Weyerhaeuser Company · NYSE:WY
Weyerhaeuser — Non-Deal Roadshow (March 2018)
34 slides from Weyerhaeuser's roadshow presentation, Mar 1, 2018
Slide 1: Weyerhaeuser Investor Meetings March 2018
WEYERHAEUSER INVESTOR MEETINGS March 2018
Slide 2: Forward-Looking Statements and Non-GAAP Financial Measures
FORWARD-LOOKING STATEMENTS AND NON-GAAP FINANCIAL MEASURES 2 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 g
Slide 3: Weyerhaeuser's Investment Thesis Focused on Driving Value for Shareholders
WEYERHAEUSER’S INVESTMENT THESIS FOCUSED ON DRIVING VALUE FOR SHAREHOLDERS 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 TOTAL
Slide 4: 2017 Accomplishments
2017 ACCOMPLISHMENTS 4 ACHIEVED $160 MILLION OF COST SYNERGIES AND OVERHEAD COST REDUCTIONS SIMPLIFIED PORTFOLIO AND RECEIVED $700 MILLION OF PROCEEDS GENERATED MORE THAN $1 BILLION OF WOOD PRODUCTS EBITDA INCREASED ADJUSTED EBITDA MORE THAN 30% CAPTURED NEARLY $140 MILLION OF OPX INCREASED QUARTE
Slide 5: Weyerhaeuser's Investment Thesis Focused on Driving Value for Shareholders
WEYERHAEUSER’S INVESTMENT THESIS FOCUSED ON DRIVING VALUE FOR SHAREHOLDERS 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 TOTAL
Slide 6: Focused Portfolio of Scale Assets
0 FOCUSED PORTFOLIO OF SCALE ASSETS UNMATCHED QUALITY & SCALE 6 6 MILLION ACRES 7 MILLION ACRES 12.4 MILLION ACRES ONE OF THE LARGEST REITS IN THE U.S. LOW COST & INDUSTRY LEADING WOOD PRODUCTS FACILITIES 45%Business Assets in Timberlands 58% 87% TODAY20132012 WORLD CLASS TIMBERLANDS ASSETS DIVESTED
Slide 7: Three Business Segments
THREE BUSINESS SEGMENTS TIMBERLANDS REAL ESTATE, ENERGY & NATURAL RESOURCES WOOD PRODUCTS Largest private timberland owner in the U.S. Unmatched scale and diversity Superior quality and productivity Sustainably certified Maximizing value from every acre Premium recreation and conservation la
Slide 8: Largest Private Timberland Owner in the U.S.
LARGEST PRIVATE TIMBERLAND OWNER IN THE U.S. 8 QUALITY, DIVERSITY & SCALE ARE UNMATCHED NORTH 2.5 MILLION ACRES WEST 2.9 MILLION ACRES SOUTH 7.0 MILLION ACRES 100% CERTIFIED TO SUSTAINABLE STANDARDS Total acres as of December 31, 2017.
Slide 9: Real Estate & ENR: Maximizing the Value of Every Acre
REAL ESTATE & ENR: Maximizing the value of every acre 9 1.6 MILLION AVO ACRES North 23% of AVO acres West 21% of AVO acres South 56% of AVO acres Determine timber net present value for each acre1 Identify opportunities to capture premium value (Asset Value Optimization — AVO) 2 3 Deliver a premium t
Slide 10: Industry Leading North American Wood Products Producer
INDUSTRY LEADING NORTH AMERICAN WOOD PRODUCTS PRODUCER 10 LUMBER PRODUCTION 3RD OSB PRODUCTION 4TH $5.0 Revenue and statistics for full year 2017. Engineered Wood revenue includes solid section and I-Joist products. *Production capacity for engineered wood mills represents total press capacity. Thre
Slide 11: Weyerhaeuser's Investment Thesis Focused on Driving Value for Shareholders
WEYERHAEUSER’S INVESTMENT THESIS FOCUSED ON DRIVING VALUE FOR SHAREHOLDERS 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 TOTAL
Slide 12: Timberlands: OpX Performance
2014-16 RESULTS PROGRESS $106 MM $66 MM TIMBERLANDS: OpX performance OPERATIONAL EXCELLENCE KEY INITIATIVES Maximize value from log merchandising and marketing Continued rollout of silviculture best practices Increase logging and hauling efficiency Expand use of steep slope logging technolog
Slide 13: Timberlands: Relative Performance
TIMBERLANDS: Relative performance Source for competitor data: public SEC filings, National Council of Real Estate Investment Fiduciaries (NCREIF). *Adjusted EBITDA. See appendix for reconciliation to GAAP amounts. **Weyerhaeuser excludes Real Estate, Energy & Natural Resources and includes Plum Cree
Slide 14: Real Estate & ENR: Performance
REAL ESTATE & ENR: Performance 14 $250 Million OPERATIONAL EXCELLENCE KEY INITIATIVES Continually refine AVO acreage Capture premium above timber value ̶ Recreation ̶ Conservation ̶ Land entitlement Capture value of all surface and subsurface assets ̶ Construction materials and minerals ̶ Oil
Slide 15: Wood Products: OpX Performance
WOOD PRODUCTS: OpX performance Controllable cost Reliability Focused capital investments Reliability Controllable cost Enhanced product mix Controllable cost Improved recovery Product mix Product margins Operating costs Selling expenses KEY INITIATIVES $62 $55 $81 $58 $21 $20
Slide 16: Wood Products: Relative Performance
-10% 0% 10% 20% 30% 40% 50% 2011 2012 2013 2014 2015 2016 2017 LPX OSB Norbord OSB Ainsworth OSB WY WOOD PRODUCTS: Relative performance 16 LUMBER ADJUSTED EBITDA MARGIN*+ RELATIVE PERFORMANCE OSB ADJUSTED EBITDA MARGIN* RELATIVE PERFORMANCE Amounts presented reflect the results of operations acquire
Slide 17: Weyerhaeuser's Investment Thesis Focused on Driving Value for Shareholders
WEYERHAEUSER’S INVESTMENT THESIS FOCUSED ON DRIVING VALUE FOR SHAREHOLDERS 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 TOTAL
Slide 18: Returning Cash to Shareholders
$0.15 $0.17 $0.20 $0.22 $0.29 $0.31 $0.32 2011 Q1 2012 Q4 2013 Q2 2013 Q3 2014 Q3 2015 Q3 2017 Q4 RETURNING CASH TO SHAREHOLDERS 18 QUARTERLY DIVIDEND PER SHARE SUSTAINABLE AND GROWING DIVIDEND $500 MILLION $2.0 BILLION ACCELERATED *Funds available for distribution: cash flow before major acquisitio
Slide 19: Investing in Our Businesses: Disciplined Capital Expenditures for 2018
INVESTING IN OUR BUSINESSES: Disciplined capital expenditures for 2018 19 TIMBERLANDS Reduce costs and improve productivity Maintenance capex Silviculture Roads and infrastructure FOCUS WOOD PRODUCTS REAL ESTATE, ENERGY & NATURAL RESOURCES Primarily entitlement activities $120 MILLION $300
Slide 20: Maintain Appropriate Capital Structure
MAINTAIN APPROPRIATE CAPITAL STRUCTURE LONG-TERM DEBT Solid investment grade ratings Moody’s: Baa2 stable S&P: BBB stable FOCUS FINANCIAL RATIOS CREDIT RATINGS Achieved target ratios Target: Net debt to Adjusted EBITDA ≤ 3.5x Target: Net debt to Enterprise value ≤ 25% STRONG BALANCE SHEE
Slide 21: Weyerhaeuser's Investment Thesis Focused on Driving Value for Shareholders
WEYERHAEUSER’S INVESTMENT THESIS FOCUSED ON DRIVING VALUE FOR SHAREHOLDERS 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 TOTAL
Slide 22: Continued Growth in U.S. Housing Market
CONTINUED GROWTH IN U.S. HOUSING MARKET 22 U.S. HOUSING STARTS SEASONALLY ADJUSTED ANNUAL RATE Strong activity in early 2018 Single-family starts leading growth ̶ Rising employment and wages ̶ Demographics and pent-up housing demand ̶ Builders navigating labor and lot availability Higher singl
Slide 23: Lumber: Demand Growth and Canadian Constraints Drive Strong Pricing
LUMBER: Demand growth and Canadian constraints drive strong pricing 23 North American lumber demand rising ̶ Increasing single-family starts ̶ Repair & remodel growth in excess of 6% Operating rates are strong B.C. lumber production declining Additional capacity needed to serve demand Expe
Slide 24: Southern Sawlogs: Improving Demand and Pricing
SOUTHERN SAWLOGS: Improving demand and pricing 24 KEY DRIVERS SENSITIVITY $5/ton ≈ $70 million EBITDA PRICING OUTLOOK DELIVERED SOUTHERN AVG PINE SAWLOG U.S. SOUTH CAPACITY ADDITIONS 2017-2019 Additional lumber capacity needed to serve demand Supply from Canada constrained ̶ B.C. fires, pine bee
Slide 25: Western Sawlogs: Strong Demand from Domestic and Export Markets
WESTERN SAWLOGS: Strong demand from domestic and export markets 25 KEY DRIVERS Steady Japanese demand for premium logs ̶ Continued growth in post and beam housing in 2017 Chinese growth supports continued demand for U.S. logs ̶ Softwood log imports from U.S. increased 10% in 2017 Strong domest
Slide 26: OSB: Continued Strong Markets
OSB: Continued strong markets 26 OSB demand increasing ̶ Rising single-family starts ̶ Strong growth in repair & remodel Industry operating rate exceeded 90% in 2017 Industry capacity additions are needed to meet demand Expect pricing and operating rates to remain favorable PRICING OUTLOOK N
Slide 27: Weyerhaeuser's Investment Thesis Focused on Driving Value for Shareholders
WEYERHAEUSER’S INVESTMENT THESIS FOCUSED ON DRIVING VALUE FOR SHAREHOLDERS 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 TOTAL
Slide 28: Appendix
APPENDIX 28
Slide 29: Softwood Lumber Agreement Update
Final CVD effective (approx. 14% for most producers) Final ADD effective (approx. 6% for most producers) Countervailing duties collected Anti-dumping duties collected SOFTWOOD LUMBER AGREEMENT UPDATE 29 Duties effective for 5+ years unless reduced upon appeal ̶ Canadian producers have appealed to
Slide 30: Benefits of Federal Tax Reform
Timber REIT status preserved Dividends to shareholders remain eligible for capital gain treatment Taxable REIT subsidiary benefits from lower tax rate Corporate rate reduced to 21% from 35% Expect 2018 effective tax rate of 11-13% No limitations on interest deductibility anticipated Ac
Slide 31: Adjusted EBITDA Reconciliation: Timberlands
ADJUSTED EBITDA RECONCILIATION: Timberlands 31 1. Results exclude Real Estate, Energy & Natural Resources, which was reported as part of legacy Weyerhaeuser’s Timberlands segment, and include Plum Creek. West includes Plum Creek Washington and Oregon operations. South includes Plum Creek Southern Re
Slide 32: Adjusted EBITDA Reconciliation: Wood Products
ADJUSTED EBITDA RECONCILIATION: Wood Products 32 1. Amounts presented reflect the results of operations acquired in our merger with Plum Creek Timber, Inc. beginning on the merger date of February 19, 2016. 2. Adjusted EBITDA is a non-GAAP measure that management uses to evaluate the performance of
Slide 33: Adjusted EBITDA Reconciliation: Real Estate, Energy & Natural Resources
ADJUSTED EBITDA RECONCILIATION: Real Estate, Energy & Natural Resources 33 1. Adjusted EBITDA is a non-GAAP measure that management uses to evaluate the performance of the company. Adjusted EBITDA, as we define it, is operating income from continuing operations adjusted for depreciation, depletion,
Slide 34: Our Vision and How We Win
Working together to be the world’s pre OUR VISION timber, land, and forest products emai HOW WE WIN WHAT IT LOOKS LIKE 4 bd IEYERHAEUSER KEY WEYER! BEHAVIORS A TRULY GREAT COMPANY + Act with urgency + Safety » Develop our people + Integrity + +f] + Be accountable + Deliver the most + Citizenship 7 +