Weyerhaeuser Company · NYSE:WY
Weyerhaeuser — Q3 2020 Earnings Presentation
29 slides from Weyerhaeuser's earnings presentation, Oct 30, 2020
Slide 1: Weyerhaeuser Earnings Results Third Quarter 2020
WEYERHAEUSER EARNINGS RESULTS THIRD QUARTER 2020 | October 30, 2020
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, Section 27A of the Securities Act of 1933, and Section 21E of the S
Slide 3: 2020 Q3 Consolidated Results
2020 Q3 CONSOLIDATED RESULTS $ Millions 2020 2020 $ Millions (except EPS) 2020 2020 Adjusted EBITDA Q2 Q3 Change Consolidated Statement of Operations Q2 Q3 Timberlands $ 140 $ 130 $ (10) Before Special Items Net sales $ 1,631 $ 2,110 Real Estate, Energy & Natural 57 60 3 Resources Costs of sales 1,2
Slide 4: Earnings Before Special Items
EARNINGS BEFORE SPECIAL ITEMS $ Millions (except EPS) 2020 Q2 2020 Q3 Pretax After-Tax Diluted Pretax After-Tax Diluted Earnings Earnings EPS Earnings Earnings EPS Earnings Before Special Items $ 135 $ 77 $ 0.11 $ 495 $ 386 $ 0.52 Special Items: Early extinguishment of debt charges (11) (11) (0.02)
Slide 5: Adjusted EBITDA
ADJUSTED EBITDA1 Total Company2 Real Estate & ENR $800 $745 $150 $106 $101 $ Millions $600 $ Millions $100 $413 $365 $386 $71 $400 $343 $308 $60 $60 $57 $260 $50 $37 $200 $0 $0 Q1.19 Q2.19 Q3.19 Q4.19 Q1.20 Q2.20 Q3.20 Q1.19 Q2.19 Q3.19 Q4.19 Q1.20 Q2.20 Q3.20 Real Estate $ 87 51 37 18 86 42 44 ENR
Slide 6: Timberlands Segment
TIMBERLANDS SEGMENT TIMBERLANDS ($ Millions) 2020 2020 TIMBERLANDS ($ Millions) 2020 2020 Adjusted EBITDA by Region Q2 Q3 Segment Statement of Operations Q2 Q3 West $ 73 $ 72 Third-party sales $ 359 $ 345 South 70 62 Intersegment sales 121 107 North (1) — Total Sales 480 452 Other (2) (4) Costs of s
Slide 7: 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 3,000 $106.92 $104.07 $104.91 $104.90 $109.01 $120 7,000 $35.45 $40 $99.07 $102.12 $35.35 $35.03 $34.71 $34.27 $33.68 $33.68 Volum es (Thousands of tons) Volum es
Slide 8: Fee Harvest Volume and Intersegment Sales Volume
FEE HARVEST VOLUME AND INTERSEGMENT SALES VOLUME Fee Harvest Volume Intersegment Log Sales Volume 7,500 6,802 1,800 6,492 6,617 6,367 1,515 6,130 1,432 5,914 1,421 6,250 5,596 1,500 1,377 1,331 1,307 Thousands of tons Thousands of tons 5,000 1,200 1,076 3,750 900 737 712 687 700 720 661 646 2,385 2,
Slide 9: Real Estate, Energy & Natural Resources (ENR) Segment
REAL ESTATE, ENERGY & NATURAL RESOURCES (ENR) SEGMENT Real Estate & ENR ($ Millions) 2020 2020 Real Estate & ENR ($ Millions) 2020 2020 Adjusted EBITDA by Business Q2 Q3 Segment Statement of Operations Q2 Q3 Real Estate $ 42 $ 44 Total sales $ 65 $ 69 Energy & Natural Resources 15 16 Costs of sales
Slide 10: Real Estate, Energy & Natural Resources (ENR) Segment
REAL ESTATE, ENERGY & NATURAL RESOURCES (ENR) SEGMENT Acres Sold Average Price per Acre 60 $3,000 $2,424 $2,415 47 $2,500 $2,308 45 45 $1,992 39 Acres (thousands) $2,000 Price per acre 35 31 30 $1,501 $1,500 $1,381 18 $1,000 15 $1,063 9 $500 0 $0 Q1.19 Q2.19 Q3.19 Q4.19 Q1.20 Q2.20 Q3.20 Q1.19 Q2.19
Slide 11: Wood Products Segment
WOOD PRODUCTS SEGMENT WOOD PRODUCTS ($ Millions) 2020 2020 WOOD PRODUCTS ($ Millions) 2020 2020 Adjusted EBITDA by Business Q2 Q3 Segment Statement of Operations Q2 Q3 Lumber $ 103 $ 363 Total sales $ 1,207 $ 1,696 OSB 41 160 Costs of sales 997 1,075 Engineered Wood Products 42 58 Gross margin 210 6
Slide 12: Third-Party Sales Volumes and Realizations
THIRD-PARTY SALES VOLUMES AND REALIZATIONS1 Lumber OSB $395 $674 3,000 $700 2,000 $400 Volum es (Millions of Square Ft.) Volum es (Millions of Board Ft.) Realizations ($/M 3/8") Realizations ($/MBF) 2,250 $525 1,500 $246 $300 $438 $240 $392 $416 $223 $213 $214 $216 $388 $389 $389 1,000 $200 1,500 1,
Slide 13: Unallocated Items
UNALLOCATED ITEMS UNALLOCATED ITEMS ($ Millions)1 2020 2020 UNALLOCATED ITEMS ($ Millions)1 2020 2020 Q2 Q3 Q2 Q3 Unallocated corporate function expenses and variable 3 $ (23) $ (36) Costs of sales $ 16 $ (18) compensation expense 4 Liability classified share-based compensation (4) (5) G&A expense (
Slide 14: Capital Allocation
CAPITAL ALLOCATION Balanced and Sustainable Philosophy | Three Key Priorities RETURN CASH INVEST IN MAINTAIN AN APPROPRIATE TO SHAREHOLDERS OUR BUSINESSES CAPITAL STRUCTURE CORE ALLOCATION Sustainable Disciplined Capital Investment Grade Base Dividend Expenditures Credit Rating OPPORTUNISTIC ALLOCAT
Slide 15: Returning Cash to Shareholders
RETURNING CASH TO SHAREHOLDERS Implementing “Base Plus Variable Supplemental” Dividend Framework CORE ALLOCATION OPPORTUNISTIC ALLOCATION Sustainable Supplemental Dividend Base Dividend & Share Repurchase ▪ Initiating quarterly cash “base dividend” ▪ Flexible tools to achieve targeted total return o
Slide 16: Returning Cash to Shareholders
RETURNING CASH TO SHAREHOLDERS Dividend Framework is Sustainable Over the Business Cycle ADJUSTED FUNDS AVAILABLE FOR DISTRIBUTION 1 $1,081 $1,049 $1,027 EXCESS CASH above 75-80% $1,000 of Adjusted FAD available for $918 growth, debt paydown, and additional share repurchase $750 $514 SUPPLEMENTAL DI
Slide 17: Financial Items
FINANCIAL ITEMS KEY FINANCIAL METRICS ($ Millions) 2020 2020 Cash Flow from Operations Q2 Q3 $750 $608 Ending Cash Balance $ 643 $ 787 $600 $396 $391 Total Debt $6,299 $5,974 $450 $ Millions $292 $300 Net Debt to Adjusted EBITDA (LTM)1 4.1 2.9 $292 $150 Net Debt to Enterprise Value2 25% 20% $0 $86 (
Slide 18: Financial Items
FINANCIAL ITEMS Net Debt to Adjusted EBITDA (LTM)2 6.0 4.9 5.0 4.7 4.5 4.1 3.9 4.0 TARGET 3.5 RATIO 3.0 3.3 2.9 2.0 1.0 0.0 Q1.19 Q2.19 Q3.19 Q4.19 Q1.20 Q2.20 Q3.20 1. Q4.20 pro forma reflects announced redemption of $500 million 4.625% 2023 maturities. 2. LTM = last twelve months. A reconciliation
Slide 19: Outlook: 2020 Q4 vs. 2020 Q3
OUTLOOK: 2020 Q4 vs. 2020 Q3 SEGMENT COMMENTS TIMBERLANDS • Higher average Western sales realizations for domestic and Japanese export logs and improved log sales volumes • Slightly higher Southern forestry expense and slightly lower average log sales realizations • Anticipate earnings before specia
Slide 20: 2020 Outlook: Update
2020 OUTLOOK: UPDATE DRIVER UPDATED 2020 OUTLOOK Approximately 33 million tons: • South: Approximately 10% lower than 2019 FEE HARVEST VOLUME • West: Approximately 10% lower than 2019, modestly lower than prior guidance due to wildfire disruptions • North: Approximately 40% lower than 2019 due to Mi
Slide 21: Earnings Summary
EARNINGS SUMMARY $ Millions (except EPS) 2019 2020 Adjusted EBITDA by Segment Q1 Q2 Q3 Q4 Q1 Q2 Q3 Timberlands $ 193 $ 175 $ 154 $ 158 $ 173 $ 140 $ 130 Real Estate, Energy & Natural Resources 106 71 60 37 101 57 60 Wood Products 115 128 123 110 184 198 615 Unallocated Items (49) (31) (29) (45) (45)
Slide 22: Earnings Per Share Reconciliation
EARNINGS PER SHARE RECONCILIATION 2019 2020 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Diluted EPS Before Special Items $ 0.11 $ 0.16 $ 0.08 $ 0.03 $ 0.18 $ 0.11 $ 0.52 Special Items: Pension settlement charges (0.47) 0.01 — (0.01) — — — Early extinguishment of debt charges (0.01) — — — — (0.02) (0.03) Legal (charges) be
Slide 23: Adjusted EBITDA Reconciliation by Segment
ADJUSTED EBITDA RECONCILIATION BY SEGMENT $ Millions 2017 2018 2019 2020 FY FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 LTM Timberlands $ 936 $ 902 $ 193 $ 175 $ 154 $ 158 $ 680 $ 173 $ 140 $ 130 $ 601 Real Estate & ENR 241 264 106 71 60 37 274 101 57 60 255 Wood Products 1,017 987 115 128 123 110 476 184 198 615 1,
Slide 24: Adjusted EBITDA Reconciliation: Timberlands
ADJUSTED EBITDA RECONCILIATION: TIMBERLANDS $ Millions 2019 2020 Q1 Q2 Q3 Q4 Q1 Q2 Q3 West $ 97 $ 89 $ 59 $ 73 $ 93 $ 73 $ 72 South 90 86 91 85 78 70 62 North 7 1 4 3 3 (1) — Other (1) (1) — (3) (1) (2) (4) Total Timberlands Adjusted EBITDA1 $ 193 $ 175 $ 154 $ 158 $ 173 $ 140 $ 130 West (29) (30) (
Slide 25: Adjusted EBITDA Reconciliation: Real Estate, Energy & Natural Resources
ADJUSTED EBITDA RECONCILIATION: REAL ESTATE, ENERGY & NATURAL RESOURCES $ Millions 2019 2020 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Real Estate $ 87 $ 51 $ 37 $ 18 $ 86 $ 42 $ 44 Energy & Natural Resources 19 20 23 19 15 15 16 1 Total Real Estate & ENR Adjusted EBITDA $ 106 $ 71 $ 60 $ 37 $ 101 $ 57 $ 60 Depletion, d
Slide 26: Adjusted EBITDA Reconciliation: Wood Products
ADJUSTED EBITDA RECONCILIATION: WOOD PRODUCTS $ Millions 2019 2020 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Lumber $ 47 $ 44 $ 49 $ 43 $ 79 $ 103 $ 363 OSB 19 8 13 19 45 41 160 EWP 47 64 55 41 51 42 58 Distribution 4 11 10 8 12 13 37 Other (2) 1 (4) (1) (3) (1) (3) Total Wood Products Adjusted EBITDA1, 2 $ 115 $ 128 $
Slide 27: Adjusted EBITDA Reconciliation: Unallocated
ADJUSTED EBITDA RECONCILIATION: UNALLOCATED $ Millions 2019 2020 Q1 Q2 Q3 Q4 Q1 Q2 Q3 1 Total Unallocated Adjusted EBITDA $ (49) $ (31) $ (29) $ (45) $ (45) $ (9) $ (60) Total depletion, depreciation & amortization (1) (1) (1) (1) (2) (1) (2) Special items included in operating income (loss) (20) —
Slide 28: Net Debt to Adjusted EBITDA Reconciliation
NET DEBT TO ADJUSTED EBITDA RECONCILIATION $ Millions 2019 2020 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Net Debt to Adjusted EBITDA (LTM)1,2 3.3 3.9 4.7 4.9 4.5 4.1 2.9 Total debt $ 6,401 $ 6,293 $ 6,590 $ 6,377 $ 7,426 $ 6,299 $ 5,974 Less: cash and cash equivalents 259 212 153 139 1,458 643 787 Net Debt $ 6,142 $ 6,
Slide 29: Funds Available for Distribution Reconciliation
FUNDS AVAILABLE FOR DISTRIBUTION RECONCILIATION $ Millions 2017 2018 2019 2020 Q3 FY FY FY LTM Net Cash from Operations $ 1,201 $ 1,112 $ 966 $ 1,377 Capital Expenditures (excluding discontinued operations) (419) (427) (384) (342) Funds Available for Distribution1 $ 782 $ 685 $ 582 $ 1,035 Cash for