PIPELINE: Well positioned for California recovery CONTROLLED LOTS (As of March 31, 2013) * The business also controls approximately 67,000 lots, mostly under option, in a large master planned comm
Slide 67: California Recovery Finally Underway
67 | 05/10/2013 0 30 60 90 120 150 180 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Census SINGLE-FAMILY BUILDING PERMITS FOR CALIFORNIA (Seasonally Adjusted Annual Rate) QUARTERLY CALIFORNIA RECOVERY FINALLY UNDERWAY Thousands $
Slide 68: Capitalizing on Improving Markets
68 | 05/10/2013 CAPITALIZING ON IMPROVING MARKETS • Well positioned to grow earnings – Opening new communities – Increasing prices – Expect 2,800 closings in 2013 (20% year-over-year improvement) – Recovering California market will drive sales and backlog • Controlling costs • Accelerating land deve
Slide 69: Cellulose Fibers
69 | 05/10/2013 CELLULOSE FIBERS
Slide 70: Building on Our Strengths
70 | 05/10/2013 BUILDING ON OUR STRENGTHS • Focused on fluff and value-added grades • Growing with global customers • Innovating for higher margins • Driving operational excellence • Strategically located manufacturing sites
Slide 71: Strategically Located Manufacturing Facilities
71 | 05/10/2013 STRATEGICALLY LOCATED MANUFACTURING FACILITIES GRANDE PRAIRIE, AB NEW BERN FLINT RIVER COLUMBUS LONGVIEW PORT WENTWORTH GDANSK, POLAND Pulp Mills Liquid Packaging Board Converting Facilities Production 2012 Pulp (M ADMT) 1,773 Liquid Packaging Board (M TONS) 292
Slide 72: How Our Products Are Used
72 | 05/10/2013 HOW OUR PRODUCTS ARE USED • Fluff: 40% of sales – Diapers and personal care products • Specialty (Crosslink, Pearl®): 22% of sales – Textiles, nonwovens, and industrial applications • Pulp for Premium Towel & Tissue: 20% of sales • Liquid Packaging Board: 18% of sales – Dairy, juice
Slide 73: Focused on Value-Added Grades
73 | 05/10/2013 0 5 10 15 20 25 30 G lo b al Ma rk e t Siz e (MM to n s ) Papergrade Towel & Tissue Fluff Dissolving Wood Pulp Pearl® (launched in 2011) Crosslink FOCUSED ON VALUE-ADDED GRADES WY = 23% global share WY = 10% global share Increasing V alue Per T o n $$$
Slide 74: Globally Distributed Products
74 | 05/10/2013 GLOBALLY DISTRIBUTED PRODUCTS N & S America 37% Asia (Non- Japan) 27% Japan 16% Europe 12% EMEA* 8% 2012 REVENUES – $1.8B * EMEA = Eastern Europe, Middle East and Africa Growing with Key Global Customers
Slide 75: Operational Excellence
75 | 05/10/2013 OPERATIONAL EXCELLENCE • Continuing to improve operational efficiency • Capital spending focused on efficiency improvements and cost reduction • On schedule to extend period between mill maintenance outages from 12 to 18 months – Three of six mills have begun an 18-month outage sched
Slide 76: Financial Update
76 | 05/10/2013 FINANCIAL UPDATE
Slide 77: Weyerhaeuser Structure
77 | 05/10/2013 Minerals and other non-qualifying activities Weyerhaeuser Company Timberlands (REIT) Taxable REIT Subsidiary Non-REIT Timber Business Wood Products Cellulose Fibers Weyerhaeuser Real Estate Company (WRECO) More than 6 million acres of timberlands Specialty Absorbent Pulp Single-Famil
Slide 78: Benefits of REIT Structure
78 | 05/10/2013 BENEFITS OF REIT STRUCTURE • Significant cash flow benefits from lower overall tax burden – No taxes on qualified timberland earnings – Eventual elimination of tax on the sale of timberlands (built-in gains) • REIT rules are manageable • Aligned with timberlands-focused strategy – En
Slide 79: Committed to a Sustainable, Growing Dividend
79 | 05/10/2013 COMMITTED TO A SUSTAINABLE, GROWING DIVIDEND • Targeting a dividend payout of 75% of Funds Available for Distribution (FAD) over cycle – FAD defined as cash flow before debt repayment and dividends • Increased quarterly dividend by 33% over the last six months – October 2012: 13% inc
Slide 80: Strong Capital Structure
80 | 05/10/2013 STRONG CAPITAL STRUCTURE • Significant liquidity – Cash balance as of March 31, 2013: $639MM – $1B credit facility, expires June 2015 – no borrowings outstanding – Net debt to enterprise value* as of March 31, 2013: 17% Total Debt ($ Millions) 2013 2014 2015 2016 2017 Beginning of ye
Slide 81: Targeted Investment in Businesses
81 | 05/10/2013 TARGETED INVESTMENT IN BUSINESSES: Shifting capital expenditure allocation $0 $50 $100 $150 $200 $250 $300 $350 2010 2011 2012 2013 Est. C a p ital Ex p e n d it u res ($ mi ll io n s ) Timberlands Operations Wood Products Cellulose Fibers Other 47% 50% 63% 65% Est. Percent of Deprec
Slide 82: Conclusion
82 | 05/10/2013 Dan Fulton CONCLUSION President and Chief Executive Officer
Slide 83: Third Party Awards and Recognition
83 | 05/10/2013 THIRD PARTY AWARDS AND RECOGNITION Most Admired Companies FORTUNE Magazine, 1988-2012 World’s Most Ethical Companies Ethisphere Institute, 2009, 2010, 2012 Top 100 S&P 500 Clean Capitalism Ranking Corporate Knights, 2012 100 Best Corporate Citizens Corporate Responsibility Magazine,
Slide 84: Reasons to Own Weyerhaeuser
84 | 05/10/2013 REASONS TO OWN WEYERHAEUSER • Industry leader with unique and valuable timberlands • Capitalizing on strong recovery of U.S. housing market • Focused on growing earnings and creating value for shareholders
Slide 85: Q&A Session
Q&A SESSION thé i 85 | osioz013 A
Slide 86: Biographies
86 | 05/10/2013 BIOGRAPHIES
Slide 87: Dan Fulton
87 | 05/10/2013 DAN FULTON Dan Fulton was elected chief executive officer and a member of the board of directors in April 2008. He has been president of Weyerhaeuser Company since January 2008. From May 2001 until March 2008 he was president and chief executive officer of Weyerhaeuser Real Estate Co
Slide 88: Patty Bedient
88 | 05/10/2013 PATTY BEDIENT Patty Bedient was named executive vice president and chief financial officer in April 2007. She became senior vice president of Finance and Strategic Planning in February 2006 and from February 2003 to 2006 she served as vice president of Strategic Planning. Prior to jo
Slide 89: Don Haid
89 | 05/10/2013 DON HAID Don Haid is the corporate economist and director of Industry Analysis for Weyerhaeuser Company. Educated in both Canada and the US, his credentials include undergraduate and master’s degrees in forestry and forest economics from the University of Alberta and PhD in resource
Slide 90: EBITDA Reconciliation: Timberlands
90 | 05/10/2012 EBITDA RECONCILIATION: TIMBERLANDS $ millions 2012 Timberlands EBITDA1 $460 Depreciation, Depletion and Amortization (142) Special Items 0 Operating Income (GAAP) $318 Interest Income and Other 3 Loss Attributable to Non-Controlling Interest 1 Net Contribution to Earnings (GAAP) $322
Slide 91: Wood Products Adjusted EBITDA Reconciliation by Quarter
91 | 05/10/2012 $ Millions 2012 Q1 2012 Q2 2012 Q3 2012 Q4 L u m b er O S B E W P D is t O th er T O T A L L u m b er O S B E W P D is t O th er T O T A L L u m b er O S B E W P D is t O th er T O T A L L u m b er O S B E W P D is t O th er T O T A L Adjusted EBITDA Excluding Special Items1 $14 $12