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| 8-K - 8-K - WEYERHAEUSER CO | a20168-kinvestorpresentati.htm |
Working together to be the world’s premier timber, land, and forest products company
Investor Meetings | September 2016
1
FORWARD-LOOKING STATEMENTS
AND NON-GAAP FINANCIAL MEASURES
2
This presentation contains statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as
amended, including, without limitation, with respect to future prospects, business strategies, revenues, earnings, cash flow, taxes, funds available for
distribution, pricing, production, supply, dividend levels, share repurchases, business priorities, performance, cost reductions, operational excellence
initiatives, costs and operational synergies, demand drivers and levels, margins, growth, housing markets, capital structure, credit ratings, capital
expenditures, cash position, debt levels, and harvests and export markets. 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. 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. Many factors could cause, among other things, 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 these forward-looking statements. Such factors include,
without limitation: our ability to successfully integrate the Plum Creek merger; 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 the other risk factors described in filings we make from time to time with the Securities and Exchange Commission, including without limitation risk
factors described in our annual report on Form 10-K for the year ended December 31, 2015. 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.
3
PROGRESS UPDATE
COMMITMENT PROGRESS
• Sale of liquid packaging board business closed Aug 31
• Sale of pulp mills to close in Q4
• Collective proceeds of approx. $2.5B, or $1.8B after-tax
• Printing papers JV: working with prospective buyers
• On track to meet or exceed $100MM “run rate” cost
synergy target by end of year one
• Operational synergies rolled into OpX targets
• Completed $2B accelerated stock buyback in less than
6 months
• Investment grade credit rating
MERGER
SYNERGIES
CAPITAL
STRUCTURE
CELLULOSE
FIBERS
DIVESTITURE
WEYERHAEUSER’S TRANSFORMATION
4
TIMBERLANDS
WOOD
PRODUCTS
CELLULOSE
FIBERS
WOOD
PRODUCTS
WRECO
• Acquired Longview Timber
• Divested WRECO
• Merged with Plum Creek
• Divesting Cellulose Fibers
*Book value of assets by business segment. Excludes Unallocated items. Timberlands includes Real Estate and Energy & Natural Resources assets. “Today” excludes assets of
discontinued operations.
Source: WY 2016 Q2 10-Q and 2012 10-K.
6 13
WOOD
PRODUCTS
TIMBERLANDS
WOOD
PRODUCTS
CELLULOSE
FIBERS
TIMBERLANDS
WRECO
ASSETS
$17.7
BILLION*
TODAY 2012
ASSETS
$10.4
BILLION*
MILLION
ACRES
MILLION
ACRES
5
WEYERHAEUSER’S INVESTMENT THESIS
FOCUSED ON DRIVING VALUE FOR SHAREHOLDERS
6
• Operational
excellence
• Most value from
every acre
• Return cash to
shareholders
• Invest in our
businesses
• Maintain
appropriate
capital structure
• Premier timber,
land, and wood
products
assets
Superior
relative total
shareholder
return
PORTFOLIO PERFORMANCE
CAPITAL
ALLOCATION
SHAREHOLDER
VALUE
THREE BUSINESS SEGMENTS
TIMBERLANDS
REAL ESTATE,
ENERGY &
NATURAL RESOURCES
WOOD PRODUCTS
7
LARGEST PRIVATE
TIMBERLAND OWNER
IN THE U.S.
• 13 million acres
• Unparalleled scale
• Highly productive
• Sustainably certified
LEADER IN MAXIMIZING
VALUE FROM EVERY ACRE
• Premium recreation and
conservation lands
• Valuable surface and
subsurface resources
LEADING WOOD PRODUCTS
MANUFACTURER
• Lumber, OSB,
Engineered Wood,
Distribution
• Low-cost
UNMATCHED TIMBERLAND PORTFOLIO
Note: 13 million acres includes 323,000 acres owned in Uruguay (not shown).
Source: WY 2015 10-K, PCL 2015 10-K 8
13 MILLION ACRES
Western Region
Southern Region
Northern Region
9
REAL ESTATE:
Maximize value of each of our 13 million acres
ENERGY & NATURAL RESOURCES
• Capture value of all surface and
subsurface assets
– Oil and natural gas
– Construction materials and minerals
– Wind resources
HIGHER AND BETTER USE (HBU)
• Capture premium values above
timberland value
– Recreation
– Conservation
– Development
REAL ESTATE:
Delivering the most value from each acre
10 10
Growing & Harvesting Timber Conservation
HBU
Identify Opportunities to Capture Premium Value
(Asset Value Optimization — AVO)
ASSESS PROPERTY ATTRIBUTES
distance to cities and amenities,
access to roads, water, percent uplands
Determine Timber Net Present Value for Each Acre
SNS
ASSESS ECONOMIC ATTRIBUTES
population growth, income levels,
home values, absorption rates
BEST Net Present Value WINS
• Continued improvement through operational excellence
• Well-positioned to benefit from improving housing markets
11
LEADING WOOD PRODUCTS PORTFOLIO
* Capacity if mills produce exclusively solid section product. Three engineered wood products facilities also produce engineered I-Joists to meet market demand.
2015 production of I-Joists was 185 million lineal feet.
4 VENEER / PLYWOOD FACILITIES
610 million square feet plywood capacity
6 ENGINEERED WOOD MILLS
43 million cubic feet solid section capacity*
19 LUMBER MILLS
4.8 billion board feet capacity
6 OSB MILLS
3.0 billion square feet capacity
1 MEDIUM DENSITY FIBERBOARD MILL
265 million square feet capacity
17 DISTRIBUTION FACILITIES
(not shown)
WEYERHAEUSER’S INVESTMENT THESIS
FOCUSED ON DRIVING VALUE FOR SHAREHOLDERS
12
• Operational
excellence
• Most value from
every acre
• Return cash to
shareholders
• Invest in our
businesses
• Maintain
appropriate
capital structure
• Premier timber,
land, and wood
products
assets
Superior
relative total
shareholder
return
PORTFOLIO PERFORMANCE
CAPITAL
ALLOCATION
SHAREHOLDER
VALUE
GAINS FROM OPERATIONAL EXCELLENCE
13
Timberlands
Lumber
OSB
ELP
Distribution
Cellulose Fibers
$39 MM
$21 MM
$24 MM
$35 MM
EBITDA*
$8 MM
EBITDA*
$47 MM
$25 MM
$25 MM
$10 MM
$35 MM
EBITDA*
$28 MM
$34 MM
EBITDA*
OpX
CAPTURED
THROUGH
2015
$157 MM $174 MM
$330
MILLION
2014
RESULTS
2015
RESULTS
*Adjusted EBITDA. See appendix for definition.
14
TIMBERLANDS: Relative Performance
EBITDA* / ACRE OWNED
U.S. WEST
EBITDA* / ACRE OWNED
U.S. SOUTH
Source for competitor data: public SEC filings, National Council of Real Estate Investment Fiduciaries (NCREIF).
*Adjusted EBITDA. See appendix for reconciliation to GAAP amounts.
**WY excludes Real Estate, Energy & Natural Resources and includes Plum Creek Washington, Oregon and Southern operations for all periods. Longview Timber included beginning in 2014.
***Pope Resources results exclude significant land sales in 2014 Q3 and Q4. Including these sales, 2014 EBITDA/acre = $263.
****Deltic EBITDA calculated as Woodlands operating income plus Woodlands depreciation, amortization and cost of fee timber harvested.
$50
$100
$150
$200
$250
2011 2012 2013 2014 2015
$0
$20
$40
$60
$80
2011 2012 2013 2014 2015
WY Timberlands, including Plum Creek** NCREIF
Rayonier Pope Resources*** Deltic****
TIMBERLANDS: What Does OpX Mean
WE PRODUCE LOGS
AND WE HAVE OPPORTUNITIES TO IMPROVE
AT EVERY STAGE OF THE PROCESS
SEEDLINGS PLANTING SILVICULTURE HARVEST TRANSPORT MARKETING
15
16
TIMBERLANDS: OpX Performance
KEY INITIATIVES
SEEDLINGS
• Nursery & orchard operating cost
• Seedling handling efficiency
PLANTING & SILVICULTURE
• Benchmark both companies to improve
treatment costs and product yield
HARVEST & TRANSPORTATION
• Harvest technology, planning & methods
• Transportation planning & central dispatch
• Road maintenance & construction cost
MARKETING
• Merchandise and sell the right log to the
right customer
OPERATIONAL EXCELLENCE
SIGNIFICANTLY INCREASING OpX TARGET TO INCLUDE
OPERATIONAL SYNERGIES FOR PLUM CREEK MERGER
2
0
1
4
-1
5
2
0
1
6
PROGRESS GOAL
$64 MM
$10-20 MM
$50-70
MM
ORIGINAL
GOAL
ACHIEVED
$20-30 MM
ORIGINAL 2016 TARGET
ADDITIONAL
$200 MM
TOTAL GOAL
EBITDA
IMPROVEMENT*
17
WOOD PRODUCTS: OpX
LUMBER
• Rigorous cost control
• Improved recovery
• Capture full benefit
of focused capital
investments
PROGRESS GOAL
$46 MM
$15-20
MM
2
0
1
4
-1
5
2
0
1
6
$100 MM
TOTAL GOAL
• Reliability
• Controllable costs
• Enhanced product mix
PROGRESS GOAL
$34 MM
$15-20
MM
2
0
1
4
-1
5
2
0
1
6
$60 MM
TOTAL GOAL
OSB
• Controllable
manufacturing cost
• Improved recovery
EBITDA
IMPROVEMENT*
OPX GOAL
$69 MM
$10-15
MM
2
0
1
4
-1
5
2
0
1
6
DISTRIBUTION
$43 MM
2
0
1
4
-1
5
2
0
1
6
EWP
• Improved product
margins
• Reduced operating costs
(warehouse & delivery)
• Lower selling expenses
*Adjusted EBITDA. See appendix for reconciliation to GAAP amounts.
$15-20
MM
KEY INITIATIVES
18
WOOD PRODUCTS: Relative Performance
LUMBER EBITDA MARGIN*
RELATIVE PERFORMANCE
-5%
0%
5%
10%
15%
20%
2011 2012 2013 2014 2015 2016 Q2
YTDCanfor Lumber Interfor Lumber
West Fraser Lumber WY Lumber
EWP EBITDA MARGIN*
RELATIVE PERFORMANCE
-3%
0%
3%
6%
9%
12%
15%
18%
2011 2012 2013 2014 2015 2016 Q2
YTD
Boise Wood Products LPX ELP WY ELP
-10%
0%
10%
20%
30%
40%
2011 2012 2013 2014 2015 2016 Q2
YTDAinsworth OSB LPX OSB
Norbord OSB WY OSB
OSB EBITDA MARGIN*
RELATIVE PERFORMANCE
DISTRIBUTION EBITDA MARGIN*
RELATIVE PERFORMANCE
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
2011 2012 2013 2014 2015 2016 Q2
YTDBoise Distribution Blue Linx Distribution
WY Distribution
Amounts presented reflect the results of operations acquired in our merger with Plum Creek Timber, Inc. beginning on the merger date of February 19, 2016.
Source for competitor data: public SEC filings | *Adjusted EBITDA. See appendix for reconciliation to GAAP amounts.
WEYERHAEUSER’S INVESTMENT THESIS
FOCUSED ON DRIVING VALUE FOR SHAREHOLDERS
19
• Operational
excellence
• Most value from
every acre
• Return cash to
shareholders
• Invest in our
businesses
• Maintain
appropriate
capital structure
• Premier timber,
land, and wood
products
assets
Superior
relative total
shareholder
return
PORTFOLIO PERFORMANCE
CAPITAL
ALLOCATION
SHAREHOLDER
VALUE
RETURNING CASH TO SHAREHOLDERS
20
$0.15
$0.17
$0.20
$0.22
$0.29
$0.31
2011 Q1 2012 Q4 2013 Q2 2013 Q3 2014 Q3 2015 Q3
QUARTERLY DIVIDEND PER SHARE
$2.5 BILLION
AUTHORIZED
$2.0 BILLION
COMPLETE
THROUGH
JULY 2016
SUSTAINABLE AND GROWING DIVIDEND SHARE REPURCHASE
TIMBERLANDS
– Silviculture
– Roads and infrastructure
WOOD PRODUCTS
– Projects to reduce costs and
improve productivity
– Maintenance CAPEX
REAL ESTATE, ENERGY &
NATURAL RESOURCES
– Primarily entitlement activities
21
INVESTING IN OUR BUSINESSES
* Excludes Cellulose Fibers. 2015 capital expenditures for Cellulose Fibers totaled $118 million.
Estimated 2016 CAPEX*
$125 million
$300 million
Minimal
• Committed to solid investment grade credit rating
• Partial draw of $2.5 billion post-merger term loans
– 18 month loans at favorable floating rates (LIBOR +1.05%)
– Attractive delayed draw provisions
• Term loans to be paid down primarily through asset sales
• Target net debt / Adjusted EBITDA < 3.5x
22
CAPITAL STRUCTURE
$0
$400
$800
$1,200
$1,600
$2,000
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033
$
m
il
li
o
n
s
Legacy WY Debt
Legacy PCL Debt
LONG-TERM DEBT*
approximately $6.6 Billion
*Excludes borrowings under $2.5 billion 18-month term loan facilities entered into during Feb/March 2016, which totaled $1.4 billion as of 2016 Q2. Excludes note payable to
Timberland Venture and long-term debt (nonrecourse to the company) held by variable interest entities. Weighted average cost of $6.6 billion long-term debt approx. 6.0%.
WEYERHAEUSER’S INVESTMENT THESIS
FOCUSED ON DRIVING VALUE FOR SHAREHOLDERS
23
• Operational
excellence
• Most value from
every acre
• Return cash to
shareholders
• Invest in our
businesses
• Maintain
appropriate
capital structure
• Premier timber,
land, and wood
products
assets
Superior
relative total
shareholder
return
PORTFOLIO PERFORMANCE
CAPITAL
ALLOCATION
SHAREHOLDER
VALUE
24
CONTINUED GROWTH IN U.S. HOUSING MARKET
• U.S. housing starts still well
below trend levels
• Strength in domestic
economy, demographics,
and rising employment
boost household formations
• Anticipate 1.2 million starts
in 2016
• Continued growth in single-
family share
TOTAL U.S. HOUSING STARTS
SEASONALLY ADJUSTED ANNUAL RATE
0.0
0.5
1.0
1.5
2.0
2.5
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
M
illi
on
s
Quarterly
Source: Bureau of Census, *FEA, *RISI
Forecast*
RISI
FEA
KEY
DRIVER
0
100
200
300
400
500
600
700
800
900
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
$/
M
B
F
Annual
Forecast*
Source: Log Lines, *FEA, *RISI
RISI
FEA
25
WESTERN SAWLOGS: POSITIVE OUTLOOK
• Stable demand for Japan wood housing
• Positive long-term growth in China market
• Significant runway for California single-family starts
KEY DRIVERS
Japan Housing Starts
Softwood Log Imports to China
Single-Family Residential Building Permits for CA
PRICING OUTLOOK
DELIVERED DOUGLAS FIR #2
SENSITIVITY
$20/MBF ≈ $30 MM
Western Sawlogs
0
20
40
60
80
100
120
140
160
180
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
Tho
usa
nds
Quarterly
Source: Bureau of Census
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1998 200 2 2 04 2006 2008 2010 2012 2014 2016
Mi
llio
n U
nit
s
Annual
Source: MLIT
Wood-Based Houses
Non-Wooden Houses
YTD Q2
Annualized
0
5
10
15
20
25
30
35
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Mi
llio
n C
ub
ic
Me
ter
s
Annual
So rce: China Gov't Statistics
Customs Code Numbers: 4403-2000 Logs, coniferous
YTD Q2
Annualized
50%
Below
Normalized
20
30
40
50
60
70
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
$/
G
re
en
T
on
Annual
Forecast*
Source: Timber Mart-South, *FEA, *RISI
RISI
FEA
26
SOUTHERN SAWLOGS: POSITIVE OUTLOOK 0
5
10
15
20
25
4 20 5 20 6 2007 2008 2009 2010 2011 2012 2013 2014 2015
BB
F
of
L
um
be
r
Annual
Source: Census, WWPA, COFI
• Continued growth in U.S. housing starts and repair
and remodel
• Canadian lumber supply limited due to pine beetle
and lower allowable cuts
• Incremental lumber production to come from U.S.
South
Canadian Lumber Shipments to U.S.
PRICING OUTLOOK
DELIVERED SOUTHERN AVG PINE SAWLOG
KEY DRIVERS
U.S. Southern Lumber Production
Down
9 BBF
vs. Peak
SENSITIVITY
$5/TON ≈ $75 MM
Southern Sawlogs
0
5
10
5
20
25
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
BB
F
of
L
um
be
r
Annual
Source: Census, WWPA, COFI
YTD May
Annualized
Expected
to Exceed
Prior Peak
27
LUMBER: IMPROVING DEMAND AND PRICING
• Continued growth in U.S. housing
• Growth in repair & remodel
• Rising operating rates
• Pine beetle drives decline in Canadian log supply
and lumber production
SENSITIVITY
$10/MBF ≈ $40 MM
Growth in U.S. Repair & Remodel Expenditures
KEY DRIVERS
Canadian Share of U.S. Lumber Market
PRICING OUTLOOK
FRAMING LUMBER COMPOSITE
20
25
30
35
40
1995 2000 2005 2010 2015
Pe
rc
en
t
Annual
Source: Random Lengths, RISI
Pine beetle
drives
decline
150
200
250
300
350
400
450
500
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
$/
M
BF
Quarterly
Sources: Random Lengths, *RISI, *FEA. Q3 average as of Aug 26.
Forecast*
RISI
FEA
Q3 Avg
X
-15
-10
-5
0
5
10
15
1995 1998 2001 2004 2007 2010 2013 2016
%
C
ha
ng
e
Ye
ar
A
go
Quarterly
Source: Census
100
150
200
250
300
350
400
450
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
$/
M
SF
Quarterly
Sources: Random Lengths, *RISI, *FEA. Q3 average as of Aug 26.
Forecast*
RISI
FEA
Q3 Avg
X
28
OSB: IMPROVING DEMAND AND PRICING
• Improving housing starts and increasing
single-family share
• Rising operating rates
Single-Family Share of U.S. Total Housing Starts
PRICING OUTLOOK
NORTH CENTRAL OSB
KEY DRIVERS
OSB Effective Operating Rate
SENSITIVITY
$10/MSF ≈ $30 MM
40
50
60
70
80
90
100
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
P
er
ce
nt
Quarterly
Source: Census
Single-family
starts up 13%
July YTD
30
40
50
60
70
80
90
100
2005 2007 2009 2011 2013 2015 2017
P
er
ce
nt
Annual
Forecast
Source: FEA
FEA
APPENDIX
30
ADJUSTED EBITDA RECONCILIATION: TIMBERLANDS
$ Millions 2011 2012 2013 2014 2015
West $279 $258 $373 $571 $459
South 226 298 328 410 430
North 29 28 32 47 41
Other (15) (8) 46 2 7
Adjusted EBITDA including Legacy Plum
Creek operations1
$519 $576 $779 $1,030 $937
Less: EBITDA attributable to Plum Creek 175 203 235 291 260
Weyerhaeuser Timberlands
Adjusted EBITDA2
$344 $373 $544 $739 $677
Depletion, Depreciation & Amortization 138 143 168 207 207
Special Items - - - - -
Operating Income (GAAP) $206 $230 $376 $532 $470
Interest Income and Other 4 3 4 - -
Loss Attributable to Non-Controlling
Interest
- 1 - - -
Net Contribution to Earnings $210 $234 $380 $532 $470
1. Results exclude Real Estate, Energy & Natural Resources, which was reported as part of legacy Weyerhaeuser’s Timberlands segment, and include
Plum Creek operations for all periods shown. West includes Plum Creek Washington and Oregon operations. South includes Plum Creek Southern
Resources. North includes Plum Creek Northern Resources less Washington and Oregon. Results from Longview Timber are included in Other for
2013 and in Western Timberlands for 2014 and forward. Other also includes results from international operations and certain administrative charges.
2. Adjusted EBITDA is a non-GAAP measure that management uses to evaluate the performance of the company. 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. Adjusted EBITDA should not be
considered in isolation from and is not intended to represent an alternative to our GAAP results.
ADJUSTED EBITDA RECONCILIATION:
WOOD PRODUCTS
$ Millions 2011 2012 2013 2014 2015
2016 Q2
YTD1
Lumber ($7) $130 $317 $319 $212 $147
OSB (4) 143 247 46 41 74
EWP 6 17 45 79 114 76
Distribution (37) (29) (33) 2 10 13
Other (1) (15) (2) - (5) (4)
Adjusted EBITDA2 ($43) $246 $574 $446 $372 $306
Depletion, Depreciation &
Amortization
(151) (133) (123) (119) (106) (63)
Special Items (52) 6 (10) - (8) -
Operating Income (GAAP) ($246) $119 $441 $327 $258 $243
Interest Income and Other 3 1 - - - -
Net Contribution to Earnings ($243) $120 $441 $327 $258 243
1. Amounts presented reflect the results of operations acquired in our merger with Plum Creek Timber, Inc. beginning on the merger date of February 19, 2016.
2. Adjusted EBITDA is a non-GAAP measure that management uses to evaluate the performance of the company. 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. Adjusted EBITDA should not be considered in
isolation from and is not intended to represent an alternative to our GAAP results.
31