EARNINGS RESULTS | 1st Quarter 2016 May 6, 2016
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. These statements are based on our current expectations and various assumptions that are subject to risks and uncertainties. These factors, which are described from time to time in our filings with the Securities and Exchange Commission, as well as other factors, may cause actual results to differ significantly from these forward-looking statements. There is no guarantee that any of the events anticipated by these forward-looking statements will occur. If any of the events occur, there is no guarantee what effect they will have on the company's operations, cash flow or financial condition. All forward-looking statements are as of the date of this news release and we undertake no obligation to publicly update these forward-looking statements, whether as a result of new information, the occurrence of future events or otherwise. Some forward-looking statements discuss the company's plans, strategies and intentions. They use words such as “expects,” “may,” “will,” “believes,” “should,” “approximately,” “anticipates,” “estimates,” and “plans.” In addition, these words may use the positive or negative or other variations of those terms. This presentation contains forward-looking statements regarding the company's expectations during the second quarter of 2016, including with respect to earnings; log realizations, demand, and harvest volumes in Timberlands; market demand for our timberland properties that have higher and better uses; lumber sales realizations and production volumes across Wood Products product lines, and maintenance and capital costs and realizations for pulp in Cellulose Fibers and changes in acquisition accounting. 2 05/06/2016
NON-GAAP FINANCIAL MEASURES • During the course of this presentation, certain non-U.S. GAAP financial information will be presented. A reconciliation of those numbers to U.S. GAAP financial measures is included in this presentation which is available on the company’s website at www.weyerhaeuser.com • Adjusted EBITDA is a non-GAAP measure that management uses to evaluate the performance of the company. Effective for the quarter ended March 31, 2016, we have revised our definition of Adjusted EBITDA to add back the basis of real estate sold. We have revised our prior-period presentation to conform to our current reporting. • Adjusted EBITDA, as we define it, is operating income from continuing operations adjusted for depreciation, depletion, amortization, basis of real estate sold, pension and postretirement costs not allocated to business segments and special items. Adjusted EBITDA excludes results from joint ventures. • Our definition of Adjusted EBITDA may be different from similarly titled measures reported by other companies. Adjusted EBITDA should not be considered in isolation from and is not intended to represent an alternative to our GAAP results. 3 05/06/2016
2016 Q1 KEY DEVELOPMENTS Merger with Plum Creek: • Weyerhaeuser merged with Plum Creek Timber Company, Inc. ("Plum Creek") on February 19, 2016. Our 2016 Q1 consolidated results include the former Plum Creek operations from the date of the merger through March 31, 2016. • The initial allocation of total consideration transferred was recorded at the estimated fair value of assets acquired and liabilities assumed based on the best information available to management as of March 31, 2016. These estimated fair values are preliminary in nature and subject to adjustments, which could be material. Any necessary adjustments will be finalized within one year from the date of acquisition. Revision to business segments: • The Timberlands segment includes sales of logs, stumpage and pay-as-cut timber, recreational lease revenue, and Uruguay operations. Sales of higher and better use and non-core timberlands and royalties related to minerals and oil and gas assets are now reported as part of the Real Estate, Energy & Natural Resources segment. Results for fiscal periods prior to first quarter 2016 have been revised to conform to the new segments. 4 05/06/2016
2016 Q1 CONSOLIDATED RESULTS Chart 1 $ Millions 2015 2016 $ Millions EXCEPT EPS 2015 2016 Q4 Q1 Change Q4 Q1 Consolidated Statement of Operations Adjusted EBITDA Before Special Items Timberlands $ 160 $ 199 $ 39 Net sales $ 1,741 $ 1,835 Real Estate, Energy and Natural 33 34 1 Cost of products sold 1,390 1,475 Resources Gross margin 351 360 Wood Products 75 117 42 SG&A expenses 114 112 Cellulose Fibers 105 68 (37) Other (income) expense, net 2 (8) (30) Unallocated Items (12) (5) 7 Total Adjusted EBITDA 1 Total Contribution to Earnings Before $ 361 $ 413 $ 52 $ 245 $ 278 Special Items Contribution to Earnings Before $ 245 $ 278 $ 33 Interest expense, net 3 (88) (97) Special Items Income taxes 4 (25) (20) 1. A reconciliation to GAAP is set forth on Chart 20 . See Chart 20 for our revised definition of Adjusted EBITDA. Dividends on preference shares (11) (11) 2. Other (income) expense, net includes: R&D expense, charges for Net Earnings to Common Shareholders restructuring, closures and impairments; other operating income, net; $ 121 $ 150 Before Special Items 5 interest income and other. Interest income and other includes approximately $8 million of income from special purpose entity (SPE) Special items, after-tax 4 (62) (80) investments for each quarter presented and approximately $5 million of income from an investment in our timberland joint venture in first quarter Net Earnings to Common Shareholders $ 59 $ 70 2016. 3. Interest expense is net of capitalized interest and includes Diluted EPS Before Special Items 5 $ 0.24 $ 0.24 approximately $7 million of expense on special purpose entity (SPE) Diluted EPS $ 0.11 $ 0.11 notes for each quarter presented and approximately $4 million of expense on a note payable to our timberland joint venture in first quarter 2016. 4. Income taxes attributable to special items are included in Special items, after-tax. An explanation is set forth on Chart 2 . 5. A reconciliation to GAAP is set forth on Chart 2 . 5 05/06/2016
EARNINGS BEFORE SPECIAL ITEMS Chart 2 $ Millions EXCEPT EPS 2015 Q4 2016 Q1 Pre-Tax After-Tax Diluted Pre-Tax After-Tax Diluted Earnings 6 Earnings EPS Earnings 6 Earnings EPS Earnings Before Special Items $ 157 $ 121 $ 0.24 $ 181 $ 150 $ 0.24 Special Items: Gain on sale of non-strategic asset — — — 36 22 0.03 Plum Creek merger-related costs (14) (14) (0.03) (110) (98) (0.15) Restructuring, impairments, and other charges (8) (5) (0.01) (6) (4) (0.01) Impairment charge recorded by an equity affiliate (84) (56) (0.12) — — — Tax Adjustments — 13 0.03 — — — Total Special Items (106) (62) (0.13) (80) (80) (0.13) Earnings Including Special Items (GAAP) $ 51 $ 59 $ 0.11 $ 101 $ 70 $ 0.11 6. Earnings before income taxes and dividends on preference shares. 6 05/06/2016
TIMBERLANDS SEGMENT 7 Chart 3 TIMBERLANDS ($ Millions) 2015 2016 TIMBERLANDS ($ Millions) 2015 2016 Adjusted EBITDA by Region Q4 Q1 Segment Statement of Operations Q4 Q1 West $ 103 $ 118 Third party sales $ 297 $ 380 South 56 77 Intersegment sales 133 144 North — 3 Total Sales 430 524 Other 1 1 Cost of products sold 309 372 Total Adjusted EBITDA 9 $ 160 $ 199 Gross margin 121 152 SG&A expenses 21 28 1st Quarter Notes Other income, net 8 (7) (5) • Fee harvest volumes increased due to Contribution to Earnings $ 107 $ 129 inclusion of Plum Creek Adjusted EBITDA 9 $ 160 $ 199 Adjusted EBITDA Margin Percentage 10 37% 38% • Lower log sales realizations due to mix Operating Margin Percentage 11 25% 25% • Lower silvicultural spending due to wet weather 7. As a result of the merger and related organizational changes, we have revised our business segments. Results for fiscal periods prior to first quarter 2016 have been revised to conform to the new segments. Amounts presented exclude Canadian Forestlands operations, which are operated as a cost center for the purpose of supplying Weyerhaeuser's Canadian manufacturing facilities and contribute no margin to the Timberlands segment. 8. Other income, net includes: R&D expense, charges for restructuring, closures and impairments; other operating income, net; interest income and other. 9. A reconciliation to GAAP is set forth on Chart 21 . See Chart 21 for our revised definition of Adjusted EBITDA. 10. Adjusted EBITDA divided by total sales. 11. Contribution to earnings divided by total sales. 7 05/06/2016
SALES VOLUMES AND REALIZATIONS Chart 4 12 12,13 Volumes (Thousands of tons) Volumes (Thousands of tons) 12,14 Volumes (Thousands of tons) 12. Beginning in the first quarter of 2016, we report log sales and fee harvest volumes in tons. Prior period volumes have been converted from cubic meters to tons using annualized 2015 conversion factors. 1.056 m3 = 1 ton in the West and 0.818 m3 = 1 ton in the South. 13. The increase in first quarter 2016 log sales in the South is primarily due to a partial quarter of results from Plum Creek. 14. North timberlands are first reported in first quarter 2016 due to the merger with Plum Creek. 8 05/06/2016
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