Weyerhaeuser Company (WY)

WY 
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Weyerhaeuser Co. (WY)

Strategic Announcements Conference

June 17, 2013 8:30 am ET

Executives

Kathryn F. McAuley - Vice President of Investor Relations

Daniel S. Fulton - President, Director and Member of Executive Committee

Doyle R. Simons - Chief Executive Officer, Director, Member of Compensation Committee and Member of Finance Committee

Thomas F. Gideon - Executive Vice President of Timberlands

Patricia M. Bedient - Chief Financial Officer and Executive Vice President

Analysts

George L. Staphos - BofA Merrill Lynch, Research Division

Anthony Pettinari - Citigroup Inc, Research Division

Joshua A. Barber - Stifel, Nicolaus & Co., Inc., Research Division

Mark Wilde - Deutsche Bank AG, Research Division

Mark A. Weintraub - The Buckingham Research Group Incorporated

Gail S. Glazerman - UBS Investment Bank, Research Division

Alex Ovshey Ovshey - Goldman Sachs Group Inc., Research Division

Steven Chercover - D.A. Davidson & Co., Research Division

James Armstrong - Vertical Research Partners, LLC

Presentation

Operator

Good morning. My name is Lori, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Weyerhaeuser Conference Call. [Operator Instructions] I would now like to turn the call over to Ms. Kathy McAuley, Vice President of Investor Relations. Ms. McAuley, you may begin.

Kathryn F. McAuley

Thank you. Good morning, and thank you for joining us. Please review the warning statements in our press release and on the presentation slides concerning the risks associated with forward-looking statements, as forward-looking statements will be made during this conference call. On the call, we will discuss non-GAAP financial measures, and a GAAP reconciliation has been included in this presentation.

Joining me this morning are Dan Fulton, President and Chief Executive Officer; Patty Bedient, Executive Vice President and Chief Financial Officer; Doyle Simons, CEO Elect; and Tom Gideon, Executive Vice President, Timberlands. I will now turn the call over to Dan. Dan?

Daniel S. Fulton

Good morning. As Cathy mentioned, we made a number of exciting strategic announcements yesterday. First, we announced the acquisition of Longview Timber, which we will spend the bulk of our time discussing today.

Second, in conjunction with and subject to the completion of this acquisition, our board intends to raise our quarterly dividend from $0.20 to $0.22 per share in August, payable in September.

Third, we announced that the board has authorized the formal evaluation of strategic alternatives with respect to Weyerhaeuser Real Estate Company, or WRECO, as we call it.

And fourth, we announced that Doyle Simons, a member of the Weyerhaeuser Board of Directors, has been appointed President and CEO of Weyerhaeuser effective August 1 and CEO Elect effective today. Following Doyle's transition to CEO on August 1, I will become Executive Vice Chairman of the Board until my planned retirement in October 2013. I'd like to express an official welcome to Doyle. I know that the Weyerhaeuser team is looking forward to working with you as you lead the next phase of growth of our company. And I'd like to give Doyle a few moments at the start of this call just to say a few words.

Doyle R. Simons

Thank you, Dan, and good morning, everyone. I want to start off by saying how excited I am to have the opportunity to be part of this company's great legacy and serve as Weyerhaeuser's next CEO. As a board member for the past year, I've gained great respect for this company's values, its world-class Timberlands, its quality assets and its people, including Dan, Patty, Tom, Kathy and the rest of the leadership team.

Today's strategic announcements are fully aligned with the board's commitment to further enhance value for all Weyerhaeuser shareholders. My priority over the next few weeks as CEO Elect will be to meet our people, visit our facilities and begin to identify opportunities to build upon our operational improvement and to sustainably grow our company.

I also look forward to meeting, or in many cases, becoming reacquainted with those of you on the call this morning. With that, I'll turn the call back over to Dan, so he can discuss these very important announcements.

Daniel S. Fulton

Thanks, Doyle. We're very excited to agree to purchase Longview Timber LLC from affiliates of Brookfield Asset Management. This strategic acquisition comprises approximately 645,000 acres of unique, high-value timberlands in Washington and Oregon. This acquisition will expand Weyerhaeuser's timber holdings in the Pacific Northwest by 33% to approximately 2.6 million acres and will increase the total amount of Timberlands we own or control to approximately 7 million acres.

The total purchase price, which includes the assumption of debt, is $2.65 billion. And as Patty will discuss, we plan to raise approximately $2.45 billion in conjunction with this transaction. This one-of-a-kind acquisition is very straightforward. It's one that we believe can be completed quickly, and we are confident that we will start to realize the benefits immediately. We expect to close the transaction in July 2013.

We believe that this is a truly unique opportunity for Weyerhaeuser to do a scaled transaction of high-value timberlands west of the Cascades, right at our own backyard. We expect the transaction to be immediately accretive to the funds available for distribution per share, and the transaction enhances our ability to further increase our dividend.

To that end, in conjunction with and subject to the completion of this acquisition, the board intends to raise the quarterly dividend from $0.20 to $0.22 per share beginning with the third quarter dividend, which will be payable in September.

This is an example of the picture being worth much more than a thousand words. Slide 8 provides a visual representation of the strategic fit between Weyerhaeuser's current Timberland ownership in Washington and Oregon, which are in green, and the black regions, which are the Longview Timberlands we are purchasing.

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