Weyerhaeuser (WY)

Growing a Truly Great Company Company Overview Company History

• Founded in 1900 in Ticker WY State Current Price $31.27 Market Cap 18.29 B • One of the largest private 52-Week Range $26.38 - 32.00 holders of timberlands in the Avg. Daily Volume 4.06 M world (20 million+ acres) Dividend $0.88 • Produces and sells wood P/E 31.21 derivative products (like cellulose) Competitors: • Involved in real estate and - Co. Inc. (PCL) - Rayonier Inc. (RYN) housing through subsidiaries - Louisiana-Pacific Corp. (LPX) - Canfor Corp. (CFPZF) - West Fraser Timber Co. (WFTBF) Company History

• Late 1990s divested from finance and personal products and consolidated • In 1999 acquired MacMillan Bloedel Ltd for $2.45 billion, and vast lands in Canada • In 2002 hostile buyout for $7.5 billion of Willamette Industries, the 7th largest forest products firm, becoming leader in lumber, pulp, and packaging • 2006 spun off fine paper business in a $3.3 billion deal • During cash crunch in 2008, forced to sell containerboard and packaging business for $6 billion to raise cash • 2013 purchased Long View Timber + forests for $2.65 billion • 2013 management shuffle, new CEO Management Team

• CEO Doyle R Simmons – In charge since 2013, has 20+ years of experience in forest product industry • CFO Patricia M Bedient – promoted from Senior VP in 2006 • Peter M Orser – President of real estate subsidiery, managing lands. Career Weyerhaeuser employee Management Team

• Senior VP, Fibers– Srinivasan Chandrasekaran • Senior VP, Lumber– Adrian M Blocker • Senior VP, Timberlands – Rhonda Hunters • Senior VP and General Counsel – Sandy D McDade • Senior VP, HR – Denise M Merle • Senior VP, Engineered Products and Distribution – Catherine I Slater Historic Stock Performance

• WY changed majority of management team in April 2014 Income Statements

• Revenue has gone up each year since 2011, despite management shakeups and economic vulnerability • Large recent non-recurring expenditures that reduced profit margin can be attributed to timberlands purchases • Note: timberland does not depreciate in value, you can sit on it Fundamental Analysis Investment Thesis

• WY is a great play on timber, real estate, and strategic management – Timber does not depreciate in value over time – Strong management team has transformed WY – Better location than competitors – High growth potential with newly acquired land – Real estate markets in Asia and United States are easily accessible Short-Term Value Catalysts

• Split-Off of WRECO – By combining its real estate operations with Tri Pointe Homes, Weyerhaeuser can focus on its most profitable segment, the timberlands business segment Long-Term Growth Drivers

• Strategic Location of Assets – 2.6 million of Weyerhaeuser’s 6.6 million acres of forestland are located in the – Pacific Northwest is a strategic location near Asia and enables Weyerhaeuser to capitalize on continued growing demand from Chinese and Japanese markets – Land and timber values are worth more in the Pacific Northwest than in the South, where the company’s biggest competitors have more extensive timber assets Risks

• Questionable direction of the US housing sector – Uncertainty of the strength of the US housing recovery impacts the company’s building-materials business – Home construction and buyer demand has suffered through a tough winter and dropping affordability • Weather related risks are always present – Extreme weather conditions or natural events can effect the company’s assets of standing timber and manufacturing facilities Timber Price Trends Timber Price Trends Timber Price Trends Financial and Technical Analysis WY Notes

• Given a 10% growth per year, and factoring in that the risk free rate on a 30 year treasury note is 5.5%, we add a 3% to this 5.5% figure as a risk premium. • In 2013 WY’s total cash flow was 2691400. This was a sharp increase from the cash flows from the previous two periods. Assumptions

• Assuming that WY’s Cash flows in 2014 are 2,970,000 and assuming that WY grows at a 10% pace annually, we see that over 5 years the company will be worth… DCF Visual DCF Results

• Cash Flow over 5 Years = $14,070,334 • Assuming a 2% growth rate, terminal value = $219.7 M • Total Value = 14.07M + 219.7 = $233.77 M Comps Model Conclusions

• WY is a great play on timber, real estate, and strategic management – Timber does not depreciate in value over time – Strong management team has transformed WY – Better location than competitors – High growth potential with newly acquired land – Real estate markets in Asia and United States are easily accessible

Alumni Homecoming Reunion 2009 10/24/09