Weyerhaeuser Company · NYSE:WY
Weyerhaeuser — Non-Deal Roadshow (June 2020)
59 slides from Weyerhaeuser's roadshow presentation, Jun 2, 2020
Slide 1: Weyerhaeuser Investor Meetings June 2, 2020
Weyerhaeuser Investor Meetings June 2, 2020
Slide 2: Forward Looking Statements and Non-GAAP Financial Measures
FORWARD LOOKING STATEMENTS AND NON-GAAP FINANCIAL MEASURESThis 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 goal
Slide 3: Weyerhaeuser Investment Thesis
WEYERHAEUSER INVESTMENT THESIS UNMATCHED PORTFOLIO INDUSTRY-LEADING PERFORMANCE DISCIPLINED CAPITAL ALLOCATION SUPERIOR SHAREHOLDER VALUE Strong ESG Foundation I Our Forests and Wood Products are Natural Climate Solutions 3
Slide 4: Well Positioned to Navigate COVID-19 Disruptions
WELL POSITIONED TO NAVIGATE COVID-19 DISRUPTIONS ./ STRONG SAFETY CULTURE with high employee engagement ./DYNAMICALLY ALIGNING PRODUCTION with profitable demand ./ PROVEN ABILITY TO DELIVER industry-leading performance through adverse markets ./FAVORABLE COST STRUCTURE and focus on operational excel
Slide 5: Unmatched Portfolio
UNMATCHED PORTFOLIO Our Quality, Diversity and Scale Cannot Be Replicated
Slide 6: Who We Are
WHO WEARE A Tax-Efficient Timber REIT with Three Industry-Leading Businesses timberlands we are the largest private timberland owner in north America real estate, Energy & natural resources we deliver the most value from every acre wood products we are a scale low cost wood products manufacturer 11
Slide 7: What We Do
WHAT WE DO Create and Capture Superior Value at Every Step Proprietary seedlings yield superior growth. wood quality and sui'Vlval characteristics Customized planting deploys the best genetic material for each acre on our land base Targeted silviculture generates superior volume and value in each ge
Slide 8: How We Do It: Strong ESG Foundation
HOW WE DO IT Strong ESG Foundation Environmental stewardship sustainable forest management environmental impact carbon footprint safety & human capital workplace culture community investment & engagement social responsibility corporate governance best practices in governance board composition ethics
Slide 9: Environmental Stewardship
ENVIRONMENTALSTEWARDSHIP Sustainable Forestry • Carbon Sequestration • Reduced Environmental Footprint TIMBERLANDS0 MANUFACTURING WE PLANT ABOUT 150 MILLION TREES EVERY YEAR WE LEAVE TREE BUFFERS ALONG WATERWAYS TO PROTECT AQUATIC HABITAT WE HARVEST ONLY 2% of our forests each year 100% OF OUR TIMBE
Slide 10: Social Responsibility & Governance
SOCIAL RESPONSIBILITY & GOVERNANCE Human Capital Management • Ethics • Board Composition m HUMAN CAPITAL MANAGEMENT ~ GOVERNANCE WE DRIVE SIGNIFICANT SAFETY IMPROVEMENT 91% 10.00 1.77 1990 - 2019 RECORDABlE INCIDENT RATE 95% OF ALL SALARIED EMPLOYEES HAVE AN INDIVIDUAL DEVELOPMENT PLAN WE REDUCED BV
Slide 11: Timberlands
TIMBERLANDS ../ Unrivaled portfolio that cannot be replicated ../ Diversified holdings at scale ../ Unmatched timber-growing expertise ../ Superior supply chain ../ Enduring value across market cycles ../ Enhancing portfolio over time SUPERIOR HOLDING CREATE VALUE TODAY AND TOMORROW 11
Slide 12: Our Timberlands Portfolio
OUR TIMBERLANDS PORTFOLIO Unmatched Quality, Scale and Diversification High value Douglas-fir • Premium land west of the Cascade mountains • Sawlogs are approximately90% of harvest • Unique Japan export presence Premium Southern yellow pine • Superior quality pine plantation • Balanced mix of grade
Slide 13: Timberlands Customers
TIMBERLANDS CUSTOMERS Capture Full Value Through a Diverse Customer Mix TIMBERLANDS REVENUE BY END MARKET (2019} THIRD-PARTY DOMESTIC CUSTOMERS WEYERHAEUSER MILLS EXPORT CUSTOMERS We flex supply to meet dynamic customer demands and capture market opportunities 59 % 24% 17% 13
Slide 14: Timberlands Export Markets
TIMBERLANDS EXPORT MARKETS Unrivaled Market Position and Supply Chain Expertise EXPORT REVENUE UNIQUE JAPAN BUSINESS • Multi-decade relationships supplying steady post & beam housing market • Western timberlands ownership provides premium logs at unrivaled scale • Largest log export facility in Nort
Slide 15: Timberlands: Enduring Value Across Market Cycles
TIMBERLANDS Enduring Value Across Market Cycles 0 0 ~ II J: 1- ::::> 0 Vl vi ::::> ....... co m ~ 600 500 400 300 200 100 NCREIF TIMBERLAND INDEX INDEXED MARKET VALUE PER ACRE, BY REGION ~-- 1987 1991 1995 1999 2003 2007 2011 2015 2019 - Northwest - south Low Correlation With Other Asset Classes per
Slide 16: Timberlands Portfolio Management
TIMBERLANDS PORTFOLIO MANAGEMENT Disciplined and Opportunistic Timberland Acres By Region 7.5 6.0 4.5 3.0 ~ ~ 1.5 0 1£ g ~ 0.0 U.S. South U.S. West 2012 2013 2014 2015 2016 2017 2018 2019 Strategic Divestitures ~ :!:! v :: 3.0 0 ~ 1.5 ~ o.o Twin Creeks Uruguay - Michigan Montana 2012 2013 2014 2015
Slide 17: Real Estate, Energy & Natural Resources
REAL ESTATE, ENERGY & NATURAL RESOURCES ../ Continually evaluate every acre ../ Deliver a significant premium to timber value ../ Capture the full value of surface and subsurface assets ../ Generate consistent and reliable cash flow maximize the value of every acre we own 17
Slide 18: Real Estate: Unlock Higher and Better Use Value
REAL ESTATE Unlock Higher and Better Use (HBU) Value Asset Value Optimization (AVO) PROCESS Nimble Business Model r:-Y Low Operating lJ!I Costs Minimal Capital Investment Approximate acres as of December 31, 2019, pro forma for the sale of Montana timberlands '\Aihich closed in first quarter 2020. C
Slide 19: Energy & Natural Resources
ENERGY & NATURAL RESOURCES Maximize the Value of Surface and Sub-Surface Rights Wind and Infrastructure Rights of solar power mitigation banks oil & natural gas 35 % ebitda mix (1) 60% 5% aggregates & industries materials Way Cell Towers Wetland Aggregates & Industrial Materials BALANCED Oil & Natur
Slide 20: Consistent, Reliable Cash Generation
I REAL ESTATE, ENERGY & NATURAL RESOURCES Consistent, Reliable Cash Generation ADJUSTED EBITDA(1> $ in millions $264 $274 $241 $200 $189 2016 2017 2018 2019 2020 • Real Estate • Energy & Natural Resources Outlook (1) See appendixfor reconciliation to GAAP amounts. ./ Record Adjusted EBITDA in 2019 .
Slide 21: Wood Products
WOOD PRODUCTS • ../ Unmatched scale, brand and reputation ../ Diversified mix of high-quality products ../ Diverse customer mix and demand drivers ../ Relentless focus on industry-leading cost structure ../ Superior returns through the cycle: "Black at the bottom" Maximizing margin through the busin
Slide 22: Wood Products Portfolio
WOOD PRODUCTS PORTFOLIO Industry-Leading Scale/ Diversification and Quality LUMBER 2nd largest producer in North America 19 lumber mills 5.2 BBF capacity ORIENTED STRAND BOARD 4th largest producer in North America 6 oriented strand board mills 3.0 BSF capacity ENGINEERED WOOD PRODUCTS #1 engineered
Slide 23: Diverse Demand Drivers and Customer Mix
WOODPRODUCTS Diverse Demand Drivers and Customer Mix PERCENT OF SALES BY END MARKET (2019) NEW RESIDENTIAL: SINGLE & MULTI-FAMILY REPAIR & REMODEL: PROFESSIONAL AND DIY NON-RESIDENTIAL CONSTRUCTION AND INDUSTRIAL USES Customers value our quality, scale, reliability and sustainable practices Percenta
Slide 24: Positioned for Superior Performance Through the Cycle
WOOD PRODUCTS Positioned for Superior Performance Through the Cycle Achieved Industry-Leading Cost Structure Lumber 14% Cost Reduction 100% 95% 90% 85% 80% 2013 2015 2017 2019 Cost Net of Logs/MBF OSB 15% Cost Reduction 100% 95% 90% 85% 80% 2013 2015 2017 2019 Controllable Cost/M38 Indexed to 2013 I
Slide 25: Industry-Leading Performance
INDUSTRY-LEADING PERFORMANCE Significant Sustainable Margin Improvement Through the Cycle 25
Slide 26: Operational Excellence 1.0
OPERATIONAL EXCELLENCE 1.0 Achieved $650 Million of Margin Improvements Since 2014 TIMBERLANDS HARVEST & HAUL Increase efficiency and reduce cost SILVICULTURE Optimize site prep, thinning and fertilization MERCHANDISING Right product from the right log MARKETING Right product to the right customer W
Slide 27: Our OpX Scorecard
DRIVING SUPERIOR RELATIVE PERFORMANCE Our OpX Scorecard TIMBERLANDS ADJUSTED EBITDAI1,2l PER ACRE WOOD PRODUCTS ADJUSTED EBITDA MARGIN1',3l 5220 5180 5140 5100 500 WEST 520 +-~~~--~--~--~~--~--,---~~ 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q1 Weyerhaeuserlimberlands & ENR vs Peers LTM SOUT
Slide 28: OpX 2.0
OPX 2.0 Evolving Our Approach to Operational Excellence DELIVERING VALUE TO SHAREHOLDERS THROUGH SUPERIOR EXECUTION +ONGOING IMPROVEMENT TOP LINE Capture Maximum Value for Every Product BOTTOM LINE Deliver and Maintain Industry- Leading Cost Structure BLACK AT THE BOTIOM • #liN EVERY BUSINESS LINE '
Slide 29: Disciplined Capital Allocation
DISCIPLINED CAPITAL ALLOCATION Long-Term Commitment to Balancing Three Key Priorities
Slide 30: Capital Allocation Adjustments
DISCIPLINED CAPITAL ALLOCATION CAPITAL ALLOCATION Appropriate and Temporary Adjustments to Navigate Uncertain Environment RETURN CASE TO SHAREHOLDERS INVEST IN OUR BUSINESSES MAINTAIN AN APPROPRIATE CAPTIAL STRUCTURE CORE ALLOCATION Sustainable Dividend Disciplined Capital Expenditures Investment Gr
Slide 31: Actions to Preserve Financial Flexibility and Liquidity
ACTIONS TO PRESERVE FINANCIAL FLEXIBILITY AND LIQUIDITY CAPTIAL ALLOCATION Well-Positioned to Successfully Navigate Uncertain Markets REDUCING PRODUCTION ENHANCED LIQUIDITY REDUCING CAPEX REDUCING NON-ESSENTIAL OPERATING EXPENSES REDUCING MANAGEMENT AND BOARD COMPENSATION TEMPORARILY SUSPENDED QUART
Slide 32: Returning Cash to Shareholders
RETURNING CASH TO SHAREHOLDERS CAPTIAL ALLOCATION Key Component of Long-Term Capital Allocation Strategy RETURNED NEARLY $8 BILLION TO SHAREHOLDERS SINCE2014 THROUGH DIVIDENDS AND SHARE REPURCHASE Temporarily suspended quarterly dividend to preserve liquidity and financial flexibility Committed to r
Slide 33: Disciplined Investments
DISCIPLINED INVESTMENTS Sustain and Enhance Our Operations CAPTIAL ALLOCATION CAPITAL EXPENDITURES $ in millions $425 216 $419 2017 $427 2018 $384 2019 $270 2020 Outlook REVISED 2020 OUTLOOK Wood Products-$160 million Maintenance capex Projects to improve costs and reliability Timberlands-$110 milli
Slide 34: Maintain an Appropriate Capital Structure
MAINTAIN AN APPROPRIATE CAPITAL STRUCTURE CAPTIAL ALLOCATION Solid Balance Sheet and Financial Flexibility INVESTMENT GRADE CREDIT PROFILE Baa2 Moody’s BBB- Standard & Poor’s 3.5x Target Net debt/Adjusted EBITDA over the cycle SOLID LIQUIDITY STRONG ASSET COVERAGE OPPORTUNISTIC LIABILITY MGMT Precau
Slide 35: Superior Shareholder Value
SUPERIOR SHAREHOLDER VALUE Capitalizing on Strong Portfolio and Operational Performance 35
Slide 36: Significant Uncertainty Across Our Markets
SIGNIFICANT UNCERTAINTY ACROSS OUR MARKETS As CO VI D-19 Drives Reduced Construction Activity VAI.Vt HOUSING STARTS Rising unemployment Tighter credit availability • Decreased consumer confidence * Construction restrictions easing .... Renewed preference for single-family REPAIR & REMODEL Solid do-i
Slide 37: Solid Underlying Market Fundamentals
SOLID UNDERLYING MARKET FUNDAMENTALS Driven by Continued Demand for U.S. Housing HOUSING STARTS Underbuilt housing stock Favorable demographics Affordable offerings, low interest rates Supply-side constraints remain Growing preference for single-family REPAIR & REMODEL Aging housing stock Rising hom
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 FROM THE ATMOSPHERE WE PLANT MORE TREES THAT ABSORB EVEN MORE CO2 AS THEY GROW OUR WOOD PRODUCTS STORE CARBON FOR THE LIFE OF THE PRODUCT WO
Slide 39: Weyerhaeuser Investment Thesis
WEYERHAEUSER INVESTMENT THESIS UNMATCHED PORTFOLIO INDUSTRY-LEADING PERFORMANCE DISCIPLINED CAPITAL ALLOCATION SUPERIOR SHAREHOLDER VALUE Strong ESG Foundation I Our Forests and Wood Products are Natural Climate Solutions
Slide 40: Appendix: Market Overview and Supplemental Information
APPENDIX Market Overview and Supplemental Information
Slide 41: Expect Continued Long-Term Growth in U.S. Housing
EXPECT CONTINUED LONG-TERM GROWTH IN U.S. HOUSING • U.S. housing activity impacted by rising unemployment, weaker consumer confidence and tightening credit • Expect growth to resume as economic fundamentals recover • Historically low mortgage rates • Growing preference for single-family homes 2.5 U.
Slide 42: Level of Construction Remains Below Housing Need
LEVEL OF CONSTRUCTION REMAINS BELOW HOUSING NEED • Growing housing "deficit" as current pace of building activity is not sufficient to meet demand • Favorable demographics with millennials entering prime homebuying years 6 5 ~ 4 0 2 1 0 U.S. POPULATION BY AGE AS OF JULY 1, 2018 0 ~ 0 ~ 0 ~ 0 ~ 0 ~ 0
Slide 43: Steady Repair & Remodel Activity
STEADY REPAIR & REMODEL ACTIVITY • Housing stock continues to age, with median age of approximately 40 years old • Solid do-it-yourself demand • Large remodel projects challenged by social distancing measures and tighter credit availability ~" c ::> ~ ~ 25 20 15 10 5 0 U.S. HOUSING STOCK UNITS BY VI
Slide 44: Lumber Demand Uneven
LUMBER DEMAND UNEVEN • Lower construction activity due to economic impacts from COVID-19 • Solid repair and remodel activity supported by do-it-yourself demand • Industry curtailments and closures have reduced available supply • Expect choppy demand and pricing as market conditions evolve • Rising f
Slide 45: Lumber: Mill Curtailments and Closures Have Reduced Industry Capacity
LUMBER Mill Curtailments and Closures Have Reduced Industry Capacity • Significant North American lumber capacity curtailed in 2020 due to economic impacts from COVID-19 • Structural decline in British Columbia log supply drove numerous mill closures in 2019 • Canadian lumber exports to the U.S. rem
Slide 46: OSB Demand Uneven
OSB DEMAND UNEVEN • • • 0% » .: v ~ c. 3 -5% ;;; v ·~ E -1 0% "" ~ "' ~ -1 5% 0 g, ~ -20% 8 ::; Q. -25% Lower new residential construction activity with economic impacts of COVID-19 Industry curtailments have reduced available supply Expect choppy demand and pricing as market conditions evolve NORTH
Slide 47: Western Logs: Export Demand Mitigating Weaker Domestic Markets
WESTERN LOGS Export Demand Mitigating Weaker Domestic Markets • Lower domestic log demand due to lower wood products production • Improved Chinese demand and pricing • Japanese demand steady, but softening expected • Able to rapidly flex volume in response to changing markets 900 800 700 600 ~ 500 "
Slide 48: Southern Logs: Softer Sawlog Markets, Solid Fiber Demand
SOUTHERN LOGS Softer Sawlog Markets, but Solid Fiber Demand • • • Industry harvest volumes decreasing in response to lower domestic wood products production Fiber market remains stable with demand for hygiene products WY's timberlands are well positioned to benefit as domestic sawlog demand rebounds
Slide 49: Well-Laddered Debt Profile
WELL-LADDERED DEBT PROFILE After 2021 Repayments, No Additional Debt Maturities Until 2023 DEBT MATURITY PROFILE<1> $ in millions 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 • Bonds • Revolving Line of Credit<2l 1 $860 m;tior, We:~t:Roc< r-ote 1ntuf.ng 2023 ~ exter.ioo ootl
Slide 50: ESG External Recognition
ENVIRONMENTAL, SOCIAL & GOVERNANCE External Recognition LISTINGS ON ESG INDICES ESG RATINGS AND RANKINGS WE ARE THE ONLY North American forestry or wood products company M EMBER OF Dow Jones Sustainability Indices f "'AM In collaboration with ·-·- Ecpl~~llo.. Sensein ~ ~ Jl" sustainability MSCI STO>
Slide 51: We Are Timber-Growing Experts
WE ARE TIMBER-GROWING EXPERTS Deeply Committed to Environmental Stewardship PROPRIETARY SEEDLINGS We cultivate seedlings with superior survival, growth, and wood-quality characteristics CUSTOMIZED PLANTING We deploy the best genetic material for each acre on our land base 100% OF OUR TIMBERLANDS ARE
Slide 52: Our Timber Supply-Chain Expertise Is Unrivaled
OUR TIMBER SUPPLY-CHAIN EXPERTISE IS UNRIVALED We Capture Maximum Value At Each Step MATURE FORESTS We grow diverse product offerings in scale quantities with superior, reliable quality SUPPLY CHAIN EXPERTS SUSTAINABLE HARVESTING Our expert harvest planning captures value at the point of financial m
Slide 53: Our Wood Products Supply Chain Is Efficient
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 LOW-COST MANUFACTURING Our operational excellence and reliability focus drives top
Slide 54: Our Vision
OUR VISION Working together to be the world’s premier timber, land, and forest products company HOW WE WIN CORE VALUES Safety Integrity Citizenship Sustainability Inclusion RELENTLESS FOCUS Develop our people Drive operational excellence Deliver the most value from every acre Optimize capital KEY BE
Slide 55: Adjusted EBITDA Reconciliation: Total Company
ADJUSTED EBITDA RECONCILATION Total Company $Millions 2016 2017 2018 2019 Adjusted EBITDA 1 $ 1,583 $ 2,080 $ 2,032 $ 1,276 Depletion, depreciation & amortization (512) (521) (486) (510) Basis of real estate sold (109) (81) (124) (116) Unallocated pension service costs (5) (4) Special items included
Slide 56: Net Debt to Adjusted EBITDA Reconciliation
NET DEBT TO ADJUSTED EBITDA RECONCILATION Total Company $ Millions 2016 2017 2018 2019 m m m ~ m m m ~ m m m ~ m m m ~ N et 0 e bt to Adl"jU Ste d EBITOA {l TM) 1.2.3 67 61 53 37 3 6 33 2 9 1 25 25 22 30 33 49 Total debt $7,715 $8,013 $8,310 $6,610 $6,606 $6,604 $5,995 $5,992 $5,928 $5,924 $5,921 $6
Slide 57: Adjusted EBITDA Reconciliation: Timberlands
ADJUSTED EBITDA RECONCILATION Timberlands $Millions 2011 2012 2013 Western Timberlands and Energy & Natural Resources (ENR) $283 $263 $380 Less: EBITDA attributable to Western ENR' 4 5 7 Western Timberlands 279 258 373 Southern Timberlands and ENR 290 339 372 1- Less: EBITDA attributable to Southern
Slide 58: Adjusted EBITDA Reconciliation: Wood Products
ADJUSTED EBITDA RECONCILATION Wood Products Lumber ($7) $130 $317 OSB (4) 143 247 EWP 6 17 45 Distribution (37) (29) (33) Other (1) (15) (2) Adjusted EBITDA2 ($43) $246 $574 $319 46 79 2 $446 Depletion, Depreciation & Amortization (151) (133) (123) (119) Special Items (52) 6 (1 0) Operating Income (
Slide 59: Adjusted EBITDA Reconciliation: Real Estate, ENR
ADJUSTED EBITDA RECONCILATION Real Estate, Energy & Natural Resources $Millions 2016 2017 2018 2019 Real Estate $142 $178 $196 $193 Energy & Natural Resources 47 63 68 81 Adjusted EBITDA 1 $189 $241 $264 $274 Depletion, Depreciation & Amortization (13) (15) (14) (14) Basis of Real Estate Sold (109)