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Weyerhaeuser Co. (WY)
December 17, 2013 8:30 am ET
Kathryn F. McAuley - Vice President of Investor Relations
Doyle R. Simons - Chief Executive Officer, President, Director, Member of Compensation Committee and Member of Finance Committee
Patricia M. Bedient - Chief Financial Officer and Executive Vice President
William V. Selesky - Argus Research Company
Chip A. Dillon - Vertical Research Partners, LLC
George L. Staphos - BofA Merrill Lynch, Research Division
Gail S. Glazerman - UBS Investment Bank, Research Division
Joshua L. Zaret - Longbow Research LLC
Paul C. Quinn - RBC Capital Markets, LLC, Research Division
Kathryn F. McAuley
Previous Statements by WY
» Weyerhaeuser's CEO Presents at Merger of TRI Pointe Homes, Inc. Conference (Transcript)
» Weyerhaeuser Management Discusses Q3 2013 Results - Earnings Call Transcript
» Weyerhaeuser Company (WY) Management Discusses Q2 2013 Results - Earnings Call Transcript
I would like to introduce Doyle Simons, President and Chief Executive Officer of Weyerhaeuser Company. Doyle?
Doyle R. Simons
Thank you, Kathy, and good morning, everybody, and welcome. It's nice to look around and see so many familiar faces in the audience.
Since joining Weyerhaeuser and becoming President and CEO on August 1, I've been primarily focused on answering 3 questions: Where are we today, where are we going and how are we going to get there? As part of that process, I spent my first 50 days out on the road, visiting our facilities and meeting our people. And at each stop, I asked 3 questions: What are we really good at, at Weyerhaeuser; what can we do better; and what do we need to do to make this a truly great company? And I've got some really good feedback from our employees. I also spent some time, during that first 50 days, visiting with investors and essentially asked investors the same 3 questions. And as you can imagine, I got some open and frank feedback from our investors.
I then spent the next 50 days hunker down with my senior management team saying, "Okay, if this is where we are, where do we want to go, and how we're going to get there?" And through that process, we created a vision. This is primarily an internal document, but I wanted to share with this group this morning. But the focus of today is going to be how we're creating a truly great company for our shareholders through great financial results, driven by operational excellence.
Two items I'd like to focus on, on this slide. First is operational excellence. Now it's a pretty common term in today's world, but at Weyerhaeuser, it has a very specific definition. It's delivering quality products that our customers want and are willing to pay for and doing it at the lowest possible cost. The other thing I want to focus on, on this slide is key behaviors, because what we're really focused on doing here at Weyerhaeuser is changing our culture. If we're not successful in changing our culture, we won't be successful in achieving our vision. As everybody knows, cultures are hard to change. Example I like to give is like a rubber band, right? You change, and you mold, and you do, and you do it, if you ever let up, it snaps right back. So like I said, changing a culture is hard, but we can do it at Weyerhaeuser.
Culture is nothing more than behaviors, so what we're talking about is changing our behaviors. First, we've got to act with urgency. We've got to improve the clock speed at Weyerhaeuser. And hopefully, some of the actions that we've done recently represent that new clock speed, but we have to act with urgency every day. Second thing we've got to do is we've got to be accountable. And when people hear accountable, oftentimes, people just think consequences. That's part of it. But to me, being accountable is making sure you have crystal-clear objectives, and you sure going to hear this morning, we have crystal-clear objectives now at Weyerhaeuser; got to make sure everybody knows exactly who is responsible for achieving those objectives; and then you've got to be accountable to ourselves, we've got to be accountable to ourselves; and we have to be accountable to our shareholders.
The third thing is we've got to be courageous. So what I mean by that, we've got to be willing to do things differently at Weyerhaeuser, not just do things the same way because that's the way we've always done it. And then finally, we've got to keep things simple. Sometimes, we let process get in the way of getting our work done. As I like to say, sometimes, our not-to-do list at Weyerhaeuser is just as important as our to-do list.
So that's just a little background on our vision. What I want to focus on this morning, though, is our path forward to create a truly great company for our shareholders. And at the end of this presentation, Patty is going to spend some time talking about markets, and we're really excited about where our markets are and really bullish about markets. But what I want to leave you with here today is what we're doing to fully capitalize on the upside in the markets that we have going forward, but also make sure that we're well-positioned for the inevitable downturn.
So what is our path forward? Let me start with our team. I'm a big believer, it's all about the people. And I can tell you, my board and I are committed to put the best team on the field every day, and I'm excited about the team we are assembling at Weyerhaeuser. I think it's a really good combination of some completely new faces to the company, which give a fresh perspective. We've got some folks who've been with the company for a while but are now on new roles, and then we've got some seasoned veterans.
Now in terms of the new faces, that's Adrian Blocker and myself. And I understand the jury is still out on me, but I can tell you, Adrian is going to be a fantastic addition to our team. Adrian runs our lumber operation and joins us after spending time at both West Fraser and International Paper.
Just last week, just last Friday, as a matter of fact, we named Rhonda Hunter as Head of our Timberlands operation. Now Rhonda has been with the company for a while, running our Southern Timberlands operations. She's done a really good job. And I can tell you, she's already hit the ground running, looking for opportunities to drive our earnings and cash flow in our Timberlands operations through operational excellence.
A couple of months ago, we named Cathy Slater as Head of our OSB, ELP and Distribution business. Cathy comes to us with extensive manufacturing experience. She started her career at Procter & Gamble and has now been at Weyerhaeuser for a number of years. Cathy has been instrumental in improving our OSB operation, as I'll show you in a little while.
Shaker Chandrasekaran runs our Cellulose Fiber business. I can tell you I've never met a person more intense than Shaker, and I can tell you, he's focused every day on driving the bottom line performance of our Cellulose Fiber operation. And then, of course, we have Patty. Patty has been a key member of our team in the past and will continue to be a key member going forward.
So what's our goal? Our goal is pretty simple. The way we're going to create a truly great company for shareholders is to grow shareholder values. As we think about how to do that, we think there are primarily 3 levers that we have in place to grow shareholder value. First is portfolio. Are we in the right businesses to drive value for shareholders? Second is performance. As you'll hear me talk a lot about this morning, we're going to drive our performance through operational excellence. Now this ain't real sexy stuff. This is your basic part blocking and tackling and having a relentless focus on execution every day. And then the third lever to grow shareholder value is capital allocation. And I can tell you, as markets continue to improve and as we improve our performance, then capital allocation is going to be a critical lever to drive shareholder value, and as we'll share with you this morning, we have some -- a very specific and disciplined approach to capital allocation going forward.
So what are our measures going to be? How are we going to know if we're making progress? As you know, we'll look at lots of measures. We'll look at ROI, we'll look at cash flow. But the bottom line is, I'm a big believer in relative measures in the businesses that we're in. This morning, we're going to spend a lot of time talking about relative EBITDA as we show you how we stack up versus competition. But the ultimate measure for our success is going to be our relative total shareholder return. Our goal is to have the highest shareholder return in the industry and be in the top third over a cycle.
This is just another way to look at TSR, including the 3 buckets: profit growth, change in multiple, and dividend and share repurchases, that make up total shareholder return, and then highlights the drivers of the levers that we have in push -- that have in place to impact each one.
Starting with profit growth. The way we're going to drive profit growth is through operational excellence and driving incremental profit as we improve our relative performance. All 3 of the levers, of course, can impact the change in multiple. We believe as we drive up our relative performance through operational excellence, as we focus on capital allocation and do a better job of allocating capital going forward and show we're good stewards of our investor capital and we focus our portfolio, we think that will have a positive impact on our multiple going forward.