Weyerhaeuser Company · NYSE:WY

Weyerhaeuser — UBS Global Paper & Forest Products Conference 2015

41 slides from Weyerhaeuser's conference presentation, Sep 10, 2015

  1. Slide 1: Weyerhaeuser at the UBS Global Paper & Forest Products Conference

    0 September 10, 2015 | New York, NY Patty Bedient, Executive Vice President & Chief Financial Officer WEYERHAEUSER UBS Global Paper & Forest Products Conference

  2. Slide 2: Forward-Looking Statements and Non-GAAP Financial Measures

    1 FORWARD-LOOKING STATEMENTS AND NON-GAAP FINANCIAL MEASURES This presentation contains statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, with respect to future prospects, business strategies, mar

  3. Slide 3: Driving Value for Shareholders

    2 DRIVING VALUE FOR SHAREHOLDERS Growing a Truly Great Company  Portfolio: Focused Forest Products Company  Performance: Operational Excellence  Capital Allocation

  4. Slide 4: Focused Forest Products Company

    3 FOCUSED FOREST PRODUCTS COMPANY Supporting a growing and sustainable dividend  TIMBERLANDS  Strong, productive asset base  COMPLEMENTARY MANUFACTURING OPERATIONS  Wood Products: Strong upside from US housing  Cellulose Fibers: Strong cash flow and growing demand from global markets (100) 200

  5. Slide 5: Performance

    4 PERFORMANCE

  6. Slide 6: Performance: Achieved 2014 Targets

    5  Distribution Turnaround $35 million   Cellulose Fibers $28 million   Longview Timber Synergies $29 million   SG&A Reductions $75 million run rate  PERFORMANCE: Achieved 2014 Targets  Timberlands $25 million   Lumber $25 million   OSB $10 million   ELP Turnaround $34 million  Focus

  7. Slide 7: Timberlands: OPX Performance

    6 TIMBERLANDS: OPX Performance OPERATIONAL EXCELLENCE 0 25 50 75 2014 2015 Goal EBITDA $ m il li o n s $50-70 MM $25 MM $20-30 MM  2015 INITIATIVES  Log marketing and merchandising  Cost efficiencies: harvesting, transportation, silviculture  Non-timber revenue

  8. Slide 8: Timberlands: Current Relative Performance

    7 TIMBERLANDS: Current Relative Performance EBITDA* / ACRE OWNED U.S. WEST EBITDA* / ACRE OWNED U.S. SOUTH Source for competitor data: public SEC filings, National Council of Real Estate Investment Fiduciaries (NCREIF). *See appendix for reconciliation to GAAP amounts. **Data for Rayonier as restate

  9. Slide 9: Lumber: OPX Performance

    8 LUMBER: OPX Performance  2015 INITIATIVES  Labor productivity  Process efficiency  Reliability  Capital execution OPERATIONAL EXCELLENCE* Controllable Manufacturing Cost *Benchmark is mill Best in Class. Mfg cost = Cost Net of Logs, excluding depreciation and inflation. 0 50 100 2013 Base 201

  10. Slide 10: Lumber: Current Relative Performance

    9 LUMBER: Current Relative Performance EBITDA MARGIN* Source for competitor data: public SEC filings *See appendix for reconciliation to GAAP amounts. -5% 0% 5% 10% 15% 20% 2011 2012 2013 2014 2015 YTD Q2 Canfor Lumber Interfor Lumber West Fraser Lumber WY Lumber

  11. Slide 11: OSB: OPX Performance

    10 OSB: OPX Performance  2015 INITIATIVES  Reliability  Automation  Enhanced product mix  Transportation OPERATIONAL EXCELLENCE* 40 55 70 2013 Base 2014 2015 Goal *Reliability benchmark is mill Best in Class. 2013 Base = Q3 2013 YTD. % V a lu e A d d e d P rod u c t 70 85 100 2013 Base 2014 201

  12. Slide 12: OSB: Current Relative Performance

    11 OSB: Current Relative Performance EBITDA MARGIN* Source for competitor data: public SEC filings *See appendix for reconciliation to GAAP amounts. -10% 0% 10% 20% 30% 40% 2011 2012 2013 2014 2015 YTD Q2 Ainsworth OSB LPX OSB Norbord OSB WY OSB

  13. Slide 13: ELP: Turnaround Performance

    12 ELP: Turnaround Performance  2015 INITIATIVES  Reliability  Veneer recovery  Supply chain performance ELP TURNAROUND 0 50 100 150 2013 2014 2015 Continue EBITDA Improvement* $ m il li o n s $15-20 MM *See appendix for reconciliation to GAAP amounts. $34 MM improvement vs. 2013

  14. Slide 14: ELP: Current Relative Performance

    13 ELP: Current Relative Performance EBITDA MARGIN* Source for competitor data: public SEC filings *See appendix for reconciliation to GAAP amounts. -3% 0% 3% 6% 9% 12% 15% 18% 2011 2012 2013 2014 2015 YTD Q2 Boise Wood Products LPX ELP WY ELP

  15. Slide 15: Distribution: Turnaround Performance

    14 DISTRIBUTION: Turnaround Performance  2015 INITIATIVES  Warehouse efficiency  Delivery cost  Growth in excess of market DISTRIBUTION TURNAROUND Continue EBITDA Improvement* (50) 0 50 2013 2014 2015 $20-30 MM $ m il li o n s *See appendix for reconciliation to GAAP amounts. $35 MM improvement

  16. Slide 16: Distribution: Current Relative Performance

    15 DISTRIBUTION: Current Relative Performance EBITDA MARGIN* Source for competitor data: public SEC filings *See appendix for reconciliation to GAAP amounts. -10% -8% -6% -4% -2% 0% 2% 4% 2011 2012 2013 2014 2015 YTD Q2 Boise Distribution Blue Linx Distribution WY Distribution

  17. Slide 17: Cellulose Fibers: OPX Performance

    16 CELLULOSE FIBERS: OPX Performance  2015 INITIATIVES  Energy cost  Reliability: predictive, preventive maintenance  Liquid packaging board cost and quality OPERATIONAL EXCELLENCE 0 50 100 2014 2015 Goal Reduce Controllable Cost* $ m il li o n s $100 MM *Cost of Goods Sold, excluding inflation.

  18. Slide 18: Cellulose Fibers: Current Relative Performance

    17 CELLULOSE FIBERS: Current Relative Performance EBITDA MARGIN* Source for competitor data: public SEC filings *See appendix for reconciliation to GAAP amounts. **Rayonier reflects Rayonier Performance Fibers segment for 2011-2013 and Rayonier Advanced Materials for 2014. 0% 5% 10% 15% 20% 25% 30%

  19. Slide 19: Capital Allocation

    18 CAPITAL ALLOCATION

  20. Slide 20: Capital Allocation Priorities

    19 CAPITAL ALLOCATION  PRIORITIES  Return cash to shareholders  Invest in our businesses  Maintain appropriate capital structure

  21. Slide 21: Returning Cash to Shareholders: Sustainable and Growing Dividend

    20  QUARTERLY DIVIDEND  Increased by 7% to $0.31 per common share effective 2015 Q3  Up 107% since 2011  PAYOUT GUIDELINE  75% of Funds Available for Distribution (FAD) over the cycle* RETURNING CASH TO SHAREHOLDERS: Sustainable and Growing Dividend *Funds Available for Distribution: cash flow

  22. Slide 22: Returning Cash to Shareholders: Share Repurchase

    21 $1.2 BILLION APPROVED OUR PROGRESS AUG 2014 → 2Q 2015  $700 MILLION PROGRAM  Authorized August 2014  $610 MILLION  Over 18 million shares repurchased  ADDITIONAL $500 MILLION  Authorized August 2015 RETURNING CASH TO SHAREHOLDERS: Share Repurchase

  23. Slide 23: Investing in Our Businesses

    22 INVESTING IN OUR BUSINESSES  Disciplined capital investment  Focus: reduce cost structure and improve EBITDA  2015 CapEx approximating DD&A (approx. $500 million)  Opportunistic growth through acquisition  Targeted, value-creating opportunities Responsible stewards of capital

  24. Slide 24: Maintain Appropriate Capital Structure

    23 MAINTAIN APPROPRIATE CAPITAL STRUCTURE  Liquidity  Long-term debt of approximately $4.9 billion as of 2015 Q2  Investment grade rating

  25. Slide 25: Summary

    24 SUMMARY  Focused forest products company  Improving performance  Delivering on priorities for capital allocation Growing earnings and shareholder value

  26. Slide 26: Appendix

    25 APPENDIX

  27. Slide 27: Timberlands: Ownership

    26 TIMBERLANDS: Ownership  PACIFIC NORTHWEST  Largest timberland holder in region  2.6 million acres west of Cascade mountains  Douglas fir domestic and export value  U.S. SOUTH  More than four million acres  Primarily Southern yellow pine  URUGUAY  More than 300,000 acres  Loblolly pine a

  28. Slide 28: Wood Products

    27 WOOD PRODUCTS 18 LUMBER MILLS 4.7 billion board feet capacity 6 OSB MILLS 3.0 billion square feet capacity 6 ELP MILLS 21 DISTRIBUTION CENTERS 3 VENEER / PLYWOOD SUPPLY FACILITIES

  29. Slide 29: Cellulose Fibers Business

    28 CELLULOSE FIBERS BUSINESS 5 PULP MILLS 1.9 million metric tons capacity 2 CONVERTING FACILITIES 1 LIQUID PACKAGING 350,000 tons capacity 1 PRINTING PAPERS CELLULOSE FIBERS MODIFIED FIBER MILL GDANSK, POLAND

  30. Slide 30: Significant Runway Ahead

    29 SIGNIFICANT RUNWAY AHEAD  US housing market improving  Anticipate approximately 1.1 million starts in 2015  Single-family recovery underway  US housing starts remain well below trend  Demand for logs and wood products rises as housing strengthens  Growing global demand for fluff products dr

  31. Slide 31: Housing Recovers to Trend

    30 HOUSING RECOVERS TO TREND 0.0 0.5 1.0 1.5 2.0 2.5 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 *RISI *John Burns *Global Insight Total U.S. Housing Starts (Seasonally Adjusted Annual Rate) Source: Census Forecast* The Harvard Jo

  32. Slide 32: Canadian Supply Constraints: Benefit for Southern Lumber & Logs

    31 CANADIAN SUPPLY CONSTRAINTS: Benefit for Southern Lumber & Logs  Anticipate decline in Canadian share of U.S. lumber market as demand recovers and Canadian production is constrained  Southern pine lumber expanding Southern log price recovery still ahead US LUMBER SUPPLY SOURCES SOUTHERN LOG PRI

  33. Slide 33: Western Log Prices: Positive Outlook

    32 0 50 100 150 200 250 1998 2000 2002 2004 2006 2008 2010 2012 2014 Single-family Multi-family (Seasonally Adjusted Annual Rate) T h o u sa n d s QuarterlySource: Bureau of Census WESTERN LOG PRICES: Positive Outlook WESTERN LOG PRICE DELIVERED DOUGLAS FIR #2 RESIDENTIAL BUILDING PERMITS FOR CALIFO

  34. Slide 34: Significant Leverage to Pricing

    33 SIGNIFICANT LEVERAGE TO PRICING  TIMBERLANDS Western logs: $10/MBF ≈ $15 million  Southern sawlogs: $5/ton ≈ $40 million  WOOD PRODUCTS  Lumber: $10/MBF ≈ $40 million  OSB: $10/M3/8” ≈ $30 million  CELLULOSE FIBERS  $10/ADMT ≈ $20 million

  35. Slide 35: Working together to grow a truly great company

    Working together to grow a truly great company OUR VISION for our shareholders, customers and employees HOW WE WIN [ | WEYERHAEUSER A TRULY GREAT COMPANY Great Place to Work Great Financial Results Great Contribution to Society ) CHASE PERFECTION... CATCH EXCELLENCE

  36. Slide 36: 2015 EBITDA Reconciliation: By Segment

    35 $ Millions 2015 Q2 YTD Timberlands Lumber OSB ELP Distribution WP Other Wood Products Cellulose Fibers Unallocated Items Total Adjusted EBITDA1 $393 $124 $4 $64 ($1) ($5) $186 $150 ($38) $691 Depletion, Depreciation & Amortization (104) (22) (15) (13) (3) -- (53) (77) (7) (241) Non-Operating Pens

  37. Slide 37: EBITDA Reconciliation: Timberlands

    36 EBITDA RECONCILIATION: Timberlands $ Millions 2011 2012 2013 2014 2015 Q2 LTM West1 $273 $250 $361 $556 $491 South 214 218 225 262 277 Other1 (15) (8) 46 2 8 Adjusted EBITDA2 $472 $460 $632 $820 $776 Depletion, Depreciation & Amortization (137) (142) (166) (207) (208) Special Items 152 -- -- -- -

  38. Slide 38: 2014 EBITDA Reconciliation: By Segment

    37 $ Millions 2014 Timberlands Lumber OSB ELP Distribution WP Other Wood Products Cellulose Fibers Unallocated Items Total Adjusted EBITDA1 $820 $319 $46 $79 $2 $-- $446 $447 ($79) $1,634 Depletion, Depreciation & Amortization (207) (41) (31) (41) (6) -- (119) (155) (12) (493) Non-Operating Pension

  39. Slide 39: 2013 EBITDA Reconciliation: By Segment

    38 2013 EBITDA RECONCILIATION: By Segment $ Millions 2013 Timberlands Lumber OSB ELP Distribution WP Other Wood Products Cellulose Fibers Unallocated Items Total Adjusted EBITDA1 $632 $317 $247 $45 ($33) ($2) $574 $353 ($61) $1,498 Depletion, Depreciation & Amortization (166) (40) (31) (46) (5) (1)

  40. Slide 40: 2012 EBITDA Reconciliation: By Segment

    39 2012 EBITDA RECONCILIATION: By Segment 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 adjusted for depreciation, depletion, amortization, pension and postretirement costs not allocated

  41. Slide 41: 2011 EBITDA Reconciliation: By Segment

    40 2011 EBITDA RECONCILIATION: By Segment $ Millions 2011 Timberlands Lumber OSB ELP Distribution WP Other Wood Products Cellulose Fibers Unallocated Items Total Adjusted EBITDA1 $472 ($7) ($4) $6 ($37) ($1) ($43) $597 ($108) $918 Depletion, Depreciation & Amortization (137) (47) (34) (61) (6) (3) (

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