Weyerhaeuser Company · NYSE:WY
Weyerhaeuser — Q2 2022 Earnings Presentation
30 slides from Weyerhaeuser's earnings presentation, Jul 29, 2022
Slide 1: 2022 Earnings Results, Second Quarter 2022
2022 EARNINGS RESULTS SECOND QUARTER 2022 | July 29, 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 Q2 Consolidated Results
2022 Q2 CONSOLIDATED RESULTS $ Millions 2022 2022 $ Millions (except EPS) 2022 2022 Adjusted EBITDA Q1 Q2 Change Consolidated Statement of Q1 Q2 Timberlands $ 247 $ 219 $ (28) Operations Before Special Items Real Estate, Energy & Natural Resources 116 107 (9) Net sales $ 3,112 $ 2,973 Wood Products
Slide 4: Earnings Before Special Items
EARNINGS BEFORE SPECIAL ITEMS $ Millions (except EPS) 2022 Q1 2022 Q2 Pretax After-Tax Diluted Pretax After-Tax Diluted Earnings Earnings EPS Earnings Earnings EPS Earnings Before Special Items $ 1,256 $ 978 $ 1.31 $ 972 $ 788 $ 1.06 Special Items: Loss on debt extinguishment 276 207 0.28 — — — Tota
Slide 5: 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 $990 $100 $96 $91 $746 $674 $660 $60 $49 $50 $330 $0 $0 Q1.21 Q2.21 Q3.21 Q4.21 Q1.22 Q2.22 Q1.21 Q2.21 Q3.21 Q4.21 Q1.22 Q2.22 Real Estate $ 76 66 38 27 87 83 ENR $ 20 25
Slide 6: Timberlands Segment
TIMBERLANDS SEGMENT TIMBERLANDS ($ Millions) 2022 2022 TIMBERLANDS ($ Millions) 2022 2022 Adjusted EBITDA by Region Q1 Q2 Segment Statement of Operations Q1 Q2 West $ 165 $ 144 Third-party sales $ 465 $ 515 South 80 75 Intersegment sales 161 156 North 4 2 Total Sales 626 671 Other (2) (2) Costs of s
Slide 7: Timberlands Key Drivers: 2022 Q2 vs. 2022 Q1
TIMBERLANDS KEY DRIVERS: 2022 Q2 vs. 2022 Q1 REGION KEY DRIVERS WEST • Fee Harvest Volumes: Moderately lower, unseasonably wet weather • Sales Volumes: Significantly higher, primarily for Japan, slightly lower for domestic • Sales Realizations: Moderately higher, primarily for export, moderately low
Slide 8: 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 $173.35 $38.47 3,600 $180 7,000 $35.56 $36.55 $37.15 $40 $161.29 $34.50 $35.11 $146.39 Volumes (Thousands of tons) $145.64 $137.80 Volumes (Thousands of tons) 3,00
Slide 9: Fee Harvest Volumes and Intersegment Sales Volumes
FEE HARVEST VOLUMES AND INTERSEGMENT SALES VOLUMES FEE HARVEST VOLUMES INTERSEGMENT LOG SALES VOLUMES 7,500 1,500 6,160 6,159 1,263 1,220 1,224 1,189 1,206 5,856 5,912 5,842 6,250 5,376 1,200 1,099 Thousands of tons Thousands of tons 5,000 900 779 799 761 741 733 721 3,750 2,240 600 2,101 2,099 1,93
Slide 10: Real Estate, Energy & Natural Resources (ENR) Segment
REAL ESTATE, ENERGY & NATURAL RESOURCES (ENR) SEGMENT REAL ESTATE & ENR ($ Millions) 2022 2022 REAL ESTATE & ENR ($ Millions) 2022 2022 Adjusted EBITDA by Business Q1 Q2 Segment Statement of Operations Q1 Q2 Real Estate $ 87 $ 83 Total sales $ 128 $ 117 Energy & Natural Resources 29 24 Costs of sale
Slide 11: Real Estate, Energy & Natural Resources (ENR) Segment: Acres Sold
REAL ESTATE, ENERGY & NATURAL RESOURCES (ENR) SEGMENT ACRES SOLD AVERAGE PRICE PER ACRE 50 $7,000 45 $6,316 40 $6,000 35 31 $5,000 Acres (thousands) Price per acre 30 $4,385 27 24 $3,785 $4,000 $3,803 19 $4,005 20 18 $3,000 $3,227 $3,215 11 10 $1,992 7 $2,000 $1,501 1 $1,381 0 $1,000 Q1.20 Q2.20 Q3.
Slide 12: Wood Products Segment
WOOD PRODUCTS SEGMENT WOOD PRODUCTS ($ Millions) 2022 2022 WOOD PRODUCTS ($ Millions) 2022 2022 Adjusted EBITDA by Business Q1 Q2 Segment Statement of Operations Q1 Q2 Lumber $ 648 $ 359 Total sales $ 2,519 $ 2,341 OSB 392 332 Costs of sales 1,276 1,414 Engineered Wood Products 136 173 Gross margin
Slide 13: Wood Products Key Drivers: 2022 Q2 vs. 2022 Q1
WOOD PRODUCTS KEY DRIVERS: 2022 Q2 vs. 2022 Q1 BUSINESS KEY DRIVERS LUMBER • Sales Realizations: Decreased 25% • Sales Volumes: Significantly higher, seasonal inventory drawdown and improved production • Production Volumes: Slightly higher • Unit Manufacturing Costs: Slightly higher • Log Costs: Sli
Slide 14: 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 2,700 $592 $660 3,000 $490 $570 $516 1,8
Slide 15: Unallocated Items
UNALLOCATED ITEMS UNALLOCATED ITEMS ($ Millions) 1 2022 2022 UNALLOCATED ITEMS ($ Millions)1 2022 2022 Q1 Q2 Q1 Q2 Unallocated corporate function expenses and variable Costs of sales 3 $ (68) $ 9 $ (31) $ (36) compensation expense G&A expense 4 (27) (36) Liability classified share-based compensation
Slide 16: Financial Items
FINANCIAL ITEMS KEY FINANCIAL METRICS ($ Millions) 2022 2022 Q1 Q2 Cash Flow from Operations $1,500 $1,308 Ending Cash Balance $ 1,205 $ 1,723 $1,146 $1,200 Total Debt $ 5,053 $ 5,053 $957 $900 $ Millions $698 $659 Net Debt to Adjusted EBITDA (LTM)1 0.9 0.8 $600 Net Debt to Enterprise Value 2 12% 12
Slide 17: Adjusted Funds Available for Distribution: Allocation Framework
ADJUSTED FUNDS AVAILABLE FOR DISTRIBUTION Allocation Framework and Cash Return Calculation TARGETED RETURN OF CASH ADJUSTED FUNDS AVAILABLE FOR DISTRIBUTION1 TO SHAREHOLDERS ALLOCATION FRAMEWORK Calculated on an Annual Basis Return 75-80% of Adj. FAD to Shareholders Adjusted FAD SUSTAINABLE BASE DIV
Slide 18: Adjusted Funds Available for Distribution: Cash Return Update
ADJUSTED FUNDS AVAILABLE FOR DISTRIBUTION1 Cash Return To Shareholders Update TARGETED RETURN OF CASH TO SHAREHOLDERS Based on 2022 Q2 YTD Results and Activity ADJUSTED FUNDS AVAILABLE FOR DISTRIBUTION ($ Millions) 2022 Q2 Q2 YTD $ MM Net Cash from Operations $ 1,146 $ 2,103 Capital Expenditures 2 (
Slide 19: 2022 Q3 Outlook
2022 Q3 OUTLOOK EXPECTED EARNINGS1 SEGMENT KEY DRIVERS & ADJUSTED EBITDA TIMBERLANDS Lower than 2022 Q2, West South North but moderately higher Fee Harvest Volumes: Fee Harvest Volumes: Fee Harvest Volumes: than 2021 Q3 Comparable Moderately higher Significantly higher Sales Volumes: Sales Realizati
Slide 20: 2022 Outlook: Update
2022 OUTLOOK: UPDATE DRIVER UPDATED 2022 OUTLOOK PRIOR 2022 OUTLOOK Approximately 34.5 million tons Unchanged • South: Moderately higher than 2021 FEE HARVEST VOLUME • West: Slightly higher than 2021 • North: Moderately lower than 2021 REAL ESTATE & ENR ADJUSTED EBITDA $325 million $300 million BASI
Slide 21: Wood Products Sales Realizations: Current vs. 2022 Q2
WOOD PRODUCTS SALES REALIZATIONS: CURRENT VS. 2022 Q2 WEYERHAEUSER’S AVERAGE SALES REALIZATIONS Approximate Change As of July 22, 2022 LUMBER1 Q3 QTD vs. WY’s -$195/MBF LOWER SENSITIVITY Q2 AVERAGE CHANGE IN REALIZATIONS $10/MBF ≈ $50 million CURRENT vs. EBITDA -$185/MBF LOWER ANNUALLY Q2 AVERAGE OS
Slide 22: Earnings Summary
EARNINGS SUMMARY $ Millions (except EPS) 2021 2022 Adjusted EBITDA by Segment Q1 Q2 Q3 Q4 Q1 Q2 Timberlands $ 172 $ 180 $ 165 $ 176 $ 247 $ 219 Real Estate, Energy & Natural Resources 96 91 60 49 116 107 Wood Products 889 1,386 565 517 1,233 912 Unallocated Items (56) (84) (44) (68) (99) (33) Total
Slide 23: Earnings Per Share Reconciliation
EARNINGS PER SHARE RECONCILIATION 2021 2022 Q1 Q2 Q3 Q4 Q1 Q2 Diluted EPS Before Special Items $ 0.91 $ 1.37 $ 0.60 $ 0.49 $ 1.31 $ 1.06 Special Items: Loss on debt extinguishment — — — — 0.28 — Legal benefit — — — 0.01 — — Product remediation recovery — — — 0.04 — — Gain on sale of timberlands — —
Slide 24: Adjusted EBITDA Reconciliation: By Segment
ADJUSTED EBITDA RECONCILIATION By Segment $ Millions 2019 2020 2021 2022 1 FY FY Q1 Q2 Q3 Q4 FY Q1 Q2 LTM Timberlands $ 680 $ 610 $ 172 $ 180 $ 165 $ 176 $ 693 $ 247 $ 219 $ 807 Real Estate & ENR 274 241 96 91 60 49 296 116 107 332 Wood Products 476 1,527 889 1,386 565 517 3,357 1,233 912 3,227 Unal
Slide 25: Adjusted EBITDA Reconciliation: Timberlands
ADJUSTED EBITDA RECONCILIATION Timberlands $ Millions 2021 2022 Q1 Q2 Q3 Q4 Q1 Q2 West $ 101 $ 103 $ 90 $ 93 $ 165 $ 144 South 69 76 76 80 80 75 North 3 2 1 3 4 2 Other (1) (1) (2) — (2) (2) Total Timberlands Adjusted EBITDA 1 $ 172 $ 180 $ 165 $ 176 $ 247 $ 219 West (28) (28) (24) (25) (28) (26) So
Slide 26: 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 Real Estate $ 76 $ 66 $ 38 $ 27 $ 87 $ 83 Energy & Natural Resources 20 25 22 22 29 24 Total Real Estate & ENR Adjusted EBITDA 1 $ 96 $ 91 $ 60 $ 49 $ 116 $ 107 Depletion, depreciation & amo
Slide 27: Adjusted EBITDA Reconciliation: Wood Products
ADJUSTED EBITDA RECONCILIATION Wood Products $ Millions 2021 2022 Q1 Q2 Q3 Q4 Q1 Q2 Lumber $ 513 $ 804 $ 118 $ 195 $ 648 $ 359 OSB 300 472 344 176 392 332 EWP 42 53 76 114 136 173 Distribution 39 75 22 40 72 48 Other (5) (18) 5 (8) (15) — Total Wood Products Adjusted EBITDA 1, 2 $ 889 $ 1,386 $ 565
Slide 28: Adjusted EBITDA Reconciliation: Unallocated
ADJUSTED EBITDA RECONCILIATION Unallocated $ Millions 2021 2022 Q1 Q2 Q3 Q4 Q1 Q2 1 Total Unallocated Adjusted EBITDA $ (56) $ (84) $ (44) $ (68) $ (99) $ (33) Total depletion, depreciation & amortization (2) (1) (2) — (2) (1) Special items included in operating loss — — — 15 — — Operating Loss (GAA
Slide 29: Net Debt to Adjusted EBITDA Reconciliation
NET DEBT TO ADJUSTED EBITDA RECONCILIATION $ Millions 2021 2022 Q1 Q2 Q3 Q4 Q1 Q2 Net Debt to Adjusted EBITDA (LTM) 1, 2 1.5 0.9 0.7 0.8 0.9 0.8 Total debt $ 5,475 $ 5,250 $ 5,250 $ 5,099 $ 5,053 $ 5,053 Less: cash and cash equivalents 1,016 1,777 2,326 1,879 1,205 1,723 Net Debt $ 4,459 $ 3,473 $ 2
Slide 30: 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 YTD Net Cash from Operations $ 966 $ 1,529 $ 3,159 $ 957 $ 1,146 $ 2,103 Capital Expenditures (384) (281) (441) (70) (81) (151) Funds Available for Distribution 1