WEYERHAEUSER EARNINGS RESULTS 2ND QUARTER 2018 | July 27, 2018 - PowerPoint PPT Presentation

WEYERHAEUSER EARNINGS RESULTS 2ND QUARTER 2018 | July 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, adjusted EBITDA, operating expense, sales realizations and volumes and harvest volumes, and earnings before special items. 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 July 27, 2018

Chart 1 2018 Q2 CONSOLIDATED RESULTS $ Millions 2018 2018 $ Millions EXCEPT EPS 2018 2018 Q1 Q2 Change Q1 Q2 Consolidated Statement of Operations Before Adjusted EBITDA Special Items Timberlands $ 268 $ 240 $ (28) Net sales $ 1,865 $ 2,065 Real Estate, Energy & Natural 41 47 6 Resources Cost of products sold 1,348 1,447 Wood Products 286 385 99 Gross margin 517 618 Unallocated Items (51) (35) 16 SG&A expenses 101 103 Total Adjusted EBITDA 1 $ 544 $ 637 $ 93 Other (income) expense, net 2 16 21 Contribution to Earnings Before Total Contribution to Earnings Before Special $ 400 $ 494 $ 94 $ 400 $ 494 Special Items Items Interest expense, net 3 (93) (92) Income taxes 4 (32) (70) Net Earnings Before Special Items 4 $ 275 $ 332 1. Our definition of Adjusted EBITDA and a reconciliation to GAAP are set forth on Chart 16 . Special items, after-tax 4 (6) (15) 2. Includes R&D expenses; charges for integration and restructuring, closures, and asset impairments; other operating (costs) income, net; non- Net Earnings $ 269 $ 317 operating pension and other postretirement benefit costs; and interest Diluted EPS Before Special Items 4 $ 0.36 $ 0.44 income and other. Interest income and other includes approximately $8 million of income from SPE investments for each quarter presented. Diluted EPS $ 0.35 $ 0.42 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 July 27, 2018

Chart 2 EARNINGS BEFORE SPECIAL ITEMS $ Millions EXCEPT EPS 2018 Q1 2018 Q2 Pre-Tax After-Tax Diluted Pre-Tax After-Tax Diluted Earnings Earnings EPS Earnings Earnings EPS Earnings Before Special Items $ 307 $ 275 $ 0.36 $ 402 $ 332 $ 0.44 Special Items: Environmental remediation (charges) recoveries (28) (21) (0.03) — — — Product remediation (charges) recoveries, net 20 15 0.02 (20) (15) (0.02) Total Special Items (8) (6) (0.01) (20) (15) (0.02) Earnings Including Special Items (GAAP) $ 299 $ 269 $ 0.35 $ 382 $ 317 $ 0.42 4 July 27, 2018

Chart 3 ADJUSTED EBITDA 1 2 Adjusted EBITDA (millions) Adjusted EBITDA (millions) $ 29 20 58 71 27 30 Real Estate $ 14 17 16 16 14 17 ENR Adjusted EBITDA (millions) Adjusted EBITDA (millions) $ 133 124 111 140 165 152 $ 99 127 117 116 140 195 West Lumber $ 96 91 95 101 98 84 $ 66 87 102 104 92 129 South OSB $ 8 2 4 9 6 3 $ 37 52 50 34 45 58 North Engineered Wood $ 5 5 10 2 (1) 1 $ 8 13 12 5 15 12 Other Distribution $ (3) (5) (3) (1) (6) (9) 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 July 27, 2018

Chart 4 TIMBERLANDS SEGMENT TIMBERLANDS ($ Millions) 1 TIMBERLANDS ($ Millions) 1 2018 2018 2018 2018 Segment Statement of Operations Q1 Q2 Adjusted EBITDA by Region Q1 Q2 West $ 165 $ 152 Third party sales $ 490 $ 476 South 98 84 Intersegment sales 142 139 North 6 3 Total Sales 632 615 Other (1) 1 Cost of products sold 422 431 Total Adjusted EBITDA 3 $ 268 $ 240 Gross margin 210 184 SG&A expenses 23 24 2nd Quarter Notes Other (income) expense, net 2 (2) (1) Contribution to Earnings $ 189 $ 161 • Slightly higher average Western log sales realizations Adjusted EBITDA 3 $ 268 $ 240 • Average Southern realizations declined slightly due to mix Adjusted EBITDA Margin Percentage 4 42% 39% Operating Margin Percentage 5 • Seasonally higher forestry, road and unit logging 30% 26% costs • Increased fuel costs 1. Amounts presented exclude Canadian Forestlands operations, which are operated for the purpose of supplying Weyerhaeuser's Canadian manufacturing facilities and contribute no margin to the Timberlands segment. 2. Other (income) expense, net includes: R&D expenses and other operating costs (income), net. 3. Our definition of Adjusted EBITDA and a reconciliation to GAAP are set forth on Chart 17 . 4. Adjusted EBITDA divided by total sales. 5. Contribution to earnings divided by total sales. 6 July 27, 2018

SALES VOLUMES, Chart 5 REALIZATIONS AND EXPORT SALES 1 Volumes (Thousands of tons) Volumes (Thousands of tons) Volumes (Thousands of tons) Japan 70% 65% 62% 68% 72% 68% 1. Western logs are primarily transacted in MBF but are converted to China 24% 26% 29% 27% 23% 27% ton equivalents for external reporting purposes. Korea 6% 9% 9% 5% 5% 5% 7 July 27, 2018