Weyerhaeuser Company · NYSE:WY
Weyerhaeuser — Non-Deal Roadshow (June 2019)
37 slides from Weyerhaeuser's roadshow presentation, Jun 4, 2019
Slide 1: Weyerhaeuser Investor Meetings June 2019
WEYERHAEUSER Investor Meetings June 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: 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 We are in the We have a North American forestry continues to name us top 50 of the 100 Best “Winning” rating or wood products one of the Corporate Citizens, from 2020 Women company on the World’s Most
Slide 5: 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 5
Slide 6: 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 7: Three Business Segments
THREE BUSINESS SEGMENTS REAL ESTATE, WOOD TIMBERLANDS ENERGY & NATURAL PRODUCTS RESOURCES Largest private timberland Maximizing value Leading wood products owner in the U.S. from every acre manufacturer ▪ Unmatched scale and ▪ Premium recreation and ▪ Low-cost and diversity conservation lands well-p
Slide 8: 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 9: 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 10: 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 11: 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 12: 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 13: OpX: Relative performance
OPX: Relative performance ADJUSTED EBITDA* ADJUSTED EBITDA MARGIN* / ACRE OWNED WESTERN TIMBERLANDS LUMBER+ ORIENTED STRAND BOARD $240 30% 50% 25% $200 40% 20% 30% $160 15% 20% $120 10% 10% 5% $80 0% 0% $40 -5% -10% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2011 2012 2013 2014 2015 2016 2017 2018
Slide 14: 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 INCREASED 55% 2019 TARGET TO $270 MM 2017 2018 2017 2018 » KEY INITIATIVES » ▪ Continually refine AVO acreage ▪ Exceed 30% premium to timber value ▪ Capture additional value from surface and subs
Slide 15: Driving Financial Performance
DRIVING FINANCIAL PERFORMANCE STRONG EARNINGS POWER DEMONSTRATED TRACK RECORD » from scale timber and land portfolio and » of improved execution lower volatility wood products operations ADJUSTED EBITDA* ADJUSTED CASH FROM OPERATIONS+ $2.1 $2.0 $1.9 $1.5 $1.6 $1.4 $1.2 $1.3 $BILLIONS $BILLIONS $0 20
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 $7.5 BILLION RETURNED TO SHAREHOLDERS SINCE 2014 SUSTAINABLE OPPORTUNISTIC AND GROWING DIVIDEND SHARE REPURCHASE Quarterly dividend per share INCREASED $0.34 REPURCHASED 127% $0.32 SINCE 2011 $0.31 $0.29 $3.2 $0.22 $0.20 BILLION $0.17 $0.15 SINCE 2014 2011 2012 2013 20
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 $250 million; lower than 2018 WOOD PRODUCTS » Projects to reduce cost and improve reliability Maintenance capex REAL ESTATE, V
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 ‒ No maturities until 2021 ov
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: Fundamentals Support Continued Growth in U.S. Housing
FUNDAMENTALS SUPPORT CONTINUED GROWTH IN U.S. HOUSING ▪ Solid economic fundamentals ▪ Favorable mortgage rates ▪ Millennials are the largest demographic cohort ▪ Builders are responding to demand for affordable product U.S. HOUSING STARTS SEASONALLY ADJUSTED ANNUAL RATE 2.5 Forecast* 2.0 Multi-famil
Slide 22: Repair & Remodel Activity Strong
REPAIR & REMODEL ACTIVITY STRONG ▪ Housing stock continues to age, with median age of approximately 40 years old ▪ Rising home equity supports home improvement activity ▪ Expect continued growth in repair & remodel expenditures U.S. HOUSING STOCK U.S. REPAIR & REMODEL UNITS BY VINTAGE TOTAL SPENDING
Slide 23: Weather Delayed Building Season
WEATHER DELAYED BUILDING SEASON ▪ Record precipitation across the U.S. ▪ Housing starts and construction activity delayed ▪ Weather in key building regions has yet to improve ▪ Anticipate building products demand will accelerate as weather clears MAY 2019 PRECIPITATION PERCENT OF NORMAL Source: NOAA
Slide 24: Lumber: Expect rising demand and pricing
LUMBER: Expect rising demand and pricing KEY DRIVERS NORTH AMERICAN LUMBER CONSUMPTION BY END USE, 2018 ▪ Repair & remodel and new residential construction activity will drive New increased demand Repair & Residential Remodel 29% ▪ Demand growth expected to outpace 40% industry capacity additions ▪
Slide 25: 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 continues to decline 30% 25% - 20% duties on Canadian lumber 15 20% - Log supply declining due to BC fi
Slide 26: Western Sawlogs: Solid demand from domestic and export markets
WESTERN SAWLOGS: Solid demand from domestic and export markets KEY DRIVERS JAPAN HOUSING STARTS 1.0 WOOD-BASED ▪ Steady Japanese demand for premium logs 0.8 ▪ Strong Chinese demand for U.S. logs in 2018, 0.6 despite tariffs 0.4 0.2 ▪ Domestic demand supported by continued UNITS MILLION growth in U.S
Slide 27: 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 28: OSB: Demand growth supports market fundamentals
OSB: Demand growth supports market fundamentals KEY DRIVERS NORTH AMERICAN OSB CONSUMPTION BY END USE, 2018 ▪ New residential construction and repair & Repair & Remodel remodel activity will drive increased demand 25% ▪ Operating rates exceeded 90% in 2018 New Residential ▪ Industry capacity growth
Slide 29: 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 30: Appendix
APPENDIX 30
Slide 31: Our Vision
OUR VISION SFX HOW WE WIN Ww Working together to be the world’s premier timber, land, and forest products company KEY BEHAVIORS WHAT IT LOOKS LIKE Ww WEYERHAEUSER A TRULY GREAT COMPANY Safety Integrity Citizenship Sustainability Inclusion Develop our people = Drive operational excellence Deliver the
Slide 32: 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 33: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION 2019 $ Millions 2016 2017 2018 Q1 LTM1 Adjusted EBITDA2 $ 1,583 $ 2,080 $ 2,032 $ 1,853 Depletion, depreciation & amortization (512) (521) (486) (489) Basis of real estate sold (109) (81) (124) (160) Unallocated pension service costs (5) (4) — — Special items included
Slide 34: Adjusted EBITDA Reconciliation: Timberlands
ADJUSTED EBITDA RECONCILIATION: Timberlands 2019 $ Millions 2011 2012 2013 2014 2015 2016 2017 2018 Q1 LTM1 West $279 $258 $373 $571 $459 $443 $508 $532 $464 South 226 298 328 410 430 426 383 351 343 North 29 28 32 47 41 26 23 19 20 Other (15) (8) 46 2 7 6 22 - - Adjusted EBITDA including Legacy Plu
Slide 35: Adjusted EBITDA Reconciliation: Wood Products
ADJUSTED EBITDA RECONCILIATION: Wood Products 2019 $ Millions 2011 2012 2013 2014 2015 20161 2017 2018 Q1 YTD2 Lumber ($7) $130 $317 $319 $212 $289 $459 $459 $47 OSB (4) 143 247 46 41 183 359 329 19 EWP 6 17 45 79 114 145 173 177 47 Distribution (37) (29) (33) 2 10 25 38 32 4 Other (1) (15) (2) - (5
Slide 36: Adjusted EBITDA Reconciliation: Real Estate, Energy & Natural Resources
ADJUSTED EBITDA RECONCILIATION: Real Estate, Energy & Natural Resources $ Millions 2017 2018 Real Estate $178 $196 Energy & Natural Resources West 11 12 North 7 9 South 45 47 Adjusted EBITDA1 $241 $264 Depletion, Depreciation & Amortization (15) (14) Basis of Real Estate Sold (81) (124) Operating In
Slide 37: Adjusted Cash from Operations Reconciliation
ADJUSTED CASH FROM OPERATIONS RECONCILIATION 2019 $ Millions 2016 2017 2018 Q1 LTM1 Adjusted Cash from Operations2 $1,229 $1,393 $1,508 $1,303 Cash paid for income taxes related to the sale of our Cellulose Fibers businesses (494) — — — Cash paid for product remediation — (192) (96) (41) Cash contri