Earnings Results: 2nd Quarter 2013 1 | 07/27/2012 FORWARD-LOOKING - PowerPoint PPT Presentation

WEYERHAEUSER Earnings Results: 2nd Quarter 2013 1 | 07/27/2012

FORWARD-LOOKING STATEMENT 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 various assumptions and may not be accurate because of risks and uncertainties surrounding these assumptions. Factors listed below, 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 this news release. 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 release contains forward- looking statements regarding the company’s expectations during the third quarter of 2013, includin g weaker domestic and export prices for Western logs, seasonally lower fee harvest from existing Western operations, comparable log price realizations and seasonally higher harvest volumes in the South, seasonally higher road and silviculture costs, somewhat higher earnings from disposition of non-strategic timberlands, just over two months of earnings from Longview Timber, seasonal slowdown in existing operations, and lower earnings from the Timberlands segment; substantially lower average selling prices for oriented strand board, lower lumber realizations, improved sales volumes across most product lines, lower log prices in the West, lower manufacturing costs and improved operating rates for OSB and engineered wood products, and lower earnings from the Wood Products segment; modestly improved average sales realizations and volumes for pulp and liquid packaging board, lower fiber and energy costs, higher maintenance costs and lower productivity due to additional planned annual outage days, and comparable earnings from the Cellulose Fibers segment; and seasonally increased home closings to more than 700 single-family homes, lower average margins due to mix, higher selling-related expenses due to the additional closing volume, somewhat higher earnings from the sale of land and lots, and higher earnings in the Real Estate segment. Major risks, uncertainties and assumptions that affect the company’s businesses and may cause actual results to differ from these forward -looking statements, include, but are not limited to: • 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 the company’s products, which is related to the strength of the various U.S. business segments and U.S. and international economic conditions; • performance of the company’s manufacturing operations, including maintenance requirements; • the level of competition from domestic and foreign producers; • the successful execution of internal performance plans, including restructurings and cost reduction initiatives; • raw material and energy prices and transportation costs; • the effect of weather and the risk of loss from fires, floods, windstorms, hurricanes, pest infestation and other natural disasters; • 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 the market price of company stock on charges for stock-based compensation; • changes in accounting principles; and • other factors described under “Risk Factors” in the Company’s annual report on Form 10-K and quarterly reports on Form 10-Q. The company also is a large exporter and is affected by changes in economic activity in Europe and Asia, particularly Japan and China. It is affected by changes in currency exchange rates, particularly the relative value of the U.S. dollar to the euro and the Canadian dollar and the relative value of the euro to the yen. Restrictions on international trade or tariffs imposed on imports also may affect the company. 2 | 07/26/2013

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 3 | 07/26/2013

Chart 1 2013 Q2 CONSOLIDATED RESULTS $ Millions EXCEPT EPS 2013 2013 $ Millions 2013 2013 Consolidated Statement of Operations Q1 Q2 Contribution to Q1 Q2 Change Earnings Net sales $1,951 $2,141 Timberlands $104 $114 $10 Cost of products sold 1,533 1,664 Wood Products 178 136 (42) Gross margin 418 477 Cellulose Fibers 31 57 26 SG&A expenses 169 162 Real Estate -- 14 14 Other income, net 2 (18) (6) Unallocated Items (46) -- 46 Total Contribution to Earnings $267 $321 Total Contribution $267 $321 $54 Interest expense, net 3 (82) (81) to Earnings Adjusted EBITDA 1 Income taxes $387 $447 $60 (41) (42) Dividends on preference shares 4 -- (2) Net Earnings to Common Shareholders $144 $196 Diluted EPS 4 $0.26 $0.35 1. A reconciliation to GAAP is set forth on Chart 19 and at www.weyerhaeuser.com. 2. Other income, net includes: R&D expense, charges for restructuring, closures and impairments; other operating income, net; interest income and other; and net loss attributable to non-controlling interests. 3. Interest expense is net of capitalized interest. 4. During 2013 Q2, Weyerhaeuser issued 29 million common shares in conjunction with the acquisition of Longview Timber LLC. The company also issued 13.8 million mandatory convertible preference shares with a conversion date of July 1, 2016. The mandatory convertible preference shares are currently antidilutive and are not included in the calculation of diluted EPS. An explanation of the change in share count is set forth on Chart 15. 4 | 07/26/2013

Chart 2 TIMBERLANDS SEGMENT 2nd Quarter Notes TIMBERLANDS ($ Millions) 2013 2013 Segment Statement of Operations Q1 Q2 • Higher earnings from disposition of Third party sales $285 $332 non-strategic timberlands • Improved selling prices, slightly Intersegment sales 127 123 lower fee harvest volumes, and Total sales 412 455 higher logging costs in the West Cost of products sold 1. 290 321 • Flat fee harvest volumes and log Gross margin 122 134 realizations in the South SG&A expenses 28 27 • Seasonally higher road and Other income, net 2 silviculture expenses (10) (7) Contribution to Earnings $104 $114 Adjusted EBITDA 3 $139 $147 Gross Margin Percentage 4 30% 29% Operating Margin Percentage 5 25% 25% 1. 2013 Q2 excludes $1 million of third party sales, $43 million of intersegment sales, and $44 million in cost of products sold for Canadian Forestland operations, compared with $8 million of third party sales, $97 million of intersegment sales and $105 million in cost of products sold in 2013 Q1. 2. Other income, net includes: R&D expense, charges for restructuring, closures and impairments; other operating income, net; interest income and other; and net loss attributable to non-controlling interests. 3. A reconciliation to GAAP is set forth on Chart 19, and at www.weyerhaeuser.com. 4. Gross margin divided by total sales excluding Canadian Forestlands operations. Timberlands makes no margin on Canadian Forestlands operations, which are operated as a cost center for the purpose of supplying Weyerhaeuser's Canadian manufacturing facilities. 5. Contribution to earnings divided by total sales excluding Canadian Forestlands operations. 5 | 07/26/2013

Chart 3 WESTERN/SOUTHERN TIMBERLANDS 3 rd -Party Log Sales and Realizations - West 3 rd -Party Log Sales and Realizations - South 2,500 $125 2,500 $50 $115 $43 $43 $43 $105 $42 Volumes (Thousands of m3) $41 $40 $99 $96 $94 Volumes (Thousands of m3) $89 2,000 $100 1,812 Realizations ($/m3) 2,000 $40 Realizations ($/m3) 1,674 1,559 1,563 1,551 1,507 1,480 1,430 1,399 1,354 1,500 $75 1,500 $30 1,308 1,228 1,000 $50 1,000 $20 500 $25 500 $10 0 $0 0 $0 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 2013 2012 2013 2012 Export Log Sales 1 Export Log Sales by Country 1 $200 Korea $146 9% $150 ($ Millions) $115 $100 $90 $87 China $100 $79 20% Japan $50 71% $0 Q1 Q2 Q3 Q4 Q1 Q2 2012 2013 2013 Q2 6 | 07/26/2013 1. Export log sales are net of freight expense, rebates and claims.