Weyerhaeuser Company · NYSE:WY
Weyerhaeuser — Non-Deal Roadshow (September 2016)
31 slides from Weyerhaeuser's roadshow presentation, Sep 7, 2016
Slide 1: Investor Meetings | September 2016
Working together to be the world’s premier timber, land, and forest products company Investor Meetings | September 2016 1
Slide 2: Forward-Looking Statements and Non-GAAP Financial Measures
FORWARD-LOOKING STATEMENTS AND NON-GAAP FINANCIAL MEASURES 2 This presentation contains statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, including, without limitation, with respect to future prospects, business str
Slide 3: Progress Update
3 PROGRESS UPDATE COMMITMENT PROGRESS • Sale of liquid packaging board business closed Aug 31 • Sale of pulp mills to close in Q4 • Collective proceeds of approx. $2.5B, or $1.8B after-tax • Printing papers JV: working with prospective buyers • On track to meet or exceed $100MM “run rate” cost syner
Slide 4: Weyerhaeuser's Transformation
WEYERHAEUSER’S TRANSFORMATION 4 TIMBERLANDS WOOD PRODUCTS CELLULOSE FIBERS WOOD PRODUCTS WRECO • Acquired Longview Timber • Divested WRECO • Merged with Plum Creek • Divesting Cellulose Fibers *Book value of assets by business segment. Excludes Unallocated items. Timberlands includes Real Estate and
Slide 5: How We Win / What It Looks Like
HOW WE WIN WHAT IT LOOKS LIKE Vv vW KEY WEYERHAEUSER BEHAVIORS A TRULY GREAT COMPANY + Safety + Develop + Act with urgency our people « Integrity + | + Be accountable = Deliver the most + Citizenship : excellence + Be innovative | | + Sustainability * Drive operational | + Keep it simple | | | * Opt
Slide 6: Weyerhaeuser's Investment Thesis
WEYERHAEUSER’S INVESTMENT THESIS FOCUSED ON DRIVING VALUE FOR SHAREHOLDERS 6 • Operational excellence • Most value from every acre • Return cash to shareholders • Invest in our businesses • Maintain appropriate capital structure • Premier timber, land, and wood products assets Superior relative tota
Slide 7: Three Business Segments
THREE BUSINESS SEGMENTS TIMBERLANDS REAL ESTATE, ENERGY & NATURAL RESOURCES WOOD PRODUCTS 7 LARGEST PRIVATE TIMBERLAND OWNER IN THE U.S. • 13 million acres • Unparalleled scale • Highly productive • Sustainably certified LEADER IN MAXIMIZING VALUE FROM EVERY ACRE • Premium recreation and conservatio
Slide 8: Unmatched Timberland Portfolio
UNMATCHED TIMBERLAND PORTFOLIO Note: 13 million acres includes 323,000 acres owned in Uruguay (not shown). Source: WY 2015 10-K, PCL 2015 10-K 8 13 MILLION ACRES Western Region Southern Region Northern Region
Slide 9: Real Estate: Maximize value of each of our million acres
9 REAL ESTATE: Maximize value of each of our 13 million acres ENERGY & NATURAL RESOURCES • Capture value of all surface and subsurface assets – Oil and natural gas – Construction materials and minerals – Wind resources HIGHER AND BETTER USE (HBU) • Capture premium values above timberland value – Rec
Slide 10: Real Estate: Delivering the most value from each acre
REAL ESTATE: Delivering the most value from each acre 10 10 Growing & Harvesting Timber Conservation HBU Identify Opportunities to Capture Premium Value (Asset Value Optimization — AVO) ASSESS PROPERTY ATTRIBUTES distance to cities and amenities, access to roads, water, percent uplands Determine Tim
Slide 11: Leading Wood Products Portfolio
• Continued improvement through operational excellence • Well-positioned to benefit from improving housing markets 11 LEADING WOOD PRODUCTS PORTFOLIO * Capacity if mills produce exclusively solid section product. Three engineered wood products facilities also produce engineered I-Joists to meet mark
Slide 12: Weyerhaeuser's Investment Thesis
WEYERHAEUSER’S INVESTMENT THESIS FOCUSED ON DRIVING VALUE FOR SHAREHOLDERS 12 • Operational excellence • Most value from every acre • Return cash to shareholders • Invest in our businesses • Maintain appropriate capital structure • Premier timber, land, and wood products assets Superior relative tot
Slide 13: Gains from Operational Excellence
GAINS FROM OPERATIONAL EXCELLENCE 13 Timberlands Lumber OSB ELP Distribution Cellulose Fibers $39 MM $21 MM $24 MM $35 MM EBITDA* $8 MM EBITDA* $47 MM $25 MM $25 MM $10 MM $35 MM EBITDA* $28 MM $34 MM EBITDA* OpX CAPTURED THROUGH 2015 $157 MM $174 MM $330 MILLION 2014 RESULTS 2015 RESULTS *Adjusted
Slide 14: Timberlands: Relative Performance
14 TIMBERLANDS: Relative Performance EBITDA* / ACRE OWNED U.S. WEST EBITDA* / ACRE OWNED U.S. SOUTH Source for competitor data: public SEC filings, National Council of Real Estate Investment Fiduciaries (NCREIF). *Adjusted EBITDA. See appendix for reconciliation to GAAP amounts. **WY excludes Real E
Slide 15: Timberlands: What Does OpX Mean
TIMBERLANDS: What Does OpX Mean WE PRODUCE LOGS AND WE HAVE OPPORTUNITIES TO IMPROVE AT EVERY STAGE OF THE PROCESS SEEDLINGS PLANTING SILVICULTURE HARVEST TRANSPORT MARKETING 15
Slide 16: Timberlands: OpX Performance
16 TIMBERLANDS: OpX Performance KEY INITIATIVES SEEDLINGS • Nursery & orchard operating cost • Seedling handling efficiency PLANTING & SILVICULTURE • Benchmark both companies to improve treatment costs and product yield HARVEST & TRANSPORTATION • Harvest technology, planning & methods • Transportati
Slide 17: Wood Products: OpX
EBITDA IMPROVEMENT* 17 WOOD PRODUCTS: OpX LUMBER • Rigorous cost control • Improved recovery • Capture full benefit of focused capital investments PROGRESS GOAL $46 MM $15-20 MM 2 0 1 4 -1 5 2 0 1 6 $100 MM TOTAL GOAL • Reliability • Controllable costs • Enhanced product mix PROGRESS GOAL $34 MM $15
Slide 18: Wood Products: Relative Performance
18 WOOD PRODUCTS: Relative Performance LUMBER EBITDA MARGIN* RELATIVE PERFORMANCE -5% 0% 5% 10% 15% 20% 2011 2012 2013 2014 2015 2016 Q2 YTDCanfor Lumber Interfor Lumber West Fraser Lumber WY Lumber EWP EBITDA MARGIN* RELATIVE PERFORMANCE -3% 0% 3% 6% 9% 12% 15% 18% 2011 2012 2013 2014 2015 2016 Q2
Slide 19: Weyerhaeuser's Investment Thesis
WEYERHAEUSER’S INVESTMENT THESIS FOCUSED ON DRIVING VALUE FOR SHAREHOLDERS 19 • Operational excellence • Most value from every acre • Return cash to shareholders • Invest in our businesses • Maintain appropriate capital structure • Premier timber, land, and wood products assets Superior relative tot
Slide 20: Returning Cash to Shareholders
RETURNING CASH TO SHAREHOLDERS 20 $0.15 $0.17 $0.20 $0.22 $0.29 $0.31 2011 Q1 2012 Q4 2013 Q2 2013 Q3 2014 Q3 2015 Q3 QUARTERLY DIVIDEND PER SHARE $2.5 BILLION AUTHORIZED $2.0 BILLION COMPLETE THROUGH JULY 2016 SUSTAINABLE AND GROWING DIVIDEND SHARE REPURCHASE
Slide 21: Investing in Our Businesses
TIMBERLANDS – Silviculture – Roads and infrastructure WOOD PRODUCTS – Projects to reduce costs and improve productivity – Maintenance CAPEX REAL ESTATE, ENERGY & NATURAL RESOURCES – Primarily entitlement activities 21 INVESTING IN OUR BUSINESSES * Excludes Cellulose Fibers. 2015 capital expenditures
Slide 22: Capital Structure
• Committed to solid investment grade credit rating • Partial draw of $2.5 billion post-merger term loans – 18 month loans at favorable floating rates (LIBOR +1.05%) – Attractive delayed draw provisions • Term loans to be paid down primarily through asset sales • Target net debt / Adjusted EBITDA <
Slide 23: Weyerhaeuser's Investment Thesis
WEYERHAEUSER’S INVESTMENT THESIS FOCUSED ON DRIVING VALUE FOR SHAREHOLDERS 23 • Operational excellence • Most value from every acre • Return cash to shareholders • Invest in our businesses • Maintain appropriate capital structure • Premier timber, land, and wood products assets Superior relative tot
Slide 24: Continued Growth in U.S. Housing Market
24 CONTINUED GROWTH IN U.S. HOUSING MARKET • U.S. housing starts still well below trend levels • Strength in domestic economy, demographics, and rising employment boost household formations • Anticipate 1.2 million starts in 2016 • Continued growth in single- family share TOTAL U.S. HOUSING STARTS S
Slide 25: Western Sawlogs: Positive Outlook
0 100 200 300 400 500 600 700 800 900 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 $/ M B F Annual Forecast* Source: Log Lines, *FEA, *RISI RISI FEA 25 WESTERN SAWLOGS: POSITIVE OUTLOOK • Stable demand for Japan wood housing • Positive long-term growth in China market • Significant runway
Slide 26: Southern Sawlogs: Positive Outlook
20 30 40 50 60 70 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 $/ G re en T on Annual Forecast* Source: Timber Mart-South, *FEA, *RISI RISI FEA 26 SOUTHERN SAWLOGS: POSITIVE OUTLOOK 0 5 10 15 20 25 4 20 5 20 6 2007 2008 2009 2010 2011 2012 2013 2014 2015 BB F of L um be r Annual Sourc
Slide 27: Lumber: Improving Demand and Pricing
27 LUMBER: IMPROVING DEMAND AND PRICING • Continued growth in U.S. housing • Growth in repair & remodel • Rising operating rates • Pine beetle drives decline in Canadian log supply and lumber production SENSITIVITY $10/MBF ≈ $40 MM Growth in U.S. Repair & Remodel Expenditures KEY DRIVERS Canadian Sh
Slide 28: OSB: Improving Demand and Pricing
100 150 200 250 300 350 400 450 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 $/ M SF Quarterly Sources: Random Lengths, *RISI, *FEA. Q3 average as of Aug 26. Forecast* RISI FEA Q3 Avg X 28 OSB: IMPROVING DEMAND AND PRICING • Improving housing starts and increasing single-fam
Slide 29: Appendix
APPENDIX
Slide 30: Adjusted EBITDA Reconciliation: Timberlands
30 ADJUSTED EBITDA RECONCILIATION: TIMBERLANDS $ Millions 2011 2012 2013 2014 2015 West $279 $258 $373 $571 $459 South 226 298 328 410 430 North 29 28 32 47 41 Other (15) (8) 46 2 7 Adjusted EBITDA including Legacy Plum Creek operations1 $519 $576 $779 $1,030 $937 Less: EBITDA attributable to Plum C
Slide 31: Adjusted EBITDA Reconciliation: Wood Products
ADJUSTED EBITDA RECONCILIATION: WOOD PRODUCTS $ Millions 2011 2012 2013 2014 2015 2016 Q2 YTD1 Lumber ($7) $130 $317 $319 $212 $147 OSB (4) 143 247 46 41 74 EWP 6 17 45 79 114 76 Distribution (37) (29) (33) 2 10 13 Other (1) (15) (2) - (5) (4) Adjusted EBITDA2 ($43) $246 $574 $446 $372 $306 Depletio