Weyerhaeuser Company · NYSE:WY
Weyerhaeuser — Q4 2022 Earnings Presentation
36 slides from Weyerhaeuser's earnings presentation, January 2023
Slide 1: 2022 Earnings Results: Fourth Quarter 2022
2022 EARNINGS RESULTS FOURTH QUARTER 2022
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation contains statements concerning the company's future results and performance that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, but not limited to, with respect to: future cash dividend
Slide 3: 2022 Consolidated Results
2022 CONSOLIDATED RESULTS $ Millions 2021 2022 $ Millions (except EPS) 2021 2022 Adjusted EBITDA FY FY Change Consolidated Statement of Operations FY FY Timberlands $ 693 $ 784 $ 91 Net sales $ 10,201 $ 10,184 Real Estate, Energy & Natural Resources 296 329 33 Costs of sales 6,103 6,564 Wood Product
Slide 4: 2022 Q4 Consolidated Results
2022 Q4 CONSOLIDATED RESULTS $ Millions 2022 2022 $ Millions (except EPS) 2022 2022 Adjusted EBITDA Q3 Q4 Change Consolidated Statement of Operations Q3 Q4 Timberlands $ 168 $ 150 $ (18) Net sales $ 2,276 $ 1,823 Real Estate, Energy & Natural Resources 60 46 (14) Costs of sales 1,694 1,434 Wood Prod
Slide 5: Earnings Before Special Items
EARNINGS BEFORE SPECIAL ITEMS $ Millions (except EPS) 2022 Q3 2022 Q4 Pretax After-Tax Diluted Pretax After-Tax Diluted Earnings Earnings EPS Earnings Earnings EPS Earnings Before Special Items $ 387 $ 310 $ 0.42 $ 181 $ 171 $ 0.24 Special Items: Pension settlement charge — — — 205 152 0.21 Restruct
Slide 6: Adjusted EBITDA
ADJUSTED EBITDA1 TOTAL COMPANY2 REAL ESTATE & ENR $1,650 $1,573 $1,497 $150 $1,320 $1,205 $116 $ Millions $1,101 $107 $ Millions $100 $96 $91 $990 $746 $674 $583 $60 $60 $660 $46 $49 $369 $50 $330 $0 $0 Q1.21 Q2.21 Q3.21 Q4.21 Q1.22 Q2.22 Q3.22 Q4.22 Q1.21 Q2.21 Q3.21 Q4.21 Q1.22 Q2.22 Q3.22 Q4.22 R
Slide 7: Timberlands Segment
TIMBERLANDS SEGMENT TIMBERLANDS ($ Millions) 2022 2022 TIMBERLANDS ($ Millions) 2022 2022 Adjusted EBITDA by Region Q3 Q4 Segment Statement of Operations Q3 Q4 West $ 92 $ 72 Third-party sales $ 441 $ 437 South 75 77 Intersegment sales 133 111 North 3 5 Total Sales 574 548 Other (2) (4) Costs of sal
Slide 8: Timberlands Key Drivers: 2022 Q4 vs. 2022 Q3
TIMBERLANDS KEY DRIVERS: 2022 Q4 vs. 2022 Q3 REGION KEY DRIVERS WEST • Fee Harvest Volumes: Slightly higher, returned to run-rate harvest volumes faster than expected following work stoppage resolution • Sales Volumes: Moderately higher • Sales Realizations: Significantly lower • Per Unit Log and Ha
Slide 9: Sales Volumes, Realizations and Export Revenue
SALES VOLUMES, REALIZATIONS AND EXPORT REVENUE 3rd-Party Log Sales and Realizations - West1 3rd-Party Log Sales and Realizations - South 3,600 $200 7,000 $45 $173.35 $38.47 $38.59 $38.67 Volum es (Thousands of tons) $161.29 $158.59 $34.50 $35.11 $35.56 $36.55 $37.15 Volum es (Thousands of tons) 3,00
Slide 10: Fee Harvest Volumes and Intersegment Sales Volumes
FEE HARVEST VOLUMES AND INTERSEGMENT SALES VOLUMES FEE HARVEST VOLUMES1 INTERSEGMENT LOG SALES VOLUMES1 7,500 1,500 6,160 6,159 6,216 1,263 6,112 1,220 1,224 1,189 1,206 5,856 5,912 5,842 1,186 6,250 1,099 1,106 5,376 1,200 Thousands of tons Thousands of tons 5,000 900 779 799 761 741 733 721 3,750
Slide 11: Real Estate, Energy & Natural Resources (ENR) Segment
REAL ESTATE, ENERGY & NATURAL RESOURCES (ENR) SEGMENT REAL ESTATE & ENR ($ Millions) 2022 2022 REAL ESTATE & ENR ($ Millions) 2022 2022 Adjusted EBITDA by Business Q3 Q4 Segment Statement of Operations Q3 Q4 Real Estate $ 24 $ 12 Total sales $ 68 $ 55 Energy & Natural Resources 36 34 Costs of sales
Slide 12: Real Estate, Energy & Natural Resources (ENR) Segment: Acres Sold
REAL ESTATE, ENERGY & NATURAL RESOURCES (ENR) SEGMENT ACRES SOLD AVERAGE PRICE PER ACRE 50 $7,000 45 $6,316 40 $6,000 $5,550 35 $5,046 Acres (thousands) Price per acre 31 $5,000 30 27 $4,385 24 $3,803 $3,785 $4,000 19 18 $4,005 20 $3,000 $3,227 $3,215 11 10 $1,992 7 $2,000 5 $1,501 3 1 $1,381 0 $1,0
Slide 13: Natural Climate Solutions: Building a $100 Million Business
NATURAL CLIMATE SOLUTIONS Leveraging Our Scale and Making Progress Against Our Multi-Year Target GROWING OUR CURRENT BUSINESS KEY UPDATES BUILDING A $100 MILLION BUSINESS Adjusted EBITDA1 • Initial growth primarily from current Mitigation, Conservation and Renewable Energy businesses $100 • Progress
Slide 14: Wood Products Segment
WOOD PRODUCTS SEGMENT WOOD PRODUCTS ($ Millions) 2022 2022 WOOD PRODUCTS ($ Millions) 2022 2022 Adjusted EBITDA by Business Q3 Q4 Segment Statement of Operations Q3 Q4 Lumber $ 88 $ 8 Total sales $ 1,767 $ 1,331 OSB 101 54 Costs of sales 1,360 1,116 Engineered Wood Products 166 110 Gross margin 407
Slide 15: Wood Products Key Drivers: 2022 Q4 vs. 2022 Q3
WOOD PRODUCTS KEY DRIVERS: 2022 Q4 vs. 2022 Q3 BUSINESS KEY DRIVERS LUMBER • Sales Realizations: Decreased 11% • Sales and Production Volumes: Significantly lower, resulting from the work stoppage, labor constraints and adverse weather conditions • Unit Manufacturing Costs: Significantly higher • Lo
Slide 16: Third-Party Sales Volumes and Realizations
THIRD-PARTY SALES VOLUMES AND REALIZATIONS1 Lumber2 OSB 4,500 $1,077 $1,041 $1,200 $911 5,000 $950 $787 Volumes (Millions of Board Ft.) Volumes (Millions of Square Ft.) 3,600 $864 Realizations ($/MBF) $776 $900 $691 $676 4,000 $760 Realizations ($/M 3/8") $614 2,700 $592 $556 $490 3,000 $570 $516 $4
Slide 17: Unallocated Items
UNALLOCATED ITEMS UNALLOCATED ITEMS ($ Millions)1 2022 2022 UNALLOCATED ITEMS ($ Millions)1 2022 2022 Q3 Q4 Q3 Q4 Unallocated corporate function expenses and variable Costs of sales4 $ (11) $ 20 $ (36) $ (36) compensation expense G&A expense5 (33) (35) Liability classified share-based compensation 2
Slide 18: Financial Items
FINANCIAL ITEMS KEY FINANCIAL METRICS ($ Millions) 2022 2022 Cash Flow from Operations Q3 Q4 $1,500 $1,308 Ending Cash Balance $ 1,920 $ 1,581 $1,146 $1,200 $957 Total Debt $ 5,053 $ 5,053 $900 $ Millions Net Debt to Adjusted EBITDA (LTM)1 0.8 1.0 $659 $562 $600 $698 Net Debt to Enterprise Value2 13
Slide 19: Adjusted Funds Available for Distribution: Allocation Framework
ADJUSTED FUNDS AVAILABLE FOR DISTRIBUTION Allocation Framework and Cash Return Calculation TARGETED RETURN OF CASH ADJUSTED FUNDS AVAILABLE FOR DISTRIBUTION1 TO SHAREHOLDERS ALLOCATION FRAMEWORK Calculated on an Annual Basis Return 75-80% of Adj. FAD to Shareholders Adjusted FAD SUSTAINABLE BASE DIV
Slide 20: Adjusted Funds Available for Distribution: Returning $1.75 Billion
ADJUSTED FUNDS AVAILABLE FOR DISTRIBUTION Returning $1.75 Billion in Total Cash Based on 2022 Results RETURNING 75% OF ADJUSTED FAD TO SHAREHOLDERS BASED ON 2022 RESULTS Adjusted Funds Available for Distribution1 ($ Millions) 2022 $2,500 Net Cash from Operations $2,832 Capital Expenditures2 ($468) $
Slide 21: Returning Cash to Shareholders: $3.8 Billion
RETURNING CASH TO SHAREHOLDERS Demonstrating The Power of Our Cash Return Framework ANNUAL PAYOUT OF ADJUSTED FAD 2021 = 79% 2022 = 75% RETURNING $2,068 $2,000 $1,746 OVER $1,500 $3.8 BILLION $1,000 TO SHAREHOLDERS $1,459 $ Millions $500 BASED ON 2021 & 2022 $509 $534 $662 $550 RESULTS $0 $100 Base
Slide 22: 2025 Year-End Targets
2025 YEAR-END TARGETS Making Progress Against Our Multi-Year Targets INVESTMENT THESIS TARGETS 2022 HIGHLIGHTS Grow Timberlands Portfolio Invested ~$300 million UNMATCHED by $1 billion of disciplined investments on strategic acquisitions, including the Carolinas PORTFOLIO Grow Natural Climate Soluti
Slide 23: Outlook: 2023 Q1
OUTLOOK: 2023 Q1 EXPECTED SEGMENT EARNINGS1 KEY DRIVERS & ADJUSTED EBITDA TIMBERLANDS Slightly higher than West South North 2022 Q4 Fee Harvest Volumes: Fee Harvest Volumes: Fee Harvest Volumes: Significantly higher Slightly lower, seasonal Slightly lower Domestic Sales Realizations: Sales Realizati
Slide 24: 2023 Outlook
2023 OUTLOOK DRIVER FY 2023 OUTLOOK Approximately 35 million tons • South: Moderately higher than 2022 FEE HARVEST VOLUME • West: Moderately higher than 2022 • North: Slightly higher than 2022 REAL ESTATE & ENR ADJUSTED EBITDA $300 million BASIS OF REAL ESTATE SOLD 35-45% of Real Estate sales INTERE
Slide 25: Wood Products Sales Realizations: Current vs. 2022 Q4
WOOD PRODUCTS SALES REALIZATIONS: CURRENT VS. 2022 Q4 WEYERHAEUSER’S AVERAGE SALES REALIZATIONS Approximate Change As of January 20, 2023 LUMBER1 Q1 QTD vs. WY’s -$70/MBF LOWER SENSITIVITY Q4 AVERAGE CHANGE IN REALIZATIONS $10/MBF ≈ $50 million CURRENT vs. EBITDA -$60/MBF LOWER ANNUALLY Q4 AVERAGE O
Slide 26: Earnings Summary
EARNINGS SUMMARY $ Millions (except EPS) 2021 2022 Adjusted EBITDA by Segment Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Timberlands $ 172 $ 180 $ 165 $ 176 $ 247 $ 219 $ 168 $ 150 Real Estate, Energy & Natural Resources 96 91 60 49 116 107 60 46 Wood Products 889 1,386 565 517 1,233 912 395 197 Unallocated Items (56)
Slide 27: Earnings Per Share Reconciliation
EARNINGS PER SHARE RECONCILIATION 2021 2022 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Diluted EPS Before Special Items $ 0.91 $ 1.37 $ 0.60 $ 0.49 $ 1.31 $ 1.06 $ 0.42 $ 0.24 Special Items: Gain on sale of timberlands — — 0.04 — — — — — Insurance recovery — — — 0.01 — — — — Legal benefit — — — 0.01 — — — — Loss on de
Slide 28: Earnings Before Special Items Reconciliation
EARNINGS BEFORE SPECIAL ITEMS RECONCILIATION $ Millions (except EPS) 2021 2022 Pretax After-Tax Diluted Pretax After-Tax Diluted Earnings Earnings EPS Earnings Earnings EPS Earnings Before Special Items $ 3,219 $ 2,526 $ 3.37 $ 2,796 $ 2,247 $ 3.02 Special Items: Gain on sale of timberlands 32 32 0.
Slide 29: Adjusted EBITDA Reconciliation: By Segment
ADJUSTED EBITDA RECONCILIATION By Segment $ Millions 2019 2020 2021 2022 FY FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Timberlands $ 680 $ 610 $ 172 $ 180 $ 165 $ 176 $ 693 $ 247 $ 219 $ 168 $ 150 $ 784 Real Estate & ENR 274 241 96 91 60 49 296 116 107 60 46 329 Wood Products 476 1,527 889 1,386 565 517 3,357
Slide 30: Adjusted EBITDA Reconciliation: Timberlands
ADJUSTED EBITDA RECONCILIATION Timberlands $ Millions 2021 2022 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 West $ 101 $ 103 $ 90 $ 93 $ 165 $ 144 $ 92 $ 72 South 69 76 76 80 80 75 75 77 North 3 2 1 3 4 2 3 5 Other (1) (1) (2) — (2) (2) (2) (4) Total Timberlands Adjusted EBITDA 1 $ 172 $ 180 $ 165 $ 176 $ 247 $ 219 $ 1
Slide 31: Adjusted EBITDA Reconciliation: Real Estate, Energy & Natural Resources
ADJUSTED EBITDA RECONCILIATION Real Estate, Energy & Natural Resources $ Millions 2021 2022 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Real Estate $ 76 $ 66 $ 38 $ 27 $ 87 $ 83 $ 24 $ 12 Energy & Natural Resources 20 25 22 22 29 24 36 34 Total Real Estate & ENR Adjusted EBITDA 1 $ 96 $ 91 $ 60 $ 49 $ 116 $ 107 $ 60 $
Slide 32: Adjusted EBITDA Reconciliation: Wood Products
ADJUSTED EBITDA RECONCILIATION Wood Products $ Millions 2021 2022 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Lumber $ 513 $ 804 $ 118 $ 195 $ 648 $ 359 $ 88 $ 8 OSB 300 472 344 176 392 332 101 54 EWP 42 53 76 114 136 173 166 110 Distribution 39 75 22 40 72 48 41 23 Other (5) (18) 5 (8) (15) — (1) 2 1, 2 Total Wood Pro
Slide 33: Adjusted EBITDA Reconciliation: Unallocated
ADJUSTED EBITDA RECONCILIATION Unallocated $ Millions 2021 2022 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 1 Total Unallocated Adjusted EBITDA $ (56) $ (84) $ (44) $ (68) $ (99) $ (33) $ (40) $ (24) Total depletion, depreciation & amortization (2) (1) (2) — (2) (1) (2) (1) Special items included in operating loss — —
Slide 34: Net Debt to Adjusted EBITDA Reconciliation
NET DEBT TO ADJUSTED EBITDA RECONCILIATION $ Millions 2021 2022 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Net Debt to Adjusted EBITDA (LTM) 1, 2 1.5 0.9 0.7 0.8 0.9 0.8 0.8 1.0 Total debt $ 5,475 $ 5,250 $ 5,250 $ 5,099 $ 5,053 $ 5,053 $ 5,053 $ 5,053 Less: cash and cash equivalents 1,016 1,777 2,326 1,879 1,205 1,72
Slide 35: Funds Available for Distribution Reconciliation
FUNDS AVAILABLE FOR DISTRIBUTION RECONCILIATION ADJUSTED FUNDS AVAILABLE FOR DISTRIBUTION ($ Millions) 2019 2020 2021 2022 FY FY FY FY Net Cash from Operations $ 966 $ 1,529 $ 3,159 $ 2,832 Capital Expenditures (384) (281) (441) (468) Funds Available for Distribution 1 $ 582 $ 1,248 $ 2,718 $ 2,364
Slide 36: Adjusted EBITDA Reconciliation: Natural Climate Solutions
ADJUSTED EBITDA RECONCILIATION Natural Climate Solutions $ Millions 2020 2021 2022 FY FY FY Total Natural Climate Solutions Adjusted EBITDA1 $ 22 $ 38 $ 43 Depletion, depreciation & amortization (1) (1) (1) Basis of real estate sold (9) (10) (10) Operating Income (GAAP) $ 12 $ 27 $ 32 1. Adjusted EB