Weyerhaeuser Company · NYSE:WY
Weyerhaeuser — Non-Deal Roadshow (November 2019)
35 slides from Weyerhaeuser's roadshow presentation, Nov 12, 2019
Slide 1: Investor Meetings November 2019
Investor Meetings November 2019 WEYERHAEUSER
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 go
Slide 3: Weyerhaeuser Overview
WEYERHAEUSER OVERVIEW 12.2 MILLION ACRES SUPERIOR QUALITY, DIVERSITY AND MARKET REACH WE ARE THE LARGEST PRIVATE OWNER OF TIMBERLANDS IN NORTH AMERICA Market capitalization as of October 31, 2019. All other amounts as of December 31, 2018. WE’VE MADE ALMOST $550 MILLION IN SUSTAINABLE OPERATIONAL EX
Slide 4: Sustainability at Weyerhaeuser
We grow and care for our people We are great environmental stewards SUSTAINABILITY AT WEYERHAEUSER It’s at our core We are great citizens We create value for our shareholders 1900 Company founded by Frederick Weyerhaeuser 1930 Led the industry to develop sustainable practices 1941 Established first
Slide 5: Strong ESG Reputation
ENVIRONMENTAL STRONG ESG REPUTATION SOCIAL GOVERNANCE $14B 2017/18 We have a “WINNING” rating from 2020 Women on Boards WE ARE THE ONLY North American forestry or wood products company on the WE ARE IN THE TOP 50 of the 100 BEST CORPORATE CITIZENS, according to Corporate Responsibility Magazine ETHI
Slide 6: Weyerhaeuser's Investment Thesis
FOCUSED ON DRIVING VALUE FOR SHAREHOLDERS WEYERHAEUSER’S INVESTMENT THESIS 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 SHAREHOLDER
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 lands Valu
Slide 8: Timberlands: Largest private U.S. owner
TIMBERLANDS: Largest private U.S. owner with unmatched quality, diversity and scale Total acres as of December 31, 2018, pro forma for the announced sale of 555,000 acres of Michigan timberlands expected to close in fourth quarter 2019. 50 hardwood and softwood species Diverse lumber and fiber marke
Slide 9: Real Estate & ENR: Maximizing the value of every acre
REAL ESTATE & ENR Maximizing the value of every acre 1.6 MILLION AVO ACRES North 22% West 20% South 58% Determine timber net present value for each acre 1 Identify opportunities to capture premium value (Asset Value Optimization — AVO) 2 3 Deliver a premium to timber net present value ENERGY & NATUR
Slide 10: Wood Products: Industry leading North American producer
WOOD PRODUCTS Industry leading North American producer Revenue and statistics for full year 2018. Source: Competitor reports, public filings, APA. 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 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 SHAREHOLDER
Slide 12: 2019 OpX Targets and Key Initiatives
TIMBERLANDS Harvest and transportation productivity Marketing and merchandising Silviculture best practices WOOD PRODUCTS Reliability Controllable cost Improved recovery Product mix and margins 2019 OPX TARGETS KEY INITIATIVES ACHIEVED $543 MM 2014-2018 TARGET $80-$100 MM IN 2019
Slide 13: OpX: Relative performance
ADJUSTED EBITDA* / ACRE OWNED OPX: Relative performance WESTERN TIMBERLANDS LUMBER+ ORIENTED STRAND BOARD Weyerhaeuser vs Rayonier, NCREIF Weyerhaeuser vs Rayonier, NCREIF^ Weyerhaeuser vs Boise, LP Weyerhaeuser vs Boise, BlueLinx Weyerhaeuser vs LP, Norbord SOUTHERN TIMBERLANDS ENGINEERED WOOD PROD
Slide 14: Real Estate & ENR OpX progress and targets
REAL ESTATE & ENR OpX progress and targets KEY INITIATIVES Continually refine AVO acreage Exceed 30% premium to timber value Capture additional value from surface and subsurface assets * See appendix for reconciliation to GAAP amounts. $264 MM $241 MM PREMIUM TO TIMBER VALUE ADJUSTED EBITDA* 65% 201
Slide 15: Weyerhaeuser's Investment Thesis
FOCUSED ON DRIVING VALUE FOR SHAREHOLDERS WEYERHAEUSER’S INVESTMENT THESIS 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 SHAREHOLDER
Slide 16: Returning Cash to Shareholders
RETURNING CASH TO SHAREHOLDERS SUSTAINABLE Dividend OPPORTUNISTIC Share Repurchase REPURCHASED MORE THAN $3 BILLION SINCE 2014 $440 MILLION of authorization remaining RETURNED NEARLY $8 BILLION TO SHAREHOLDERS SINCE 2014 RETURNED NEARLY $5 BILLION SINCE 2014 QUARTERLY DIVIDEND $0.34 PER SHARE
Slide 17: Investing in Our Businesses
INVESTING IN OUR BUSINESSES Disciplined capital expenditures for 2019 TIMBERLANDS $250 million Projects to reduce cost and improve reliability Maintenance capex WOOD PRODUCTS Very minimal expenditures Primarily entitlement activities Nearly $120 million Reforestation and silviculture Roads and infra
Slide 18: Maintain Appropriate Capital Structure
MAINTAIN APPROPRIATE CAPITAL STRUCTURE DEBT Solid investment grade Moody’s: Baa2 S&P: BBB FINANCIAL RATIOS CREDIT RATINGS Target: Net debt to Adjusted EBITDA ≤ 3.5x over the cycle Target: Net debt to enterprise value ≤ 25% over the cycle STRONG BALANCE SHEET AND FINANCIAL FLEXIBILITY $6.2 billion lo
Slide 19: Weyerhaeuser's Investment Thesis
FOCUSED ON DRIVING VALUE FOR SHAREHOLDERS WEYERHAEUSER’S INVESTMENT THESIS 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 SHAREHOLDER
Slide 20: Fundamentals Support Continued Growth in U.S. Housing
FUNDAMENTALS SUPPORT CONTINUED GROWTH IN U.S. HOUSING U.S. HOUSING STARTS SEASONALLY ADJUSTED ANNUAL RATE Solid economic fundamentals, including employment and wage growth Favorable consumer and homebuilder sentiment Affordability boosted by decline in mortgage rates ANTICIPATE CONTINUED MODERATE GR
Slide 21: Level of Construction Remains Below Housing Need
LEVEL OF CONSTRUCTION REMAINS BELOW HOUSING NEED Favorable demographics driving strong household formations Millennials entering prime homebuying years Growing housing “deficit” as current pace of building activity is not sufficient to meet demand ANNUAL U.S. HOUSING NEED MILLIONS OF UNITS DRIVER BA
Slide 22: New Home Sales Shifting Towards Lower Price Points
NEW HOME SALES SHIFTING TOWARDS LOWER PRICE POINTS NEW HOME SALES BY PRICE SEGMENT, Q3 2019 CHANGE IN NEW HOME SALES BY PRICE SEGMENT Q3 2019 VS. Q3 2018 THOUSANDS OF UNITS Growing share of new home sales in lower price segments Builders adjusting product offerings to meet demand for affordable hous
Slide 23: 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 sales volumes Retail revenues may fluctuate with commodity prices and tariffs U.S. HOUSING
Slide 24: Lumber: Expect strengthening markets
LUMBER: Expect strengthening markets Growing new residential, repair & remodel activity will drive increased demand Supply decreasing as announced British Columbia capacity reductions take effect Expect strengthening market dynamics LUMBER PRICING FRAMING LUMBER COMPOSITE SENSITIVITY $10/MBF ≈ $45 m
Slide 25: Lumber: Regional production shifting
LUMBER: Regional production shifting Canadian share of lumber market continues to decrease Log supply declining in British Columbia due to fires, pine beetle and lower allowable cut 20% duties remain in place on Canadian lumber exports to the U.S. U.S. Southern lumber production gaining share Source
Slide 26: Western Sawlogs
WESTERN SAWLOGS Solid demand from domestic and export markets Largest driver of demand is growing U.S. housing activity Steady Japanese demand for premium logs Chinese demand for WY logs resilient SENSITIVITY $20/MBF ≈ $30 million EBITDA JAPAN HOUSING STARTS WOOD-BASED CHINA SOFTWOOD LOG IMPORTS WES
Slide 27: Southern Sawlogs
SOUTHERN SAWLOGS Rising demand and pricing SOUTHERN LOG PRICING DELIVERED SOUTHERN AVG PINE SAWLOG U.S. SOUTH CAPACITY ADDITIONS 2017-2021 New Southern lumber capacity coming online WY uniquely positioned to benefit Aligned with rising production across the South Well positioned in markets with grea
Slide 28: OSB: Expect improving market fundamentals
OSB Expect improving market fundamentals Growing new residential, repair & remodel activity will drive increased demand Supply decreasing as announced industry curtailments take effect Expect strengthening market dynamics SENSITIVITY $10/MSF ≈ $30 million EBITDA ORIENTED STRAND BOARD PRICING NORTH C
Slide 29: Weyerhaeuser's Investment Thesis
FOCUSED ON DRIVING VALUE FOR SHAREHOLDERS WEYERHAEUSER’S INVESTMENT THESIS 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 SHAREHOLDER
Slide 30: Appendix
APPENDIX
Slide 31: Our Vision
OURWISION a cerealeniecetcncecenny Sc FYS HOW WE WIN » 4 Safety Integrity WHAT IT LOOKS LIKE » 4 KEY WEYERHAEUSER BEHAVIORS A TRULY GREAT COMPANY Develop our people Act with urgency Drive operational Be accountable excellence Citizenship Be courageous Pe j Deliver the most value reat place to|won Su
Slide 32: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION $ Millions 2016 2015 2017 2016 2018 2017 2019 Q3 LTM1 2018 Adjusted EBITDA2 $ 1,583 $ 2,080 $ 2,032 $ 1,362 Depletion, depreciation & amortization (512 ) (521 ) (486 ) (507 ) Basis of real estate sold (109 ) (81 ) (124 ) (149 ) Unallocated pension service costs (5 ) (4
Slide 33: Adjusted EBITDA Reconciliation: Timberlands
ADJUSTED EBITDA RECONCILIATION: Timberlands LTM = last twelve months 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 Plu
Slide 34: Adjusted EBITDA Reconciliation: Wood Products
ADJUSTED EBITDA RECONCILIATION: Wood Products 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. YTD = year to date Adjusted EBITDA is a non-GAAP measure that management uses to evaluate the perfo
Slide 35: Adjusted EBITDA Reconciliation: Real Estate, Energy & Natural Resources
ADJUSTED EBITDA RECONCILIATION: Real Estate, Energy & Natural Resources 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 estat