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8-K - FORM 8-K - WEYERHAEUSER CO | d554781d8k.htm |
WEYERHAEUSER
Exhibit 99.1
June 2013 Strategic Announcements |
2
Forward-Looking Statements
Forward-Looking Statements and Non-GAAP
Financial Measures
This presentation contains statements concerning the company's, Longview's and the combined company's
future results and performance that are forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995, including, without limitation, with
respect to future prospects, developments, business strategies, closing of the acquisition, financing the
acquisition, benefits and impacts of the acquisition (including cost savings, operational and other
synergies and impacts on revenues, earnings, cash flow and funds from operations and funds
available for distribution), capital structure, potential transactions involving WRECO or the
structure of any such transaction (if any),dividend increases and harvests and export markets. The words anticipate,
believe, could, will, plan, expect and
would and similar terms and phrases, including references to assumptions, have been
used in this presentation to identify forward-looking statements. These forward-looking
statements are made based on managements expectations and beliefs concerning future
events of us, Longview and the combined company and are subject to uncertainties and factors
relating to our operations and business environment, all of which are difficult to predict and many of which
are beyond the companys control. Many factors could cause the actual results to differ
materially from those projected including, without limitation, the effect of general economic
conditions, including employment rates, housing starts, interest rate levels, availability of
financing for home mortgages and strength of the U.S. dollar, market demand for our products, which is related to the
strength of the various U.S. business segments and U.S. and international economic conditions,
performance of our manufacturing operations, including maintenance requirements, the
level of competition from domestic and foreign producers, the successful execution of our
internal performance plans, including restructurings and cost reduction initiatives, 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 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 the other risk factors described under "Risk Factors" in our annual
report on Form 10-K filed with the SEC on February 19, 2013 and the matters described in
our quarterly report on Form 10-Q for the quarter ended March 31, 2013 and our Current Report on Form 8-K dated
June 17, 2013, in each case filed with the SEC. These forward-looking statements are based on
various assumptions and may not be accurate because of risks and uncertainties surrounding
these assumptions. Factors listed above, 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 company operations or financial condition. The
company will not update these forward-looking statements after the date of presentation.
Nothing on our website is included or incorporated by reference herein.
Included in this presentation are certain non-GAAP financial measures, including EBITDA and FAD,
designed to complement the financial information presented in accordance with generally
accepted accounting principles in the United States of America because management believes such
measures are useful to investors. Our non-GAAP financial measures are not necessarily comparable to
other similarly titled captions of other companies due to potential inconsistencies in the metrics of
calculation. For a reconciliation of net earnings (loss) to EBITDA and cash provided by
operating activities to FAD, see the Appendix to this presentation.
Non-GAAP Financial Measures |
3
Participants
DAN FULTON:
President & Chief Executive Officer
PATTY BEDIENT:
Executive Vice President &
Chief Financial Officer
DOYLE SIMONS:
Weyerhaeuser Board Member
President & Chief Executive Officer,
effective August 1, 2013
TOM GIDEON:
Executive Vice President
Timberlands |
4
Strategic Announcements
Weyerhaeuser acquires approximately 645,000 acres of high-
quality timberlands in Washington and Oregon (Longview
Timber LLC)
Board intends to raise quarterly dividend per share by 10%
from $0.20 to $0.22 in August, payable in September, in
conjunction with and subject to completion of the acquisition
Board authorizes exploration of strategic alternatives for
Weyerhaeuser Real Estate Company (WRECO)
Doyle Simons appointed president and chief executive officer,
effective Aug. 1, 2013
Serving as CEO Elect, effective immediately |
Longview Timber: Transaction Summary
Agreed to acquire approximately 645,000 acres of high-
quality timberlands in WA and OR (Longview Timber LLC)
Purchase price of $2.65B (includes the assumption of
debt)
Transaction structured as stock purchase
Transaction
and Purchase Price
Contemplate raising $2.45B Weyerhaeuser equity and
long-term debt issuance
Mix of ~50% equity and ~50% debt
Financing supported by a committed senior unsecured
bridge facility from Morgan Stanley
Financing Plan
Closing of acquisition expected in July 2013
Timing
In conjunction with and subject to completion of
acquisition, Board intends to raise the quarterly dividend
per share by 10% from $0.20 to $0.22 per share
Dividend Increase
5 |
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Compelling Strategic Rationale
Unique, high-value timberlands, predominantly west of the
Cascade mountain range
Leverages Weyerhaeusers core competencies (logistics,
silviculture, marketing & merchandising)
Expect approximately $20 million in annual cost and
operational synergies
Expected to be immediately accretive to FAD per share
Board intends to raise quarterly dividend per share by 10%
from $0.20 to $0.22 in conjunction with the transaction
Enhances ability to further increase the dividend |
Longview Timber:
Unique, High-Value Timberlands
High-value timber holdings
with scale
Predominantly west of the Cascade
mountain range (>90% of value)
Highly complementary and
contiguous with Weyerhaeuser
timberlands
Favorable age class
Primarily Douglas fir
7 |
Longview Timber: Property Description
Productive lands
Vast majority of combined commercial
forest area in high site class
Favorable age class distribution
Opportunity for high front-end harvest
Older age classes provide export-
quality logs
Superior logging operability
Flatter terrain
Well-roaded
Source: Management Estimates
Age Class
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Douglas fir
66%
Hemlock
20%
Other
14%
Commercial Forest Area Timber Species |
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U.S. West Coast Timberlands: Higher Value
Than Other Geographies
Highly productive lands with significant
merchantable volume
Predominantly managed for saw timber
Access to both domestic and export markets
Douglas fir a preferred species with unique
attributes
High strength and stiffness for its weight
Used for residential construction and industrial purposes
|
Increases Strategically Located Timberlands
with Access to Export
Advantaged in international log
markets
Strategically located West Coast
timberlands
Well-developed infrastructure and sales
relationships
Approximately 20% of Timberlands
revenue from export log sales
Uniquely valued in premium
Japanese market for post and
beam houses
Log size large enough to meet market
requirements
Attractive color and grain
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Japan
78%
China
15%
Korea
7%
WY 2012 Export Log Revenues |
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Compelling Cost and Operational Synergies
Approximately $20 Million
Expect to reach annual synergies of approximately $20 million
within two years of closing
Leverage scale infrastructure and logistics
Increased high-value export logs
Enhanced harvest flexibility
Immediate/Near-Term: Reduced operating and G&A costs, and
improved marketing and revenue opportunities
Longer-Term: Apply silviculture and forestry expertise to
improve productivity and enhance value |
12
Enhancing Weyerhaeusers Timberlands Exposure
Total
timberlands
holdings
rise
to
approx.
7
million
acres
Growing Pacific Northwest acreage by 33%
Pacific Northwest will increase to almost 40% of total acreage
Source: Management Estimates
Pacific Northwest Timberlands Holdings
Acres (millions)
0
0.5
1
1.5
2
2.5
3
Q1'13
Longview Timber
WY Current Holdings |
13
0
1
2
3
4
5
6
7
Acres (millions)
Other
Pacific Northwest
(west of Cascades)
Public Timber REIT Ownership By Geography
Longview
Timber
Source: WY, 2012 10Ks |
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Longview Timber LLC
GAAP Reconciliation
Source: First Quarter 2013 Financial Statements for Longview Timber LLC
First Quarter 2013 (in millions)
Longview EBITDA
1
$43.1
Depletion, depreciation & amortization
(32.1)
Total other expense, net (primarily interest
expense) (14.9)
Provision for taxes
(0.7)
Net earnings (loss) (GAAP)
($4.6)
Longview FAD
2
$20.4
Cash provided by (used in) investing activities
0.8
Cash provided by operating activities (GAAP)
$21.2
1.
EBITDA is defined as net income adjusted for taxes, other income (expense), depletion, depreciation
and amortization. EBITDA is a non- GAAP measure that management uses to evaluate the
performance of the company. EBITDA should not be considered in isolation from and is not
intended to represent an alternative to GAAP results. 2.
Funds Available for Distribution (FAD) is defined as cash provided by operating activities less cash
provided by investing activities. FAD is a non-GAAP measure that management uses to
evaluate the cash flows of the company. FAD should not be considered in isolation from and is
not intended to represent an alternative to GAAP results.
|
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Financing Strategy
Expect to raise $2.45 billion in conjunction with the
acquisition
Approximately 50% equity and 50% debt
Committed senior unsecured bridge facility from
Morgan Stanley
Weyerhaeuser remains committed to an investment-
grade credit rating
Strong capital structure supports a sustainable and
growing dividend |
16
Enhances Weyerhaeusers Ability to
Increase Dividend
Weyerhaeuser remains committed to a sustainable,
growing dividend
Board intends to increase dividend per share by 10% from
$0.20 to $0.22 in August 2013, payable in September 2013
Longview Timber cash flows and synergies support ability to
further increase dividend |
17
Unique, high-value timberlands, predominantly west of the
Cascade mountain range
Leverages Weyerhaeusers core competencies (logistics,
silviculture, marketing & merchandising)
Expect approximately $20 million in annual cost and
operational synergies
Expected to be immediately accretive to FAD per share
Board intends to raise quarterly dividend per share by 10%
from $0.20 to $0.22 in conjunction with the transaction
Enhances ability to further increase the dividend
Longview Timber Acquisition Summary |
18
Weyerhaeuser Real Estate Company (WRECO)
Board authorizes exploration of strategic alternatives for
Weyerhaeuser Real Estate Company (WRECO)
WRECO is one of the 20 largest homebuilders in the
country, located in some of the fastest-growing markets
Alternatives include, but not limited to, continuing to
operate WRECO, merger, sale or spin-off
Prudent time to explore strategic alternatives given
improving housing market fundamentals
Maximizing the Value of Our Homebuilding and
Real Estate Development Business for Shareholders |
19
Strategic Announcements
Weyerhaeuser acquires approximately 645,000 acres of
high-quality timberlands in Washington and Oregon
Board intends to raise quarterly dividend from
$0.20 to $0.22 per share in August, payable in September,
in conjunction with the acquisition
Board authorizes exploration of strategic alternatives for
Weyerhaeuser Real Estate Company (WRECO)
Doyle Simons appointed president and chief executive
officer, effective Aug. 1, 2013
Serving as CEO Elect, effective immediately
Maximizing Value for Shareholders |
WEYERHAEUSER |
21
U.S. TIMBERLAND:
West Coast has highest values
Pacific Northwest region has two distinct zones: Coast and Inland
West Coast dominated by Douglas fir, a preferred species in export
and domestic markets
Majority of sawtimber in the Inland and South goes to domestic mills
U.S. FORESTLAND REGIONS
West
Inland
West Coast |