WEYERHAEUSER EARNINGS RESULTS 1ST QUARTER 2018 | April 27, 2018
FORWARD-LOOKING STATEMENTS 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 earnings, cash flow, adjusted EBITDA, production, performance, real estate sales volumes, operating expense, sales realizations and volumes, harvest volumes, operating rates and operational excellence targets. Forward- looking statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements may be identified by our use of certain words in such statements, including without limitation words such as “anticipate,” “believe,” “continue,” “continued,” “could,” “forecast,” “estimate,” “outlook,” “goal,” “will,” “plan,” “expect,” “target,” “would” and similar words and terms and phrases using such terms and words, while depictions that constitute forward-looking statements may be identified by graphs, charts or other illustrations indicating expected or predicted occurrences of events, conditions, performance or achievements at a future date or during future time periods. We may refer to assumptions, goals or targets, or we may reference expected performance through, or events to occur by or at, a future date, and such references may also constitute forward-looking statements. Forward- looking statements are based on management’s current expectations and assumptions concerning future events, and are inherently subject to uncertainties and factors relating to our operations and business environment that are difficult to predict and often beyond the company’s control. These and other factors could cause one or more of our expectations to be unmet, one or more of our assumptions to be materially inaccurate or actual results to differ materially from those expressed or implied in our forward-looking statements. Such factors include, without limitation: our ability to successfully execute our performance plans, including cost reductions and other operational excellence initiatives; the effect of general economic conditions, including employment rates, housing starts, interest rate levels, availability of financing for home mortgages and the strength of the U.S. dollar; market demand for our products, including demand for our timberland properties with higher and better uses, which in turn is related to the strength of various U.S. business segments and U.S. and international economic conditions; domestic and foreign competition; raw material prices; energy prices; the effect of weather; the risk of loss from fires, floods, windstorms, hurricanes, pest infestation and other natural disasters; transportation availability and costs; federal tax policies; the effect of forestry, land use, environmental and other governmental regulations; legal proceedings; performance of pension fund investments and related derivatives; the effect of timing of retirements and changes in market price of our common stock on charges for share-based compensation; changes in accounting principles; and other factors described in filings we make from time to time with the Securities and Exchange Commission, including without limitation the risk factors described in our annual report on Form 10-K for the year ended December 31, 2017. There is no guarantee that any of the anticipated events or results articulated in this presentation will occur or, if they occur, what effect they will have on the company’s results of operations or financial condition. The forward-looking statements contained herein apply only as of the date of this presentation and we do not undertake any obligation to update these forward- looking statements. Nothing on our website is intended to be included or incorporated by reference into, or made a part of, this presentation. Also included in this presentation are certain non-GAAP financial measures, which management believes complement the financial information presented in accordance with U.S. generally accepted accounting principles. Management believes such non-GAAP measures may be useful to investors. Our non-GAAP financial measures may not be comparable to similarly named or captioned non-GAAP financial measures of other companies due to potential inconsistencies in how such measures are calculated. A reconciliation of each presented non-GAAP measure to its most directly comparable GAAP measure is provided in the appendices to this presentation. Adjusted EBITDA, as we define it, is operating income adjusted for depreciation, depletion, amortization, basis of real estate sold, unallocated pension service costs and special items. Adjusted EBITDA excludes results from joint ventures. 2 April 27, 2018
Chart 1 2018 Q1 CONSOLIDATED RESULTS $ Millions 2017 2018 $ Millions EXCEPT EPS 2017 2018 Q4 Q1 Change Q4 Q1 Consolidated Statement of Operations Before Adjusted EBITDA Special Items Timberlands $ 252 $ 268 $ 16 Net sales $ 1,823 $ 1,865 Real Estate, Energy & Natural 87 41 (46) Resources Cost of products sold 1,316 1,348 Wood Products 258 286 28 Gross margin 507 517 Unallocated Items (46) (51) (5) SG&A expenses 93 101 Total Adjusted EBITDA 1 $ 551 $ 544 $ (7) Other (income) expense, net 2 30 16 Contribution to Earnings Before Total Contribution to Earnings Before Special $ 384 $ 400 $ 16 $ 384 $ 400 Special Items Items Interest expense, net 3 (96) (93) Income taxes 4 (54) (32) Net Earnings Before Special Items 4 $ 234 $ 275 1. Our definition of Adjusted EBITDA and a reconciliation to GAAP are set forth on Chart 16 . Special items, after-tax 4 37 (6) 2. Includes R&D expenses; charges for integration and restructuring, closures, and asset impairments; other operating (costs) income, net; non- Net Earnings $ 271 $ 269 operating pension and other postretirement benefit (costs) credits; and Diluted EPS Before Special Items 4 $ 0.31 $ 0.36 interest income and other. Interest income and other includes approximately $8 million of income from SPE investments for each quarter Diluted EPS $ 0.36 $ 0.35 presented. 3. Interest expense is net of capitalized interest and includes approximately $7 million on SPE notes for each quarter presented. 4. An explanation of special items and a reconciliation to GAAP are set forth on Chart 2 . Income taxes attributable to special items are included in Special items, after-tax. 3 April 27, 2018
Chart 2 EARNINGS BEFORE SPECIAL ITEMS $ Millions EXCEPT EPS 2017 Q4 2018 Q1 Pre-Tax After-Tax Diluted Pre-Tax After-Tax Diluted Earnings Earnings EPS Earnings Earnings EPS Earnings Before Special Items $ 288 $ 234 $ 0.31 $ 307 $ 275 $ 0.36 Special Items: Plum Creek merger and integration-related costs (14) (12) (0.02) — — — Gain on sale of timberlands 99 99 0.14 — — — Environmental remediation (charges) recoveries 42 26 0.03 (28) (21) (0.03) Countervailing and antidumping duties (charges) 9 7 0.01 — — — credits 1 Product remediation (charges) recoveries (50) (31) (0.04) 20 15 0.02 Tax adjustments, including enactment of tax — (52) (0.07) — — — legislation Total Special Items 86 37 0.05 (8) (6) (0.01) Earnings Including Special Items (GAAP) $ 374 $ 271 $ 0.36 $ 299 $ 269 $ 0.35 1. As of first quarter 2018, countervailing and anti-dumping duties are no longer reported as a special item. 4 April 27, 2018
Chart 3 ADJUSTED EBITDA 1 2 Adjusted EBITDA Adjusted EBITDA (millions) (millions) $ 29 $ 20 $ 58 $ 71 $ 27 Real Estate $ 14 $ 17 $ 16 $ 16 $ 14 ENR Adjusted EBITDA Adjusted EBITDA (millions) (millions) $ 99 $ 127 $ 117 $ 116 $ 140 Lumber $ 133 $ 124 $ 111 $ 140 $ 165 $ 66 $ 87 $ 102 $ 104 $ 92 West OSB $ 96 $ 91 $ 95 $ 101 $ 98 $ 37 $ 52 $ 50 $ 34 $ 45 South Engineered Wood $ 8 $ 2 $ 4 $ 9 $ 6 $ 8 $ 13 $ 12 $ 5 $ 15 North Distribution $ 5 $ 5 $ 10 $ 2 $ (1) $ (3) $ (5) $ (3) $ (1) $ (6) Other Other 1. Our definition of Adjusted EBITDA and a reconciliation to GAAP are set forth on Chart 16, Chart 17, Chart 18, and Chart 19. 2. Total Company Adjusted EBITDA includes Timberlands; Real Estate, Energy and Natural Resources; Wood Products and Unallocated. 5 April 27, 2018
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