Weyerhaeuser Company · NYSE:WY
Weyerhaeuser — Investor Presentation (December 2020)
60 slides from Weyerhaeuser's investor presentation, Dec 15, 2020
Slide 1: Weyerhaeuser Investor Meetings December 2020
Weyerhaeuser Investor Meetings December 2020 Exhibit 99.1
Slide 2: Forward-looking statements
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 goals and prospects; business strategies; factors affecting m
Slide 3: Weyerhaeuser Investment Thesis
WEYERHAEUSER INVESTMENT THESIS UNMATCHED PORTFOLIO INDUSTRY-LEADING PERFORMANCE DISCIPLINED CAPITAL ALLOCATION SUPERIOR SHAREHOLDER VALUE + + ESG Strong ESG Foundation | Our Forests and Wood Products are Natural Climate Solutions
Slide 4: Positioned for Superior Long-Term Value Creation
POSITIONED FOR SUPERIOR LONG-TERM VALUE CREATION 2020 Accomplishments Balance Sheet Operating Results WY $1 BILLION REDUCTION IN NET DEBT YEAR TO DATE REINITIATED DIVIDEND BASE PLUS VARIABLE SUPPLEMENTAL STRONG PERFORMANCE IN UNPRECEDENTED MARKETS New Dividend Framework LAUNCHED NEW 3 BY 30 SUSTAINA
Slide 5: Unmatched Portfolio
UNMATCHED PORTFOLIO Our Quality, Diversity and Scale Cannot Be Replicated
Slide 6: Who We Are
WHO WE ARE A Tax-Efficient Timber REIT with Three Industry-Leading Businesses UNMATCHED PORTFOLIO 11 MILLION ACRES OWNED IN THE U.S. 35 MANUFACTURING FACILITIES ACROSS NORTH AMERICA 14 MILLION ACRES LICENSED IN CANADA 19 Lumber Mills 6 Oriented Strand Board Mills 6 Engineered Lumber Mills 3 Plywood
Slide 7: What We Do
WHAT WE DO Create and Capture Superior Value at Every Step UNMATCHED PORTFOLIO Diverse customer mix that fully values our quality, scale, reliability, and sustainable practices Proprietary seedlings yield superior growth, wood quality and survival characteristics Customized planting deploys the best
Slide 8: Our Foundation
Our Foundation For more information, see our full ESG Presentation, view our alignment with key ESG frameworks, and visit www.wy.com/sustainability. Sustainability is a core value CORPORATE GOVERNANCE ENVIRONMENTAL STEWARDSHIP Safety & Human Capital Workplace Culture Community Investment & Engagemen
Slide 9: Environmental Stewardship
14% 100% OF OUR TIMBERLANDS ARE REFORESTED AFTER HARVEST WE PLANT ABOUT 150 MILLION TREES EVERY YEAR ENVIRONMENTAL STEWARDSHIP Sustainable Forestry • Carbon Sequestration • Reduced Environmental Footprint WE PARTICIPATE IN 11 HABITAT CONSERVATION PLANS IN NORTH AMERICA 100+ years of expertise in sus
Slide 10: Social Responsibility & Governance
SOCIAL Responsibility & GOVERNANCE Human Capital Management • Ethics • Board Composition GOVERNANCE HUMAN CAPITAL MANAGEMENT RECORDABLE INCIDENT RATE WE REDUCED INJURY SEVERITY BY 35% IN 2019 95% OF ALL SALARIED EMPLOYEES HAVE AN INDIVIDUAL DEVELOPMENT PLAN WE DRIVE SIGNIFICANT SAFETY IMPROVEMENT 30
Slide 11: Timberlands
TIMBERLANDS SUPERIOR HOLDINGS CREATE VALUE TODAY AND TOMORROW Unrivaled portfolio that cannot be replicated Diversified holdings at scale Superior supply chain Enduring value across market cycles Enhancing portfolio over time Unmatched timber-growing expertise UNMATCHED PORTFOLIO
Slide 12: Our Timberlands Portfolio
Adjusted EBITDA(1) by Region (2019) See appendix for reconciliation to GAAP amounts and definition of Adjusted EBITDA. North includes Other. Approximate total acres as of March 31, 2020. High value Douglas-fir Premium land west of the Cascade mountains Sawlogs are approximately 90% of harvest Unique
Slide 13: Timberlands Customers
THIRD-PARTY DOMESTIC CUSTOMERS WEYERHAEUSER MILLS EXPORT CUSTOMERS TIMBERLANDS REVENUE BY END MARKET (2019) We flex supply to meet dynamic customer demands and capture market opportunities TIMBERLANDS CUSTOMERS Capture Full Value Through a Diverse Customer Mix UNMATCHED PORTFOLIO
Slide 14: Timberlands Export Markets
71% 23% 6% EXPORT REVENUE Percentages based on 2019 full year Timberlands export sales. TIMBERLANDS EXPORT MARKETS Unrivaled Market Position and Supply Chain Expertise UNIQUE JAPAN BUSINESS Multi-decade relationships supplying steady post & beam housing market Western timberlands ownership provides
Slide 15: Enduring Value Across Market Cycles
NCREIF Timberland INDEX INDEXED MARKET VALUE Per Acre, by Region Source: National Council of Real Estate Investment Fiduciaries (NCREIF) Timberland Index. Changes in index composition may affect average market values (e.g. NCREIF Northwest expanded to include Idaho in 2013). TIMBERLANDS Enduring Val
Slide 16: Timberlands Portfolio Management
Timberland Acres By Region TIMBERLANDS PORTFOLIO MANAGEMENT Disciplined and Opportunistic OVER 45% INCREASE SINCE 2012 NEARLY 70% INCREASE SINCE 2012 $1.6 BILLION OF PROCEEDS Strategic Divestitures Enhanced Oregon timber holdings Transactions closed in 2020 Q4 Net cost approximately $40 million Expe
Slide 17: Real Estate, Energy & Natural Resources
REAL ESTATE, ENERGY & NATURAL RESOURCES MAXIMIZE THE VALUE OF EVERY ACRE WE OWN Continually evaluate every acre Deliver a significant premium to timber value Generate consistent and reliable cash flow Capture the full value of surface and subsurface assets UNMATCHED PORTFOLIO
Slide 18: Real Estate: Unlock Higher and Better Use Value
REAL ESTATE Unlock Higher and Better Use (HBU) Value Nimble Business Model Low Operating Costs Minimal Capital Investment �� �� �� 1.3 MILLION ACRES with HBU attributes CONTINUALLY EVALUATE every acre ≤1% of timberland acres SOLD ANNUALLY 55–65% Premium to Timber Value SINCE INCEPTION consistently e
Slide 19: Energy & Natural Resources
ENERGY & NATURAL RESOURCES Maximize the Value of Surface and Subsurface Rights BALANCED EBITDA MIX (1) Infrastructure Rights of Way Wind and Solar Power Wetland Mitigation Banks Aggregates & Industrial Materials Oil & Natural Gas Oil & Natural Gas Wind, Solar & Other Aggregates & Industrial Material
Slide 20: Consistent, Reliable Cash Generation
UNMATCHED PORTFOLIO REAL ESTATE, ENERGY & NATURAL RESOURCES Consistent, Reliable Cash Generation (1) See appendix for reconciliation to GAAP amounts. Adjusted EBITDA(1) $ in millions $189 $241 $264 Real Estate Energy & Natural Resources $274 Demand for Real Estate properties remains solid 2020 outlo
Slide 21: Wood Products
WOOD PRODUCTS MAXIMIZING MARGIN THROUGH THE BUSINESS CYCLE Unmatched scale, brand and reputation Diversified mix of high-quality products Relentless focus on industry-leading cost structure Diverse customer mix and demand drivers Superior returns through the cycle: “Black at the bottom” UNMATCHED PO
Slide 22: Wood Products Portfolio
LUMBER ORIENTED STRAND BOARD ENGINEERED WOOD PRODUCTS DISTRIBUTION WOOD PRODUCTS PORTFOLIO Industry-Leading Scale, Diversification and Quality 2nd largest producer in North America 19 lumber mills 5.2 BBF capacity 4th largest producer in North America 6 oriented strand board mills 3.0 BSF capacity L
Slide 23: Diverse Demand Drivers and Customer Mix
WOOD PRODUCTS Diverse Demand Drivers and Customer Mix NEW RESIDENTIAL: SINGLE & MULTI-FAMILY REPAIR & REMODEL: PROFESSIONAL AND DIY PERCENT OF SALES BY END MARKET (2019) NON-RESIDENTIAL CONSTRUCTION AND INDUSTRIAL USES Percentages are approximate based on 2019 full year Wood Products net sales. UNMA
Slide 24: Positioned for Superior Performance Through the Cycle
WOOD PRODUCTS Positioned for Superior Performance Through the Cycle EWP Distribution $ in millions Achieved Industry-Leading Cost Structure Improved EWP & Distribution EBITDA Through Market Headwinds ADJUSTED EBITDA(1) Achieved “Black at the Bottom” Cost Net of Logs/MBF Indexed to 2013 Controllable
Slide 25: Industry-Leading Performance
INDUSTRY-LEADING PERFORMANCE Significant, Sustainable Margin Improvement Through the Cycle
Slide 26: Operational Excellence 1.0
MERCHANDISING Right product from the right log HARVEST & HAUL Increase efficiency and reduce cost SILVICULTURE Optimize site prep, thinning and fertilization MARKETING Right product to the right customer RELIABILITY Maximum uptime, highest quality product CONTROLLABLE COSTS Efficient labor, maintena
Slide 27: Our OpX Scorecard
DRIVING SUPERIOR RELATIVE PERFORMANCE Our OpX Scorecard We are “Black at the Bottom” TIMBERLANDS ADJUSTED EBITDA(1,2) PER ACRE WEST LUMBER(4) ORIENTED STRAND BOARD SOUTH ENGINEERED WOOD PRODUCTS DISTRIBUTION Source for competitor data: public SEC filings, National Council of Real Estate Investment F
Slide 28: OpX 2.0
MARGIN IMPROVEMENT BOTTOM LINE Deliver and Maintain Industry-Leading Cost Structure FUTURE VALUE 1 Superior Execution on: Silviculture Prescriptions Reliability Programs COST AVOIDANCE Simplify/Standardize Tools Automate Manual Work Leverage Technology/Data Procurement Optimization Shared/Repurposed
Slide 29: Disciplined Capital Allocation
DISCIPLINED CAPITAL ALLOCATION Long-Term Commitment to Balancing Three Key Priorities
Slide 30: Capital Allocation Philosophy
New dividend framework will return significant and appropriate cash throughout the cycle CAPITAL ALLOCATION Disciplined capital allocation Balanced and Sustainable Philosophy – Three Key Priorities INVEST IN OUR BUSINESSES RETURN CASH TO SHAREHOLDERS MAINTAIN AN APPROPRIATE CAPITAL STRUCTURE CORE AL
Slide 31: Base Plus Variable Supplemental Dividend Framework
CORE ALLOCATION RETURNING CASH TO SHAREHOLDERS Implementing “Base Plus Variable Supplemental” Dividend Framework Sustainable Base Dividend Quarterly cash base dividend of $0.17 per share Sustainable across a full range of market conditions Supported by cash flow from Timberlands and Real Estate & EN
Slide 32: Dividend Framework Sustainable Over the Cycle
Returning cash to shareholders Dividend Framework is Sustainable Over the Business Cycle CAPITAL ALLOCATION SUSTAINABLE BASE DIVIDEND supported by Timberlands and Real Estate & ENR cash flow, even at bottom of the cycle SUPPLEMENTAL DIVIDEND or share repurchase to achieve targeted return of 75-80% o
Slide 33: Demonstrated Commitment to Returning Cash
Returning cash to shareholders Demonstrated Commitment CAPITAL ALLOCATION Dividends Share Repurchase Pro Forma Dividend RETURNED OVER $8.5 BILLION TO SHAREHOLDERS SINCE 2014 THROUGH DIVIDENDS AND SHARE REPURCHASE $ millions
Slide 34: Capital Expenditures
CAPITAL EXPENDITURES Wood Products – $175 million Maintenance capex Projects to improve costs and reliability Timberlands – $105 million Reforestation and silviculture Roads and infrastructure Corporate – Very minimal IT system upgrades Real Estate & ENR – Very minimal Primarily entitlement activiti
Slide 35: Solid Balance Sheet and Financial Flexibility
Maintain AN appropriate capital structure Solid Balance Sheet and Financial Flexibility Pro forma total debt reflects announced redemption of $500 million 4.625% 2023 maturities and intended repayment of $150 million 9.0% 2021 notes at maturity. Other, net includes repayment of revolving credit line
Slide 36: Superior Shareholder Value
SUPERIOR SHAREHOLDER VALUE Capitalizing on Strong Portfolio and Operational Performance
Slide 37: Improving Fundamentals Across Our Markets
SHAREHOLDER VALUE IMPROVING FUNDAMENTALS ACROSS OUR MARKETS Driven By Continued Demand for U.S. Housing REPAIR & REMODEL HOUSING STARTS LUMBER ORIENTED STRAND BOARD WESTERN LOGS SOUTHERN LOGS Renewed preference for single-family Low interest rates Favorable demographics, pent-up demand High unemploy
Slide 38: Our Working Forests Are Part of the Climate Solution
OUR WORKING FORESTS ARE PART OF THE CLIMATE SOLUTION An Endlessly Renewable Resource that Absorbs and Stores Carbon OUR GROWING FORESTS ABSORB CO2 OUR WOOD PRODUCTS STORE CARBON FROM THE ATMOSPHERE FOR THE LIFE OF THE PRODUCT WE PLANT MORE TREES THAT ABSORB EVEN MORE CO2 AS THEY GROW WOOD IS THE ULT
Slide 39: Weyerhaeuser Investment Thesis
WEYERHAEUSER INVESTMENT THESIS UNMATCHED PORTFOLIO INDUSTRY-LEADING PERFORMANCE DISCIPLINED CAPITAL ALLOCATION SUPERIOR SHAREHOLDER VALUE + + ESG Strong ESG Foundation | Our Forests and Wood Products are Natural Climate Solutions
Slide 40: Appendix
APPENDIX Market Overview and Supplemental Information
Slide 41: Expect Long-Term Growth in U.S. Housing
EXPECT LONG-TERM GROWTH IN U.S. HOUSING Source: U.S. Census Bureau YTD as of October U.S. housing activity rebounding despite uncertain macroeconomic conditions Historically low mortgage rates and growing preference for larger, single-family homes Further economic disruptions could dampen near-term
Slide 42: Construction Remains Below Housing Need
LEVEL OF CONSTRUCTION REMAINS BELOW HOUSING NEED ANNUAL U.S. HOUSING NEED MILLIONS OF UNITS DRIVER BASELINE AVERAGE DEMAND New Household Formations 1.1 Replace Lost or Obsolete Units 0.3 Second Home Demand 0.1 Natural Vacancy Rate 0.1 ANNUAL NEW UNITS REQUIRED 1.6 Source: Freddie Mac, 2018 U.S. POPU
Slide 43: Strong Repair & Remodel Activity
STRONG REPAIR & REMODEL ACTIVITY Stay-at-home behavior and social distancing has driven surge in home improvement activity Expect continued favorable repair & remodel sales volumes Housing stock continues to age, with median age of approximately 40 years Rising home equity U.S. HOUSING STOCK UNITS B
Slide 44: Lumber Demand and Fundamentals Are Favorable
LUMBER DEMAND AND FUNDAMENTALS ARE FAVORABLE LUMBER PRICING FRAMING LUMBER COMPOSITE NORTH AMERICAN LUMBER CONSUMPTION BY END USE, 2019 Source: FEA Source: Random Lengths Q4 QTD as of 12/04/2020 Q4 QTD vs. Q3 AVERAGE -$65/MBF LOWER CURRENT vs. Q3 AVERAGE -$105/MBF LOWER Strong new residential constr
Slide 45: B.C. Mill Closures Have Reduced Industry Capacity
LUMBER B.C. Mill Closures Have Reduced Industry Capacity Log supply declining in British Columbia due to fires, pine beetle and lower allowable cut Canadian lumber exports to the U.S. remain subject to duties Canadian share of lumber market has decreased U.S. Southern lumber production gaining share
Slide 46: OSB Market Fundamentals Are Positive
OSB MARKET FUNDAMENTALS ARE POSITIVE Strong demand from new residential construction activity High industry operating rates, and limited near-term options to increment capacity Pricing remains near record levels ORIENTED STRAND BOARD PRICING 7/16” NORTH CENTRAL WY’s SENSITIVITY AT TYPICAL OPERATING
Slide 47: Western Logs: Favorable Domestic and Export Demand
Largest driver of demand is growing U.S. housing activity Solid Japanese demand for premium logs Improved Chinese demand balanced by increased global log supply to China Able to rapidly flex volume in response to changing markets JAPAN HOUSING STARTS WOOD-BASED WESTERN SAWLOG PRICING DELIVERED DOUGL
Slide 48: Southern Logs: Improving Sawlog Demand
Sawlog demand increasing as mill operating rates rise WY fiber log demand stable WY’s timberlands are well positioned to benefit from rising lumber production and capacity across the South Additional upside opportunity from Southern log exports SOUTHERN LOGS Improving Sawlog Demand Will Drive Long-T
Slide 49: Well-Laddered Debt Profile
WELL-LADDERED DEBT PROFILE Minimal Maturities Until 2023 (1) $860 million WestRock note maturing 2023 includes extension option. Revolving credit facility was undrawn as of September 30, 2020. This credit facility has a capacity of $1.5 billion and expires in January 2025. $6.0 billion of long-term
Slide 50: External Recognition and ESG Ratings
LISTINGS ON ESG INDICES ESG RATINGS AND RANKINGS We have a “WINNING” rating from 2020 Women on Boards 3BL MEDIA named WY one of the 100 BEST CORPORATE CITIZENS Environmental, social & governance External Recognition JUST CAPITAL named WY one of America’s Most JUST Companies ETHISPHERE named WY one o
Slide 51: Timber-Growing Experts
TARGETED SILVICULTURE CUSTOMIZED PLANTING We are TIMBER-GROWING Experts Deeply Committed to Environmental Stewardship PROPRIETARY SEEDLINGS We cultivate seedlings with superior survival, growth, and wood-quality characteristics We deploy the best genetic material for each acre on our land base Our p
Slide 52: Our Timber Supply-Chain Expertise Is Unrivaled
Our TIMBER Supply-chain EXPERTISE is unrivaled We Capture Maximum Value At Each Step Unmatched supply chain capabilities MATURE FORESTS We grow diverse product offerings in scale quantities with superior, reliable quality DATA-DRIVEN MARKETING SUSTAINABLE HARVESTING Our expert harvest planning captu
Slide 53: Our Wood Products Supply Chain Is Efficient
9 MILLION PRODUCT DISTRIBUTION LOW-COST MANUFACTURING OUR WOOD PRODUCTS SUPPLY CHAIN IS EFFICIENT We Drive Out Cost and Maximize Value From Raw Materials to End Use FIBER PROCUREMENT We source the optimal mix of raw materials internally and externally to maximize margins Our operational excellence a
Slide 54: Our Vision
OUR VISION HOW WE WIN Vv Safety Integrity Citizenship Sustainability Inclusion Develop our people Drive operational | Sf excellence Deliver the most value from every acre Optimize capital KEY BEHAVIORS Act with urgency Be accountable Be courageous Keep it simple Be innovative Working together to be
Slide 55: Adjusted EBITDA Reconciliation: Total Company
ADJUSTED EBITDA RECONCILIATION Total Company 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 adjusted for depreciation, depletion, amortization, basis of real estate sold, unallocated pension
Slide 56: Net Debt to Adjusted EBITDA Reconciliation
Net debt to ADJUSTED EBITDA RECONCILIATION Total Company LTM – last twelve months. Net debt to Adjusted EBITDA is a non-GAAP measure that management uses to evaluate the performance of the company. Net debt to Adjusted EBITDA, as we define it, is long-term debt and borrowings on line of credit, net
Slide 57: Timberlands Adjusted EBITDA Reconciliation
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 adjusted for depreciation, depletion, amortization, basis of real estate sold, unallocated pension service costs and special items. Adjusted EB
Slide 58: Wood Products Adjusted EBITDA Reconciliation
$ Millions 2011 2012 2013 2014 2015 20161 2017 2018 2019 Q3 2020 YTD Q3 2020 LTM Lumber ($7) $130 $317 $319 $212 $289 $459 $459 $183 $545 $588 OSB (4) 143 247 46 41 183 359 329 59 246 265 EWP 6 17 45 79 114 145 173 177 207 151 192 Distribution (37) (29) (33) 2 10 25 38 32 33 62 70 Other (1) (15) (2)
Slide 59: Real Estate, Energy & Natural Resources Adjusted EBITDA Reconciliation
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 adjusted for depreciation, depletion, amortization, basis of real estate sold, unallocated pension service costs and special items. Adjusted EB
Slide 60: Adjusted Funds Available for Distribution Reconciliation
ADJUSTED FUNDS AVAILABLE FOR DISTRIBUTION (FAD) RECONCILIATION $ Millions 2017 2018 2019 Q3 2020 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 pr