Weyerhaeuser Company · NYSE:WY
Weyerhaeuser — Investor Presentation (March 2019)
34 slides from Weyerhaeuser's investor presentation, Mar 4, 2019
Slide 1: Weyerhaeuser Investor Meetings March 2019
WEYERHAEUSER Investor Meetings March 2019
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: Weyerhaeuser Overview
WEYERHAEUSER OVERVIEW WE ARE THE LARGEST PRIVATE OWNER OF OUR TIMBERLANDS IN NORTH AMERICA WOOD WE HAVE OVER PRODUCTS SUPERIOR OPERATIONS ARE 12.212.2 QUALITY, MILLION 85% INDUSTRY MILLIONACRES LEADING DIVERSITY ACRES OF OUR BUSINESS AND ASSETS IN AND TIMBERLANDS LOW COST MARKET REACH WY RYN PCH CTT
Slide 4: 2018 Accomplishments
2018 ACCOMPLISHMENTS CAPITAL ALLOCATION PERFORMANCE ✓ RETURNED NEARLY ✓ GENERATED OVER $1.4 BILLION $2 BILLION to shareholders of EBITDA** for the second year in a row ✓ INCREASED QUARTERLY ✓ INCREASED DIVIDEND by 6% Real Estate & ENR EBITDA ** by ✓ REPURCHASED OVER 10% $365 MILLION of common shares
Slide 5: Driving Financial Performance
DRIVING FINANCIAL PERFORMANCE MARKET LEADING POSITIONS STRONG EARNINGS POWER » across our businesses » from scale timber and land portfolio, and lower volatility wood products operations DEMONSTRATED TRACK RECORD PROVEN COMMITMENT » of improved execution » to disciplined capital allocation ADJUSTED
Slide 6: 2019 Focus Areas
2019 FOCUS AREAS OPERATIONAL Focus on cost, reliability EXCELLENCE » and customers PEOPLE Accelerate development DEVELOPMENT » and build bench strength CAPITAL Maintain disciplined approach ALLOCATION » to drive value for shareholders Reinforce progress and ✓ CULTURE » emphasize focused innovation 6
Slide 7: Weyerhaeuser's Investment Thesis
WEYERHAEUSER’S INVESTMENT THESIS CAPITAL SHAREHOLDER PORTFOLIO PERFORMANCE ALLOCATION VALUE ▪ Premier ▪ Operational ▪ Return cash to timber, land, excellence shareholders SUPERIOR and wood ▪ Most value ▪ Invest in our RELATIVE products from every businesses TOTAL assets acre ▪ SHAREHOLDER Maintain R
Slide 8: Three Business Segments
THREE BUSINESS SEGMENTS REAL ESTATE, WOOD TIMBERLANDS ENERGY & NATURAL PRODUCTS RESOURCES Largest private timberland Maximizing value from Leading wood products owner in the U.S. every acre manufacturer ▪ Unmatched scale and ▪ Premium recreation and ▪ Low-cost and diversity conservation lands well-p
Slide 9: Timberlands: Largest private U.S. owner with unmatched quality, diversity and scale
TIMBERLANDS: Largest private U.S. owner with unmatched quality, diversity and scale ▪ 50 hardwood and softwood species ▪ NORTH Diverse lumber and fiber markets ▪ Premium value hardwood sawlogs 2.4 MILLION ACRES WEST 2.9 MILLION ACRES ▪ High value Douglas fir ▪ Diverse domestic and export customers ▪
Slide 10: Real Estate & ENR: Maximizing the value of every acre
REAL ESTATE & ENR: Maximizing the value of every acre REAL ESTATE ENERGY & NATURAL RESOURCES IDENTIFIED AVO ACRES LEASES & AGREEMENTS North 22% 1.6 South West North MILLION 58% AVO West ACRES 20% South ENR EBITDA MIX Determine timber net present value for 1 60% Aggregates & each acre industrial mine
Slide 11: Wood Products: Industry leading North American producer
WOOD PRODUCTS: Industry leading North American producer 3RD LUMBER PRODUCTION 4TH OSB PRODUCTION 19 LUMBER MILLS 5.0 billion board feet capacity 6 ORIENTED STRAND BOARD MILLS 3.0 billion square feet capacity 1 MEDIUM DENSITY FIBERBOARD MILL ST 6 ENGINEERED WOOD MILLS 265 million square feet capacity
Slide 12: Weyerhaeuser's Investment Thesis
WEYERHAEUSER’S INVESTMENT THESIS CAPITAL SHAREHOLDER PORTFOLIO PERFORMANCE ALLOCATION VALUE ▪ Premier ▪ Operational ▪ Return cash to timber, land, excellence shareholders SUPERIOR and wood ▪ Most value ▪ Invest in our RELATIVE products from every acre businesses TOTAL assets ▪ SHAREHOLDER Maintain R
Slide 13: 2019 OpX Targets
2019 OPX TARGETS 275 $40-50 250 225 ACHIEVED $543 MM 200 2014-2018 TARGET 175 $80-$100 MM IN 2019 150 125 $20 $10 $214 100 $10-15 $1-5 75 50 $ MILLIONS MILLIONS $ $99 $83 $75 $72 25 0 TIMBERLANDS LUMBER OSB EWP DISTRIBUTION » KEY INITIATIVES » ▪ Harvest and transportation ▪ Reliability ▪ Controllabl
Slide 14: Performance: #1 or #2 in all business lines
PERFORMANCE: #1 or #2 in all business lines ADJUSTED EBITDA* ADJUSTED EBITDA MARGIN* / ACRE OWNED WESTERN TIMBERLANDS LUMBER+ ORIENTED STRAND BOARD 30% 50% $240 25% 40% $200 20% 30% $160 15% 20% 10% $120 10% 5% $80 0% 0% $40 -5% -10% 2011 2012 2013 2014 2015 2016 2017 2018 2011 2012 2013 2014 2015 2
Slide 15: Real Estate & ENR: OpX progress and targets
REAL ESTATE & ENR: OpX progress and targets PREMIUM TO TIMBER VALUE ADJUSTED EBITDA* $264 MM 65% $241 MM 55% TARGET $260 MM IN 2019 2017 2018 2017 2018 » KEY INITIATIVES » ▪ Continually refine AVO acreage ▪ Exceed 30% premium to timber value ▪ Capture additional value from surface and subsurface ass
Slide 16: Weyerhaeuser's Investment Thesis
WEYERHAEUSER’S INVESTMENT THESIS CAPITAL SHAREHOLDER PORTFOLIO PERFORMANCE ALLOCATION VALUE ▪ Premier ▪ Operational ▪ Return cash to timber, land, excellence shareholders SUPERIOR and wood ▪ Most value ▪ Invest in our RELATIVE products from every businesses TOTAL assets acre ▪ SHAREHOLDER Maintain R
Slide 17: Returning Cash to Shareholders
RETURNING CASH TO SHAREHOLDERS SUSTAINABLE AND GROWING OPPORTUNISTIC DIVIDEND SHARE REPURCHASE Quarterly dividend per share INCREASED $0.4 127% $0.34 2018 billion SINCE 2011 $0.32 $0.31 $0.29 REPURCHASED $0.22 $3.1 $0.20 BILLION 2017 $2.7 $0.17 - SINCE 2014 $0.15 billion 2014 2011 2012 2013 2013 201
Slide 18: Investing in Our Businesses: Disciplined capital expenditures for 2019
INVESTING IN OUR BUSINESSES: Disciplined capital expenditures for 2019 $120 million of sustaining capex TIMBERLANDS » Reforestation and silviculture Roads and infrastructure $270 million; lower than 2018 WOOD PRODUCTS » Maintenance capex Projects to reduce cost and improve productivity REAL ESTATE,
Slide 19: Maintain Appropriate Capital Structure
MAINTAIN APPROPRIATE CAPITAL STRUCTURE DEBT FINANCIAL RATIOS CREDIT RATINGS ▪ $6.2 billion long-term ▪ Achieved target ratios ▪ Solid investment grade debt outstanding* ▪ Target: Net debt to ▪ Moody’s: Baa2 stable ‒ 96% fixed rate Adjusted EBITDA ≤ 3.5x ▪ S&P: BBB stable ‒ Refinanced 2019 maturity o
Slide 20: Weyerhaeuser's Investment Thesis
WEYERHAEUSER’S INVESTMENT THESIS CAPITAL SHAREHOLDER PORTFOLIO PERFORMANCE ALLOCATION VALUE ▪ Premier ▪ Operational ▪ Return cash to timber, land, excellence shareholders SUPERIOR and wood ▪ Most value ▪ Invest in our RELATIVE products from every acre businesses TOTAL assets ▪ SHAREHOLDER Maintain R
Slide 21: Continued Growth in U.S. Housing Market
CONTINUED GROWTH IN U.S. HOUSING MARKET U.S. HOUSING STARTS KEY DRIVERS SEASONALLY ADJUSTED ANNUAL RATE 2.5 Forecast* ▪ U.S. housing starts below trend levels 2.0 ▪ Multi-family Strong household formations Single-family ▪ 1.5 Solid economic fundamentals FEA ▪ RISI Favorable demographics 1.0 ▪ MILLIO
Slide 22: Lumber: Strong demand growth and rising operating rates
LUMBER: Strong demand growth and rising operating rates KEY DRIVERS NORTH AMERICAN LUMBER CONSUMPTION BY END USE, 2018 ▪ Demand rising with repair & remodel and New new residential construction activity Repair & Residential Remodel 29% ▪ Demand growth expected to outpace 40% industry capacity additi
Slide 23: Lumber: Canadian supply decreasing
LUMBER: Canadian supply decreasing KEY DRIVERS CANADIAN LUMBER EXPORTS TO U.S. 25 40% Canadian Lumber Exports to U.S. ▪ Canadian Share of U.S. Consumption 35% Canadian share of US lumber market 20 decreased to 28% in 2018 30% 25% - 20% duties on Canadian lumber 15 20% - Log supply declining due to B
Slide 24: Western Sawlogs: Domestic and export markets support continued favorable demand
WESTERN SAWLOGS: Domestic and export markets support continued favorable demand KEY DRIVERS JAPAN HOUSING STARTS 1.0 WOOD-BASED ▪ Steady Japanese demand for premium logs 0.8 ▪ Chinese growth supports continued demand 0.6 for U.S. logs 0.4 ▪ Domestic demand increasing as housing 0.2 MILLION MILLION U
Slide 25: Southern Sawlogs: Improving demand and pricing
SOUTHERN SAWLOGS: Improving demand and pricing KEY DRIVERS U.S. SOUTH CAPACITY ADDITIONS 2017-2021 ▪ New Southern lumber capacity coming online Over ▪ Emerging Southern log export programs 5.5 BBF Announced ▪ WY uniquely positioned to benefit - Aligned with rising production across the South - Well
Slide 26: OSB: Continued strong market fundamentals
OSB: Continued strong market fundamentals KEY DRIVERS NORTH AMERICAN OSB CONSUMPTION BY END USE, 2018 ▪ Demand rising with repair & remodel and new Repair & Remodel residential construction activity 25% ▪ New Operating rates exceeded 90% in 2018 Residential 54% ▪ Industry capacity growth serving ris
Slide 27: Weyerhaeuser's Investment Thesis
WEYERHAEUSER’S INVESTMENT THESIS CAPITAL SHAREHOLDER PORTFOLIO PERFORMANCE ALLOCATION VALUE ▪ Premier ▪ Operational ▪ Return cash to timber, land, excellence shareholders SUPERIOR and wood ▪ Most value ▪ Invest in our RELATIVE products from every acre businesses TOTAL assets ▪ SHAREHOLDER Maintain R
Slide 28: Appendix
APPENDIX 28
Slide 29: Our Vision: Working together to be the world's premier timber, land, and forest products company
Working together to be the world’s premier OUR VISION timber, land, and forest products company HOW WE WIN hil CORE RELENTLESS VALUES FOCUS * Safety + Develop our people + Integrity + Deliver the most * Citizenship value from every acre * Sustainability * Drive operational excellence * Optimize capi
Slide 30: Strong ESG Reputation: More than a Century of Industry-Leading Practices
STRONG ESG REPUTATION: More than a Century of Industry-Leading Practices WE ARE THE ONLY ETHISPHERE named We are in the We have a North American forestry us one of the top 100 Best “Winning” rating or wood products World’s Most Ethical Corporate Citizens, from 2020 Women company on the Companies® ac
Slide 31: Adjusted EBITDA Reconciliation: Timberlands
ADJUSTED EBITDA RECONCILIATION: Timberlands $ Millions 2011 2012 2013 2014 2015 2016 2017 2018 West $279 $258 $373 $571 $459 $443 $508 $532 South 226 298 328 410 430 426 383 351 North 29 28 32 47 41 26 23 19 Other (15) (8) 46 2 7 6 22 0 Adjusted EBITDA including Legacy Plum $519 $576 $779 $1,030 $93
Slide 32: Adjusted EBITDA Reconciliation: Wood Products
ADJUSTED EBITDA RECONCILIATION: Wood Products $ Millions 2011 2012 2013 2014 2015 20161 2017 2018 Lumber ($7) $130 $317 $319 $212 $289 $459 $459 OSB (4) 143 247 46 41 183 359 329 EWP 6 17 45 79 114 145 173 177 Distribution (37) (29) (33) 2 10 25 38 32 Other (1) (15) (2) - (5) (1) (12) (10) Adjusted
Slide 33: Adjusted EBITDA Reconciliation: Real Estate, Energy & Natural Resources
ADJUSTED EBITDA RECONCILIATION: Real Estate, Energy & Natural Resources $ Millions 2017 2018 Adjusted EBITDA1 $241 $264 Depletion, Depreciation & Amortization (15) (14) Basis of Real Estate Sold (81) (124) Operating Income (GAAP) $145 $126 Interest Income and Other 1 1 Net Contribution to Earnings $
Slide 34: Adjusted Cash from Operations Reconciliation
ADJUSTED CASH FROM OPERATIONS RECONCILIATION $ Millions 2016 2017 2018 Adjusted Cash from Operations1 $1,229 $1,393 $1,508 Cash paid for income taxes related to the sale of our Cellulose Fibers businesses (494) — — Cash paid for product remediation — (192) (96) Cash contribution to our U.S. qualifie