C ompanyName:We ye r hae us e r Co
C ompanyTicker:WY
Sector:Indus t r ialGo o ds
Industry:Mat e r ials &Co ns t r uc t io n
EventDescription:Q320 15Ear nings
Call
MarketC apasofEventDate:15.0 0 B
PriceasofEventDate:29.33
Weyerhaeuser(WY)EarningsReport:Q32015
ConferenceCallTranscript
ThefollowingWeyerhaeuserconferencecalltookplaceonO ctober30,2015,10:00AMET.Thisisa
transcriptofthatearningscall:
Co mpanyPar t ic ipant s
DeniseMerle;WeyerhaeuserC ompany;InvestorRelations
DoyleSimons;WeyerhaeuserC ompany;C EO
PattyBedient;WeyerhaeuserC ompany;C FO
Ot he r Par t ic ipant s
MarkWeintraub;BuckinghamResearch;Analyst
AnthonyPettinari;C itigroup;Analyst
TylerLangton;JPMorgan;Analyst
GailGlazerman;UBS;Analyst
MarkWilloughby;BMO C apitalMarkets;Analyst
GeorgeStaphos;BankofAmericaMerrillLynch;Analyst
C hipDillon;VerticalResearchPartners;Analyst
SteveC hercover;D.A.Davidson&C o.;Analyst
ScottLeaman;C LSA;Analyst
AlexO vshey;GoldmanSachs;Analyst
C ollinMings;RaymondJames;Analyst
MANAGEMENTDISC USSIO NSEC TIO N
Ope r at o r :
Atthistime,IwouldliketowelcomeeveryonetotheWeyerhaeuserthird-quarter2015earnings
conferencecall.
(O peratorInstructions)
IwouldnowliketoturnthecallovertoDeniseMerle,SeniorVicePresidentofHumanResourcesand
InvestorRelations.Pleasegoahead.
De nis e Me r le (InvestorRelations):
Thankyou,[Brent].Goodmorning,everyone,andthankyouforjoiningustodaytodiscuss
Weyerhaeuser'sthird-quarter2015earnings.
O nthecallwithmethismorningareDoyleSimons,C EO ;PattyBedient,C FO ;andBethBaum,Directorof
InvestorRelations.ThiscallisbeingWebcastatwww.weyerhaeuser.com.O urearningsreleaseand
presentationmaterialscanalsobefoundonourWebsite.
Pleasereviewthewarningstatementsinourpressreleaseandonthepresentationslidesconcerningthe
riskassociatedwithforward-lookingstatements,asforward-lookingstatementswillbemadeduringthe
conferencecall.Wewilldiscussnon-GAAPfinancialmeasures,andareconciliationofGAAPcanbefound
inearningsmaterialonourWebsite.
© 2014TheStr eet,I nc.Al l R i ghtsR eser ved
Page1of18
C ompanyName:We ye r hae us e r Co
C ompanyTicker:WY
Sector:Indus t r ialGo o ds
Industry:Mat e r ials &Co ns t r uc t io n
EventDescription:Q320 15Ear nings
Call
MarketC apasofEventDate:15.0 0 B
PriceasofEventDate:29.33
IwillnowturnthecallovertoDoyleSimons.
Do yle Simo ns (C EO ):
Thankyou,Denise,andwelcome,everyone.Thismorning,Weyerhaeuserreportedthird-quarternet
earningsof$180million,or$0.35perdilutedshare,onnetsalesof$1.8billion.I'mverypleasedwithour
third-quarterperformanceaseachofourbusinessescapitalizedonoperationalexcellence
improvementstodeliverstrongresults,despitesomemarketandglobalmacroeconomicheadwinds.In
addition,wecontinuetodeliveronourcommitmenttoreturncashtoshareholders.Wehavecompleted
the$700millionsharerepurchaseprogramauthorizedin2014.InAugust,ourBoardsupplementedthis
programwithanadditional$500millionsharerepurchaseauthorizationandalsoincreasedourquarterly
dividendby7%,to$0.31pershare.Thisillustratesourconfidenceinourabilitytocontinuetoexecute
ouroperationalexcellenceinitiativesandcapitalizeonmarketimprovementsgoingforward.
Iwillbeginthediscussionofourbusinessresultswithsomebriefcommentsaboutthehousingmarket.The
UShousingmarketcontinuedtoadvanceinthethirdquarter,followingchoppyactivityinthefirsthalfof
theyear.TotalhousingstartsasofSeptemberhaveimproved18%comparedwith2014,andsingle-family
startsareup12%.Wecontinuetoanticipatejustover1.1millionstartsfor2015.O urcustomerstellusthey
expectstrongyear-endactivityforaslongasweatherconditionsremainfavorable.Withrising
employment,strongconsumerconfidence,historicallylowmortgagerates,andbuildersentiment
reachingall-timehighs,wecontinuetoanticipatesteadyimprovementintheUShousingmarket.
Letmenowturntoourbusinesssegments,startingwithTimberlands,charts2to4.Timberlands
contributed$126milliontothird-quarterearnings,comparabletothesecondquarter.Strongcost
controlsandoperationalexcellenceinitiativesoffsettheeffectofreducedWesternfeeharvestvolumes
andloweraveragesalesrealizationsforWesternlogs.Asexpected,Westernfeeharvestvolumes
declinedby5%comparedwiththesecondquarter,duetofireseasonloggingconstraints.
Thisyear'sfireseasonwasexceptionallysevere,duetorecord-breakingtemperaturesandunusuallylow
rainfall.O uremployeesdidanexceptionaljobofprotectingourtimberlandsandflexingharvestsettings
toadjusttochangingloggingconstraintsandmarketconditions.O urtreefarmsexperiencedvirtuallyno
firedamage,withonlyabout150ofour7millionacresaffected,lessthan0.01%.Averagerealizationsfor
Westerndomesticlogsimprovedslightlyinthethirdquarterasfireseasonrestrictionsresultedintighter
logsupplies,especiallyinsouthernO regon,andwebenefitedfromanimprovedmix.
Turningtotheexportmarkets,JapanesedemandremainsstrongandpricingforourJapaneselogswasup
slightlyinthequarter.AfterpeakinginAugust,loginventoriesatC hineseportshavedeclinedassupplies
havefalleninresponsetolowerpricing.However,C hinesedemandandpricingremainchallengingdue
tocontinuedslowconstructionactivityandweflexvolumeintomoreprofitabledomesticmarkets.
O verall,averagerealizationsforourWesternlogsdeclinedcomparedwiththesecondquarter,primarily
duetothehigherproportionofdomesticlogsales.IntheSouth,feeharvestvolumeincreasedand
averagelogsalesrealizationimprovedslightly.
Thirdquarterincludedearningsof$13millionfromdispositionofnon-strategictimberland,anincreaseof
$8millioncomparedwiththesecondquarter.O perationalexcellenceinitiativescontributedto
Timberlandsthird-quarterresults,aseffortstooptimizeharvestsettingsandroadandsilviculture
expendituresresultedincontinuedcostimprovements.Thebusinessremainsontracktomeetorexceed
itsO pExtargetfor2015.
WoodProducts,charts5and6.WoodProductscontributed$85milliontothird-quarterearnings,an
improvementof$14millioncomparedwiththesecondquarter.EBITDAincreasedto$111millionas
improvedsalesvolumesandloweroperatingcostsenabledthebusinesstoovercomethedragoflower
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C ompanyName:We ye r hae us e r Co
C ompanyTicker:WY
Sector:Indus t r ialGo o ds
Industry:Mat e r ials &Co ns t r uc t io n
EventDescription:Q320 15Ear nings
Call
MarketC apasofEventDate:15.0 0 B
PriceasofEventDate:29.33
averagelumberrealization.Inlumber,EBITDAdeclined$4millioncomparedwiththesecondquarter.A
3%decreaseinaveragesalesrealizationswasmostlyoffsetbyseasonallyhighersalesvolumesand
improvementsinlogandothercosts.
InO SB,EBITDAimprovedby$12millionduetoa2%increaseinaveragesalesrealizationsandreduced
manufacturingandlogcosts.Engineeredwoodproductsreportedthird-quarterEBITDAof$36million,
comparedwith$38millioninthesecondquarter.Slightlyimprovedsalesvolumesandrealizationsfor
severalproductswereoffsetbyhighermanufacturingcostsduetoplannedmaintenancedowntime.
EBITDAforthedistributionbusinessincreasedby$7million,comparedwiththesecondquarter,dueto
improvedsalesvolumesandloweroverheadcosts.
O urWoodProductsbusinessremainsrelentlesslyfocusedonoperationalexcellence.LumberandO SB
areontracktoachievetheir2015targets.Engineeredwoodproductsistrackingsignificantlyaboveits
EBITDAimprovementtarget.Yeartodate,thebusinesshasgeneratedEBITDAof$100million,a$35
millionimprovementcomparedtoatargetof$15millionto$20million.Wemadesignificantprogressin
ourdistributiontowardourO pExtargetinthethirdquarterasEBITDAimprovedto$9million.Andwe
expectcontinuedprogressinthefourthquarter.Atthispoint,however,weareunlikelytoreachourfull
$20milliontargetfortheyear.Withthatsaid,Iamencouragedbyourlevelofimprovementinthethird
quarter,andthisbusinessishighlyfocusedoncontinuingtoimprovebottom-lineperformancegoing
forward.
C elluloseFibers,charts7and8.C elluloseFiberscontributed$79milliontothird-quarterearnings
comparedwith$27millioninthesecondquarter.Pulpmarketsofteninginthethirdquarterduetorising
globalinventoriesandthecontinuingchallengeofastrongUSdollar.Averagepulprealizations
declinedslightlycomparedwithsecondquarter.Earningsforthissegmentincreasedsignificantlyas
maintenanceexpensedeclinedandpulpproductionimprovedduetofewerscheduledmaintenance
outagedates.Thethirdquarterincludedonlyfourdaysofscheduledmaintenanceoutagescompared
witha46-dayextendedoutagecompletedinthesecondquarter.
TheC elluloseFibersbusinesscontinuestomakegoodprogressonoperationalexcellenceinitiativesas
well.Third-quarterresultsbenefitedfrominitiativestoreduceenergycostsandchemicalcostsand
usage.TheC elluloseFiberbusinessremainsontracktoachieveits2015operationalexcellencetarget.
IwillnowturnitovertoPattytodiscussourfourth-quarteroutlook.
Pat t yBe die nt (C FO ):
Thanks,Doyle,andgoodmorning,everyone.Theoutlookforthefourthquarterissummarizedonchart
12,andIwillbeginmycommentswithTimberlands.IntheWest,exportlogvolumestoJapanisexpected
toincreaseduringthefourthquarterasaresultofanactiveJapanesehousingmarket,andweanticipate
aslightimprovementinprices.AlthoughconstructionactivityinC hinaisstillslow,inventoriesatC hinese
portsstartedtodeclineduringQ 3andareexpectedtodecreasefurtherthisquarter.Asaresult,wesee
fourth-quarterpricesstabilizing.AveragesalesrealizationsandvolumesforWesterndomesticlogsare
expectedtobecomparabletoQ 3.
FeetimberharvestintheWestisanticipatedtoincreaseslightly,asfire-relatedloggingconstraintshave
beenlifted.IntheSouth,feeharvestvolumeisexpectedtobeinlinewiththethirdquarter,andwe
anticipateroughlysimilaraveragesalesrealizations.Silvicultureandloggingcostswilllikelyincrease
seasonally.O verall,fourth-quarterearningsinourTimberlandssegmentareexpectedtobecomparable
toQ 3.
InourWoodProductssegment,thefourthquarteristypicallytheseasonallyweakestquarteroftheyear.
Becauseoftheseasonalslowdown,weexpectlowersalesvolumes.Althoughwehaveseenanincrease
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C ompanyName:We ye r hae us e r Co
C ompanyTicker:WY
Sector:Indus t r ialGo o ds
Industry:Mat e r ials &Co ns t r uc t io n
EventDescription:Q320 15Ear nings
Call
MarketC apasofEventDate:15.0 0 B
PriceasofEventDate:29.33
inlumberpricesthusfarinthefourthquarter,averagesalesrealizationsforQ 4areexpectedtobelower
thantheaverageofQ 3.Weexpecthigheraveragesalesrealizationsfororientedstrandboardinthe
fourthquarter,comparedtothethird,andweanticipatethatengineeredwoodproductsaveragesales
realizationswillberelativelyflat.
Productionvolumesinthefourthquarterareexpectedtodeclineduetotheholidayseasonand
scheduleddowntimetocompletemaintenanceandcapitalprojects.Thisdowntimewillresultinhigher
per-unitmanufacturingcosts.C onsistentwiththenormalseasonalpattern,weexpectfourth-quarter
earningsinourWoodProductssegmenttobelowerthanthethirdquarterandslightlylowerthanthe
earningsofQ 4oflastyear,whichhadmuchhigherpricing.
O urC elluloseFibersbusinessiscontinuingtoexperiencecurrencyheadwindsduetothestrongUS
dollar.Worldwideinventoriesforsoftwoodpulpstoodat30daysattheendofthethirdquarter.Typically,
industrysupplyincreasesduringthefourthquarterasthereisseasonallynotasmuchmaintenance
downtimeinthecolderwintermonths.Asaresult,weexpectweakeraveragesalesrealizationsforpulp
inthefourthquartercomparedtothethird.
O urfinalplannedmaintenanceoutageforthisyearwascompletedearlierthismonth.Themillisbackup
andrunningwell.Duetothisoutagewewillhavemoreplannedmaintenancedaysthisquarter.Asa
result,expectthatoverallmaintenanceexpensewillbeapproximately$10millionhigherthanQ 3.In
addition,weexpectseasonallyhigherfibercosts.WeanticipatethatoverallearningsinourC ellulose
Fiberssegmentwillbeapproximately$20millionto$25millionlowerinthefourthquartercomparedto
thethird.
C hart9summarizestheresultsofUnallocatedItems.UnallocatedItemsmovedfromapositiveearnings
impactof$20millioninQ 2,toanegative$27millioninQ 3.Thelargestchangewasaresultofanon-cash
chargefortheweakeningoftheC anadiandollar.Aswe'vesaidinthepast,everypennychangeinthe
exchangerateisroughly$3millionto$4milliononapretaxbasis.Theotherlargevariancewasalower
positiveeffectfortheeliminationofinter-segmentprofitininventoryandLIFO .
Now,Iwillwrapupwithsomeoverallfinancialcomments.Incometaxesforthequarterresultedinatax
benefitof$16million.Thiswasduetoatrue-upoftheeffectivetaxratefortheyear,whichisnow
estimatedtobelower,basedonthehighermixofREITincomerelativetothetaxableREITsubsidiary.In
addition,therewerediscreteitemsbookedinthequarterofapproximately$9million,thelargestitem
beingapositiveresolutionofuncertaintaxprovisions.
Now,Iwillrefertoyouchart10.C ashflowfromoperationsforthethirdquarterwas$282million,ora
reductionof$84millioncomparedtoQ 2.Thechangewasprimarilytheresultofalargeworkingcapital
reductioninQ 2andnormaltimingofinterestpayments.C apitalexpendituresforthethirdquarterwere
$112million,bringingourtotalexpendituresforthefirstthreequartersoftheyeartojustover$300
million.Westillanticipatetotalexpendituresfortheyeartoapproximate$500million.Therewasno
changetoourscheduleddebtmaturitiesand,asyoucanseefromthechart,thefirstmaturityisn'tuntil
2017.
C hart11detailsoursharerepurchaseactivityandwehavenowcompletedour$700million2014share
repurchaseauthorization.And,asmentionedearlier,inAugust,theBoardauthorizedanadditional
sharerepurchaseprogramfor$500million.
Now,IwillturnthecallbacktoDoyle.
Do yle Simo ns (C EO ):
Thankyou,Patty.Weareencouragedbythepositivetrendinhousingandtheoptimistictoneweare
© 2014TheStr eet,I nc.Al l R i ghtsR eser ved
Page4of18
C ompanyName:We ye r hae us e r Co
C ompanyTicker:WY
Sector:Indus t r ialGo o ds
Industry:Mat e r ials &Co ns t r uc t io n
EventDescription:Q320 15Ear nings
Call
MarketC apasofEventDate:15.0 0 B
PriceasofEventDate:29.33
hearingfromourcustomers.Goingforward,weremainrelentlesslyfocusedonoperationalexcellence
anddisciplinedcapitalallocation.Byrelentlesslydrivingoperationalexcellenceineachofour
businesses,wearelayingafoundationthatenablesustotakefulladvantageofmarketopportunities.
O urrecentlyannounceddividendincreaseandsharerepurchaseprogramillustrateourconfidencethat
wewillcontinuetogrowshareholdervaluebycapitalizingontheseactivitiesgoingforward.
Andwiththat,we'dliketoopenthefloorforquestions.
Q UESTIO NS&ANSWERS
Ope r at o r :
(O peratorInstructions)
YourfirstquestioncomesfromthelineofMarkWeintraubwithBuckinghamResearch.Pleasegoahead.
Mar kWe int r aub(Analyst-BuckinghamResearch):
Thankyou.Maybealittlebitofadetailquestion.Butonthetaxrate,itI--wellmaybetheeasiestwayto
ask--whattypeoftaxrateshouldwebeanticipatingforthefourthquarter?Kindoflookslikeyouwere
5%to10%,evenaftermakingalltheadjustmentsforthefirstthreequarters.Isthatwhatweshould
expectforthefourthquarter?
Pat t yBe die nt (C FO ):
Yes,Mark,that'souroutlookforthefullyearand,ofcourse,thefourthquarterwillbethelastone.Asyou
mentioned,wehadanumberofthingsinthethirdquarterjusttotrueuptherateforthefullyear.But
we'llbeover5%forthefourthquarter.
Mar kWe int r aub(Analyst-BuckinghamResearch):
O kay.Great.Andalso,maybealittlebitofhelp,ifwelookatlumberpricing,whichhasstartedtomove
quitepositivelyoflate,onecouldcertainlyseescenarioswhereatleasttherandom[lince]average
wouldbehigherinthefourthquarterthanitwouldbeinthethirdquarter.Maybealittlebitmorecolorof
yourcommentsonwhyyouwouldexpectittobelower,recognizingmaybeyousellmoreinO ctoberand
thingslikethat.Butifyoucouldgiveusalittlebitofhelpinunderstandinghowtothinkthroughfourth
quarterlumberrealizations,thatwouldbegreat.
Do yle Simo ns (C EO ):
Sure.And,Mark,weagreewithyou.Thereisascenariowherelumberpricescould,infact,behigherin
thefourthquarterversusthethirdquarter.Butletmekindofgiveyouthefactsofwherewearecurrently.
Ifyoutakequartertodate--fourthquartertodateaverage,it'sstillabout$15belowthethirdquarter
average.Nowifyoutakecurrentpricestodayforlumber,it'sbasicallyinlinewiththethirdquarter
average.Sotoyourpoint,it'salldependentonwhathappensfromthispointgoingforward.Wemaybe
beingconservativeintermsofwhatwe'reassumingforlumberprices,butweallknowthat,asPatty
mentioned,thefourthquarteristypicallyaslowerseasonalperiodandwe'lljusthappentosee--haveto
seewhathappensinthemonthofNovemberandDecember.Sothat'sthewayweseeitatthispoint.And
we'lljustwatchtogether,becauseit'snothingbutaguessastowhatwethinkisgoingtohappeninthe
fourthquarter.Andwe'lljusttohaveseehowitplaysoutaswemovethroughthenextcoupleofmonths.
Mar kWe int r aub(Analyst-BuckinghamResearch):
Understood.Andtotallyfairenough.Anycolor,though,intermsofwhyyouthinklumberhascomeback
asnicelyasithasinthelastseveralweeks?
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Page5of18
C ompanyName:We ye r hae us e r Co
C ompanyTicker:WY
Sector:Indus t r ialGo o ds
Industry:Mat e r ials &Co ns t r uc t io n
EventDescription:Q320 15Ear nings
Call
MarketC apasofEventDate:15.0 0 B
PriceasofEventDate:29.33
Do yle Simo ns (C EO ):
Sure.Ithinkthere'sanumberofthingsthathaveplayedintothat.Ithinkwhatweunderstandintalking
toourcustomersandbuyers,Ithinktherewerevery,verylowinventoriesinthesystemwaitingtosee-partiallywaitingtoseewhathappenswhenthesoftwoodlumberagreementexpired.Whenthatdid
happen,therewasnotawalloflumberthatcameon.SoIthinkpartofithasbeenabuildingbackof
inventories.Inlightofthat,IthinktherehavebeensomeslightimprovementsintheC hinesemarkets.
Andourtakeis,aslongastheweatherholds,asIsaidinmycomments,we'regettingverypositive
commentaryfromourcustomersintermsofdemandinbuildingseason.Sothat's,Ithink,what's
happenedtodrivethelumberpricesupoverthepastfewweeks.
Mar kWe int r aub(Analyst-BuckinghamResearch):
Thankssomuch.
Do yle Simo ns (C EO ):
Thankyou.
Ope r at o r :
YournextquestioncomesfromthelineofAnthonyPettinariwithC iti.
Ant ho nyPe t t inar i(Analyst-C itigroup):
Goodmorning.Anumberofproducersseemtohaveadjustedtheirproductionschedulesin3Q given
weakerwoodproductsprices.Iwaswonderingwhatyouroperatingrateswereinthequarteracross
lumber,O SBandengineeredwoodproductsandifyoutookanykindofmarketdowntimeorcutshiftsin
Q 3orexpectanythinglikethatin4Q .
Do yle Simo ns (C EO ):
Sointermsofoperatingrates,lumberwasrightat90,O SBmid-90sandELPinthemid-70sintermsof
operatingrates.AndI'llletPatty--becauseshealludedtoitinhercomments--talkaboutthefourth
quarterandsomeofthemaintenancedowntimewehaveplannedforthefourthquarter.
Pat t yBe die nt (C FO ):
Sure.Asyouthinkaboutthefourthquarter,thefourthquarteristypicallywhenwedoourmaintenance
aswellasinstallcapitalprojects.Andmostofthatwillhappeninthewoodproductsbusiness.Andit's
reallyacrosstheboardasyouthinkaboutO SB,forexample,we'reinstallingsomenothugecapital,but
wewilltakeadvantageofputtinginsomethingsacrossthesystem.ELPwillhavesomeaswell.Lumber
hassomecapitalprojectsandalsowehaveholidaydowntimethathappensinthefourthquarter.SoI
thinkaswethinkaboutouroperatingratesforO SBinparticular,Ithink,asDoylesaid,wewereinmid90sforthethirdquarter.Wewouldexpecttobelow90sforthefourth.
Ant ho nyPe t t inar i(Analyst-C itigroup):
O kay.That'sveryhelpful.Andthenjustswitchingtothedividend,historicallyyou'vetargeted75%ofFAD
overthecycle.Andthisyearyouraisedthedividendwhileyourearningsshouldbedownyear-over-year,
maybedoubledigitsonapercentagebasis.I'mjustwonderingifyoucouldtalkaboutdividendcoverage
andprospectsforcontinueddividendgrowthandmaybetheconfidencethatyouhavegoinginto2016
thatyouaregoingtoseeearningsgrowthnextyear,givenwe'vegotastrongdollarandsomeofthese
headwindsinAsiathatyoucalledoutearlieraswell.
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Page6of18
C ompanyName:We ye r hae us e r Co
C ompanyTicker:WY
Sector:Indus t r ialGo o ds
Industry:Mat e r ials &Co ns t r uc t io n
EventDescription:Q320 15Ear nings
Call
MarketC apasofEventDate:15.0 0 B
PriceasofEventDate:29.33
Do yle Simo ns (C EO ):
Yes.Anthony,asyoualludedto,ourguideline--anditisaguideline,is75%ofFADoverthecycle.AndI
thinktheoverthecycleisanimportantcomponent.Toyourpoint,wefeellikewearestillearlyinthe
housingrecoverycycleand,asmentionedinmycomments,areoptimisticthathousewillcontinueto
recoverandwillbe[1.2],1.25in2016.Asaresultofthat,wethinkwehavealotofopportunityto
continuetogrowearningsandcashflowgoingforwardandareconfidentthatwewillcontinuetodothat
ashousingcontinuestoimprovegoingforward.
Ant ho nyPe t t inar i(Analyst-C itigroup):
O kay.That'shelpful.Andjustintermsofnextyear,isyourviewnotonlythatyouaregoingtoseea
volumerecoverywithstartsgoinghigherbutthatwillbeaccompaniedbypricerecoveryaswell,orprice
improvementyear-over-yearin2016?
Do yle Simo ns (C EO ):
Pricing,asweallknow,isdifficulttopredict.Butfollowingupontheconversationwehadearlieron
lumber,weareencouragedthatlumberpricesareimprovinginaslowerseasonalperiod.Andourtakeis,
aswemoveintothestrongbuildingseasonnextyear,again,assuminghousingisatthe1.2to1.25range,
wethinkthatwillbeaveryconstructiveforwoodproductsand,frankly,Timberlandspricesmovinginto
2016.
Ant ho nyPe t t inar i(Analyst-C itigroup):
O kay.That'shelpful.I'llturnitover.
Ope r at o r :
YournextquestioncomesfromthelineofTylerLangtonwithJPMorgan.Pleasegoahead.
T yle r Langt o n(Analyst-JPMorgan):
Yes,goodmorning.Thanks.
Do yle Simo ns (C EO ):
Goodmorning.
T yle r Langt o n(Analyst-JPMorgan):
Withthedomesticwestcoastprices,Ithink,Patty,youmentionedthatthefireswerealittlebitbeneficial
forpricesthisthequarter.C ouldyouquantifythatalittlebit?Isthereanyriskthatwiththefireseason
goingawaythatpricescouldslipalittlebitthisquarter?O rdoyouthinktheyshouldbesortofpretty
stable?
Pat t yBe die nt (C FO ):
Youknow,Tyler,wejusttalkedaboutthefactthatweexpecttohavealittlemoreseaharvestvolumein
thewest,butit'snotahugeamount.Andeveninthethirdquarterwedidn'tseeasmuchbenefitfromthe
firerestriction,asprobablymanyexpected,becauseofthefactthatmanyofthemillshadalreadyseen
thefactthatthefireseasonwasgoingtobesosevere--haddonesomeadditionalthingsasfarastheir
ownlogsupply.SoIdon'tseeahugeriskrelatedtothat.ButtheincreasethatImentionedinoursea
timberharvestinthewestisnotahugeincrease.SoIdon'tthinkitwillhavethatsignificantofanimpact.
T yle r Langt o n(Analyst-JPMorgan):
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Page7of18
C ompanyName:We ye r hae us e r Co
C ompanyTicker:WY
Sector:Indus t r ialGo o ds
Industry:Mat e r ials &Co ns t r uc t io n
EventDescription:Q320 15Ear nings
Call
MarketC apasofEventDate:15.0 0 B
PriceasofEventDate:29.33
O kay.Great.Thanks.Andthenjustswitchingtowoodproducts,canyouquantify--andIthinkyousaid
thelowerearningsinthefourthquarterwascomingfromsortoflowersalesvolumes--the[previous
operatingrates]andthenthemaintenanceandO SB.C ouldyoukindofroughlybreakouthowmuch
eachoneofthosewouldcontributetothedecline?
Pat t yBe die nt (C FO ):
Intermsoftheoverallimpact,IwouldsaythatthebiggestimpactofthirdQ comparedtofourthquarter
reallydoescomefromsalesvolumes.Aswetalkedabout,seasonallythefourthquarterisalowerquarter
forvolume.Andthat'sreallyastatementacrossmostofourproductlines--lumber,O SB,andELP,and
certainlyindistributionaswell.Wewereverypleasedwiththeimprovementindistributionforthethird
quarterbuttheywilllikelybeimpactedaswellfromtheseasonalvolumefall-off.
Nowhavingsaidallthat,asDoyletalkedabout,wearepleasedtoseethatpricesinlumber,especially,
andO SBhavebeencomingupinthequarter.Itspricingcanbeveryvolatileandwe'lljusthavetosee
howitallplaysout.ButIwouldsayacrosstheboard,thebiggestnegative,comparedtothethird
quarter,isinsalesvolumes.Andactuallywe'reverypleased.Whenyouthinkaboutquarteroverquarter,
lastyearinthefourthquarterwehadmuchbetterpricingthanwhatwe'reanticipatingforthisfourth
quarter.Andearningsareroughlyjustmaybealittlelowerorcouldbeevencomparable,depending
uponwherepricesare.SoIthinkyou'dstarttoseetheimpactofouroperationalexcellenceinitiative
kickingintothat.
T yle r Langt o n(Analyst-JPMorgan):
O kay.Great.Thanks.Andjustafinalquestionwiththedistribution.Youmentionedaniceincreasein
earnings.C anyoujustprovidealittlebitmoredetailaboutwhatdrovethatandhowsustainableitis
goingforward?
Do yle Simo ns (C EO ):
WhatIwouldtellyou,it'swhatwe'vebeenworkingon.It'sthebasicblockingandtacklingofrunninga
distribution.It'smakingsurewehavetherightwarehousecostinplace.It'smakingsurewe'rehaving-we'regrowingprofitablesales.SoasPattysaid,wewereveryencouragedbytheprogresswemadein
thethirdquarter,butmoreworktodo.Butwearepleasedthatwehave--onthetrajectorythatwesaw
inthethirdquarterandthechangesthatwe'remakinginthatbusinesstopositionitforsuccessinthe
future.Soprogress,moreworktodo,butareconfidentintheplanthatwehaveinplacewillgettous
whereweneedtobeinthatbusiness.
T yle r Langt o n(Analyst-JPMorgan):
Great.Thankssomuch.
Do yle Simo ns (C EO ):
Thankyou.
Ope r at o r :
YournextquestioncomesfromthelineofGailGlazermanwithUBS.
GailGlaz e r man(Analyst-UBS):
Hi.Thankyou.Goodmorning.
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C ompanyName:We ye r hae us e r Co
C ompanyTicker:WY
Sector:Indus t r ialGo o ds
Industry:Mat e r ials &Co ns t r uc t io n
EventDescription:Q320 15Ear nings
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MarketC apasofEventDate:15.0 0 B
PriceasofEventDate:29.33
Do yle Simo ns (C EO ):
Goodmorning,Gail.
GailGlaz e r man(Analyst-UBS):
C anyoujustofferbroadersomeperspectiveonthesoftwoodlumberagreement?Weobviouslyhaven't
seenmuchimpactinO ctober--butjusthowyouseeitplayingoutIguessoverthenextyearwhilethe
[standstill]isinplace.
Do yle Simo ns (C EO ):
AsweallknowthesoftwoodlumberagreementexpiredonO ctober12.Justintermsofwhat'shappening
onthat,thereareongoingdiscussionsbetweenparticipantstoparticipantsonbothsidesoftheborder
regardingrenewingtheagreement.Aswealsoallknow,thisisultimatelyagovernmenttogovernment
negotiationandelectionseasonhashamperedtheabilitytohavethosediscussions.Butwearelooking
forwardtobothgovernmentshavinganopportunitytoengage.Andit'smytake,ourtake,thatthere'sa
possibilityofreachinganagreementpriortotheone-yearstandstillplayingout.
GailGlaz e r man(Analyst-UBS):
O kay.Andintermsofflows,youthinkrecentactivityisaprettygoodindicatorthatitprobablywon'thave
majorimpactintermsofflowsandthemarket?
Do yle Simo ns (C EO ):
Yes,Ithinkthat'sexactlyright.Ithinkwhat'shappenedoverthepasttwoorthreeweekswasinlinewith
whatweanticipated.Butyouneverknow.ButIdothinkthatdoesshowthattherewasn'tasignificant
impactfrom--intermsofflowswhenthatagreementexpired.
GailGlaz e r man(Analyst-UBS):
Allright.Andjustintermsofthecurrentmarket,youtalkedaboutcustomershavingprettylowinventories
andsupportingtherecentrally.Doyouhaveanyview?Hasbuyingactivityoverthelastcoupleofweeks
beenenough?O rdoyouthinkinventoriesarestilllight?
Do yle Simo ns (C EO ):
Whatwethinkisinventoriescontinuetobelean,especiallyinlumberandO SB.So,yes,therehasbeen
increasedbuyingactivity,asyoualludedto,andwestated.Butit'soursensethatinventoriescontinue
tobeontheleanside.
GailGlaz e r man(Analyst-UBS):
Allright.Andyouguyshavealotof--Pattyalludedtosomesmallerstuffgoingononthecapitalside,but
youguysdoafewlargercapitalprojectsgoingoninatleastacoupleofyoursawmills.AndI'mjust
wondering,canyougivesome--justkindofwalkthroughwhatyou'redoing.BecauseIthinkthere's191-190milliongoingonatoneproject.C anyouwalkthroughsomeofyourbiggerproject,whetherthey're
fourthquarter2016events?
Do yle Simo ns (C EO ):
Fourthquarter2016?
GailGlaz e r man(Analyst-UBS):
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C ompanyName:We ye r hae us e r Co
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MarketC apasofEventDate:15.0 0 B
PriceasofEventDate:29.33
Justwalkthroughsomeofthebiggerprojectsthatyouhavegoingon(inaudible)theO pExprogram.
Do yle Simo ns (C EO ):
Yes.You'reexactlyright.Weare,aswehavebeentalkingaboutforaperiodoftimenow,spending
capital,specificallyinourlumberoperationtosupportourO pExinitiativesandtodrivedownouroverall
coststructure.Sothat'shappeningatanumberofmills.Eachofourmillshasaspecificroadmapthat's
what'sneededtogetthemtobeinthelowestcostquartile.Andwehavespecificprojectsgoingon.O ne
oftheprojects,togiveyouanexample,isourDierkssawmill.O urDierkssawmillhasbeenaverygood
sawmillforusforalongtime.It'slocatedinafantasticwoodbasket.It'sclosetoverygoodendmarkets.
Butit'saveryoldmillwithanoddconfigure.Wearebasicallyrebuildingthatmill.Wearerebuildingthat
millonsite.Aswelookedatallthedifferentopportunitiestomakethatmillmorecostefficient,thatwas
theonethatmadethemostsense.Buttoyourquestion,Gail,everyprojectthatwe'redoing,thewhole
focusistodrivedownouroverallcoststructuresothatwewillhavelow-costsawmilloperationandwillbe
abletodeliveronourO pExinitiatives.Aswe'vesaid,we'regoingtospendroughly,totalC ompany-wide,
$500millionincapital.That'sinclusiveofwhatwe'respendinginlumberandwouldanticipatethecapital
spend,asPattysaidonthelastcall,willbeinthatrangefornextyearaswellaswecontinueonthese
projects.
GailGlaz e r man(Analyst-UBS):
Yes,Gail,theonlyotherthingthatIwouldaddis,asyoulookatthefourthquarterspend,itwillbeour
highestspendfortheyear.AndasDoylementioned,thebiggestpieceofthatwillbeinthelumber
business.Inadditiontothethingsthathetalkedabout,thereareprojectsatmanyofthemillsreally
focusedonloweringtheircoststructure.O nepiece,forexample,isinourC DKsthatwe'reputtingin,the
continuousdrykilnsatacoupleoflocations,bothtoaddressboiler[MAC T]aswellasbringingdown
dryingcosts,whichisasignificantcost.We'vegotsomeedgerprojects,thosetypesofthings,thatreally
willimproverecovery.Buttheyreallyarefocusedonloweringtheoverallcoststructure.
Ope r at o r :
YournextquestioncomesfromthelineofMarkWilloughbywithBMO C apitalMarkets.Pleasegoahead.
Mar kWillo ughby(Analyst-BMO C apitalMarkets):
Goodmorning,Doyle.Goodmorning,Patty.
Do yle Simo ns (C EO ):
Goodmorning.
Mar kWillo ughby(Analyst-BMO C apitalMarkets):
Doyle,you'vereallymadesomeimpressiveprogressinallthesewoodproductsbusinesses.Iwonderedif
youlookedattheengineeredwoodbusiness--that'shadparticularlynicegains--wouldtherebekind
oftwoorthreekeyissuesyouwouldpointtothathavedriventhat?
Do yle Simo ns (C EO ):
Mark,thankyouforyourcommentaryandouremployeeshavedoneanicejobofmakingimprovements
andmoreworktodo.IntermsofEWPspecifically,itreallyboilsdowntothreethings.O neisreducing
manufacturingcosts,andspecificallycontrollablemanufacturingcosts.Andthat'ssomethingwe're
focusedoneveryday.We'vealsodrivendownouroverallSG&AcostsintheEWPbusiness.Andthen
finally,we'rereallyfocusedongrowing,notonlyjustsales,butgrowingprofitablesales.Sothosearethe
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C ompanyTicker:WY
Sector:Indus t r ialGo o ds
Industry:Mat e r ials &Co ns t r uc t io n
EventDescription:Q320 15Ear nings
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MarketC apasofEventDate:15.0 0 B
PriceasofEventDate:29.33
threekeyleversthatwe'vebeenfocusedoninEWPandhavebeenencouragedbytheprogressthat
we'vemadethere.Andwe'refocusedoncontinuingtoimprovethatoperationgoingforward.
Mar kWillo ughby(Analyst-BMO C apitalMarkets):
O kay.O verintheO SBbusiness,arethereanydebottleneckingopportunitiestheresimilartosortof-somethecapitalyou'reputtinginthelumbertoimprovethelumberoperations?
Do yle Simo ns (C EO ):
Youknow,Mark,IwouldsayinO SB,theprojectsthatwe'redoing,someofitinvolvesdebottlenecking.
Butmorethanthat,it'sjustfiguringoutawaytocontinuetoimprovereliabilityanddrivedowncosts.As
we'vetalkedabout,we'vegotacoupleofmillsthatareworld-classandwe'vegotopportunitiesto
improvesomeofourO SBmillstothosesametypeoflevelsintermsofreliabilityandcoststructure.And
that'swhatourcapitalexpendituresarefocusedon.
Mar kWillo ughby(Analyst-BMO C apitalMarkets):
O kay,fine.LastquestionIhad,Doyle,backinSeptemberwehadoneofyourpeersannouncekindofan
interestingtransactionwithagroupofinstitutionaltimberinvestors.C anyoujusttalkaboutsortofthe
applicabilityornon-applicabilityofthatkindofstructuretoWeyerhaeuser?Andmaybetieinthatwith
howyou'rethinkingaboutgrowthinyourTimberlandsbusinessoverthenextfewyears?
Do yle Simo ns (C EO ):
Sure.SowethoughtthatthePlumC reektransactionthatyou'rereferringtowasaverycreative
transactionandespeciallydidanicejobofhighlightingtheunderlyingvalueofhigh-qualitysouthern
timberlands.Ifwewereatsomepointtoconcludethatthistypeoftransactionwasinthebestinterestof
ourshareholders,it'ssomethingwewouldconsider.Intermsofgrowthoverall,Mark,aswe'vesaid,weare
interestedingrowingourC ompany.TheprimaryopportunitywethinkwillprobablybeinTimberlands.But
we'llcontinuetobeverydisciplinedinlookingatacquisitions,opportunitiesaswemoveforward.
Mar kWillo ughby(Analyst-BMO C apitalMarkets):
O kay,goodenough.Goodluckinthefourthquarter,Doyle.Goodlucknextyear.
Do yle Simo ns (C EO ):
Thankyou.
Ope r at o r :
YournextquestioncomesfromthelineofGeorgeStaphoswithBankofAmerica.Pleasegoahead.
Ge o r ge St apho s (Analyst-BankofAmericaMerrillLynch):
Thanks,everyone.Goodmorning.Appreciatethedetails.C ongratulationsagainonalltheprogresson
thecostsideandO E.MaybepiggybackingoffthelasttwoquestionsfromMarkandGail,Doyle,Ithink
whatyouwouldhaveleftintermsofprojectsandO Ebenefitasweheadinto2016issomethingnorthof
$100million.IknowwillyouprobablywanttotalkalittlebitaboutinthisDecemberatyouranalystday,
butisthereawaytoatleastcatchusuponmaybetheopportunityformoreO Ebenefits?Andistherea
waytotalktowhatyouachievedinO Einthethirdquarteracrossthesegments?Ifyouhadit,Imissedit
inthedeckorinyourcomments.
Do yle Simo ns (C EO ):
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C ompanyTicker:WY
Sector:Indus t r ialGo o ds
Industry:Mat e r ials &Co ns t r uc t io n
EventDescription:Q320 15Ear nings
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MarketC apasofEventDate:15.0 0 B
PriceasofEventDate:29.33
George,toyourpoint,wewillbeupdatingexactlyourprogressin2015laterthisyearandgivingmore
specificguidanceontheopportunitiesthatarestillinfrontofus.Buttoyourpoint,wehavemadegood
progress.WhatI'mmostencouragedaboutisthisisnowbecomingbottomupdriveninourorganization
aspeoplearereallyunderstandingwhatwe'retryingtodoinO pExandfindingadditionalopportunities.
Sowewillbegivingfurtherupdateonthatgoingforward.
Intermsofquartertoquarter,clearlyifyoulookedatpriceandvolumeandwhatthatwouldresultinin
termsofearnings,that'sonenumberinourearnings.Andeachofthebusinessesarehigherthanthat
andthatdeltaisprimarilyduetoO pEx.Lookingatit,I'lljustgiveyouanexample.Ifyoulookatit--this
morning,actually,IlookedatsomenumbersandIlookedyear-to-date2015versusyear-to-date2014,
becauseit'shardandthingsmovearoundalotonaquarterlybasis.ButjustlookingatTimberlands,for
example,year-to-date2014ourearningsin2014were$470million.Lookatlowerprice,lowervolume,
thatwouldhave--youwouldhavethought,justfactoringinthosetwothings,ourearningswouldhave
been$370millionyear-to-date2015and,infact,they're$415million.Sothatdelta,notallofitisO pEx,
butabigportionofthatisO pEx--similartypenumbers,lumber,O SB,ELP.Sothat'sthewaywethink
aboutistakingoutthethings,thevolume,thepricecomponentsofit.Andthat'showweknowit's
showingupinthebottomline.
Ge o r ge St apho s (Analyst-BankofAmericaMerrillLynch):
Doyle,couldyouremindusasyoulookout,dothebucketsforO Echangethedeeperwegointothis
decade?O rwillitbecontinuousorprettyequalcontributionacrossthevariouscategoriesforthevarious
businesses?Iknowit'sabroadquestion,butifyougiveusabitofafeelthere.
Do yle Simo ns (C EO ):
Yes,Iwouldn'tsayitchangessubstantially,George.Wewillidentifybroaderopportunitiesaswemove
forward.AsI'vesaid,theencouragingpartaboutthisisit'sbecomingpartofourculture.Itisbeing
bottomupdriven.Sothingsthat,frankly,Iwouldhaveneverthoughtofasopportunitiesareour
employeesarebringingupasopportunitiescontinuetodrivedownourcoststructure,improveour
profitability.Soagain,we'llgivemoreclarityonthataswemoveforward.Butitis--itreallydoesboil
down,asImentionedearlier,tothebasicblockingandtacklingofrunningthesebusinesses.Butweare
encouragedbytheopportunitiesthatwecontinuetounearthtodriveourO pExinitiatives.
Ope r at o r :
YournextquestioncomesfromthelineofC hipDillonwithVerticalResearchPartners.
ChipDillo n(Analyst-VerticalResearchPartners):
Goodmorning,DoyleandPatty.
Do yle Simo ns (C EO ):
Goodmorning,C hip.
ChipDillo n(Analyst-VerticalResearchPartners):
Firstquestion,wehaven'ttalkedaboutcellulosetoday.AndIwasjustwonderingwhatyouareseeingin
thatmarkplaceintermsofthere'saverysmallplayerthat'skindofworkinghardtofilluptheirmills
becausethingshaven'tturnedoutthewaytheyplanned.Andthenyou'vegotobviouslytwocompetitors
whoareinvolvedinconversionprojectsnextyear.Andcouldyoujustgivemeafeelforhowthatmayor
maynotimpactyouintermsofyourcontractsandwhatyouseeforthemarketplace?
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C ompanyName:We ye r hae us e r Co
C ompanyTicker:WY
Sector:Indus t r ialGo o ds
Industry:Mat e r ials &Co ns t r uc t io n
EventDescription:Q320 15Ear nings
Call
MarketC apasofEventDate:15.0 0 B
PriceasofEventDate:29.33
Pat t yBe die nt (C FO ):
Youmightimagine,C hip,we'rerightinthemiddleofthatprocess.Soletmejustgiveyoualittlebitof
color.Iwouldsaythatweareverypleasedwiththedemandthatwe'reseeingforourproductfromour
customers.We'vegot,asyouknow,verylongcustomerrelationships.Soonavolumesize,we'refeeling
goodabout--it'sstilljustthefourthquarter.We'renotinto2016untilnextyearandwe'llgiveyoumore
coloraswegetalittlecloser.Havingsaidthat,Idoexpectthattherewillcontinuetobesomeprice
pressureaswehavemovedforwardinto2016asyouseesupplyanddemand.ButIwouldsay,atthis
point,we'reverypleasedwithwhereweareonthatfront,butmoretocome.
ChipDillo n(Analyst-VerticalResearchPartners):
Andregardlessofthesupplyside,areyou--wouldyoustillcharacterizethemarketgloballyasstilllowto
mid--maybeevenamid-single-digitgrowth?Areyouseeingthatkindofgrowthrate?AndIknowit'svery
earlydays,butwhatdoyouthinkthischangeinpolicyinC hinacouldmeanfordemandonhavinggoing
fromonechildtotwochildren?
Pat t yBe die nt (C FO ):
Wellmorebabiesmeanmorediapers,whichmeansmorefluffpulp.Sohardtofactorthatintothecash
flowstream,butIknowwhatthedirectionwouldbe.SoIthinkfromthatperspective,wefeelgoodabout
thatpiece.ButIdon'tknowhowtoquitemodelthatatthispoint.
ChipDillo n(Analyst-VerticalResearchPartners):
O kay.Andthenjustonaseparatenote,Inoticethe--andthiswouldbeonpage8ofthefinancial
package,buttheotherunallocatedexpense,whichisn'ttiedtoFXorLIFO ,wasaprettyhighnumber,$23
million.AndmaybeImissedit,butwhatwasthat?Andwhatshould--Iknowitjumpsaround,butwhat
shouldweexpectthattodofromthirdtofourthquarter?
Pat t yBe die nt (C FO ):
Sure.Wedidtrue-upsomeofourenvironmentalreserves,whichisprobablythebiggestpieceofthat.It's
notallofthatbyanymatterofmeans.Wehaveanumberofthings,asyousaw,inthesecondquarter.
Thenumberwas,Ithink,about$13millionwentto$23million.Thebiggestdifferencereallywasforatrueupofsomeenvironmentalreservesthatareoldreserves.Andit'sjustafunctionofthisiskindofthetime
thatwegothroughthatprocess.Thereareprobablysomeothersmallreservetrue-ups,butthat'sthe
biggestnumber.GoingforwardintothefourthquarterIwouldn'texpectthatthatnumberwouldbeas
largeasyouseeit.
Ope r at o r :
YournextquestioncomesfromthelineofSteveC hercoverwithD.A.Davidson.
St e ve Che r c o ve r (Analyst-D.A.Davidson&C o.):
Thankyou.Goodmorning,everyone.IhadacoupleofquestionsonEWP,firstofall.Haveyouseenany
significantpressurefromthedeclineinsolidwood?Becauseitseemslikeyourpriceswereholdingin
prettywell.
Do yle Simo ns (C EO ):
Yes,Steve--andgoodmorning,Steve.Asyouwouldexpect,wehaveseenalittlebitofpricingpressure
asthesawlogpriceshavecomeoff.Weanticipate,aswementionedearlier,assawlogpricesgoup,
someofthatpressurecould,would,willabate.Sotoansweryourquestion,I'dsayyes.We'veseenalittle
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C ompanyTicker:WY
Sector:Indus t r ialGo o ds
Industry:Mat e r ials &Co ns t r uc t io n
EventDescription:Q320 15Ear nings
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MarketC apasofEventDate:15.0 0 B
PriceasofEventDate:29.33
bitofpressure,nothingsignificantandnotsomethingwe'reconcernedaboutinthelongterm.
St e ve Che r c o ve r (Analyst-D.A.Davidson&C o.):
O kay.Anddoanyofthetrustjoistfacilitieshavetheabilitytoparticipateinthiscross-laminatedtimber
marketthatseemstobeemerging?
Do yle Simo ns (C EO ):
Wearereallyencouragedbythecross-laminatedtimberemergingmarket.Andmoreandmorebuildings,
asweallknow,areusingwood.And,yes,wearepositionedtoparticipateinthataswemoveforward.
Andtherearesomebiginitiativesthat,asyouknow,tocontinuetoencouragethoseeffortsgoing
forward.
St e ve Che r c o ve r (Analyst-D.A.Davidson&C o.):
Yes,Ithinkit'sagreatopportunity.AndthenIhadonequestiononcellulose.Acoupleofyearsagowhen
[viscos]wasreally,reallystrongyouintroducedyourpearlproductthat,Ibelieve,wasmarketedasan
extender.ButIdon'tthinkyou'vespokenaboutitrecently.SoIwasjustwondering,isitgrowing?Isit
lucrative?Andarepricesmovingonewayoranother?
Pat t yBe die nt (C FO ):
Yes,Steve,it'sPatty.Itisasmallerpartoftheoverallportfolio.Butweareproducingthepearlproduct,
primarilyinourPortWentworthfacility.Andthatdoeshelptheoverallsupplythatcomesintothefluff
market.SoitisstillameaningfulpartforPortWentworth,stillasmallpartitisarelatestotheoverallpulp
manufacturingsupply.
St e ve Che r c o ve r (Analyst-D.A.Davidson&C o.):
Butyourexpertiseandanyfuturegrowthwouldbemoreinfluffthanintheextenders,isthatcorrect?
Pat t yBe die nt (C FO ):
Wellthebiggestimpact,forsure,wouldbeinfluff,justbaseduponthesizeofboththatmarketandour
capacity.ButIwouldn'tdiscounttheimportanceofthepearlproduct,especiallyitisaresults,asIsaid,to
boththepriceaswellasadditionalcapacityforPortWentworth.
Ope r at o r :
YournextquestioncomesfromthelineofMarkC onnellywithC LSA.
Sc o t t Le aman(Analyst-C LSA):
Hi,everyone.ThisisScott[Leaman]inforMarkC onnelly.Goodmorning.Justtwoquickquestions.Thefirst
one,ifyouguysseetheseFXconditionspersistforthenextyear,howwouldyouexpectthatthatwould
affectthemixofwoodthatyouguysareshipping?
Do yle Simo ns (C EO ):
Let'stalkjustaminuteaboutthe--aboutwhatwe'reseeingintheexportmarket.Aswementioned,we
areveryencouragedbywhatwe'reseeinginJapan.Housingcontinuestoimprovethere.Andasaresult,
weexpectimprovedshipmentsintoJapaninthefourthquarterandwouldexpectthattrendtocontinue
nextyear.IntermsofC hinesemarkets,aswereferredtoearlier,inventoriesarereturning,trendingback
towardsnormalizedlevels.Andwethink,asaresult,pricesarestabilizingandgettinginventoriesback
towardmorenormalizedlevelsbytheendofthisyear.WethinkthispositionsC hinatobeanimproving
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C ompanyName:We ye r hae us e r Co
C ompanyTicker:WY
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Industry:Mat e r ials &Co ns t r uc t io n
EventDescription:Q320 15Ear nings
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MarketC apasofEventDate:15.0 0 B
PriceasofEventDate:29.33
marketaswemoveintonextyear,2016.
Sc o t t Le aman(Analyst-C LSA):
O kay.Andthenjustthesecondandlastquestionis,itlookslikeyourpricerealizationsforengineered
woodproductswerebothupinthequarter.Doyouthinkthatthosemarketsaretightenoughtoallow
youtopassalonghigherO SBpricesifO SBpricesdocontinuetomovehigheroverthenextsixmonths?
Pat t yBe die nt (C FO ):
We'llhavetoseehowthatallfiguresout.Aswesaidforthefourthquarter,whichisreallyonapricing
guidancewhatwegive,wethinkthatrealizationwillbebasicallyflatforthethirdquarter.
Sc o t t Le aman(Analyst-C LSA):
O kay.Thankyou.
Ope r at o r :
YournextquestioncomesfromthelineofAlexO vsheywithGoldmanSachs.Pleasegoahead.
Ale xOvs he y(Analyst-GoldmanSachs):
Thankyou.Goodmorning,DoyleandPatty.
Do yle Simo ns (C EO ):
Goodmorning,Alex.
Ale xOvs he y(Analyst-GoldmanSachs):
Acoupleofonesforyou.SoyouandotherswhoareUS-basedpulpproducershavetalkedaboutthe
potentialimpactofastrongdollaronpulppricing.Assumingthedollardoesstaystrong,howdoyousort
ofhandicapthepotentialimpacttomarginsinpulpfromthat?
Pat t yBe die nt (C FO ):
Well,Ithink,asDoyletalkedaboutinhiscommentsonFX,astrongdollarisnotapositivefor[this]
business.ButIthinkaswelookattheeurorightnow,ifyoulookyear-over-year,ithasweakened
considerablycomparedtotheUSdollar.SoIwouldn'tnecessarilyseethatitwillbesignificantlyweaker
fromwhereitistoday.
Ale xOvs he y(Analyst-GoldmanSachs):
Thanksforthat,Patty.Andthenjustthinkingaboutthemanufacturingportfolio,soafewyearsbackwe
weretalkingaboutengineeredwoodanddistributionasbusinessesthatyouwouldpotentiallyexit
unlesstherewasmaterialimprovementintheprofitability,whichwe'veabsolutelyseen.Soisthereany
interestingrowingthosesegmentsthroughM&Anowthatwehaveseentheveryniceimprovement
intheprofitabilitythere?
Do yle Simo ns (C EO ):
Thankyouforyourcommentregardingtheimprovedprofitability,andasImentionedearlier,alotof
goodworkfromouremployees.Withthatsaid,inbothofthosebusinesseswe'vestillgotmoreworktodo.
Intermsofgrowth,generally,we'vesaidwewouldliketogrowourC ompany.We'llbeverydisciplined
abouthowwedo.ThatwethinkourlargestopportunitieswillbeinTimberlands.Butifwecanfindbolt-on
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C ompanyTicker:WY
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Industry:Mat e r ials &Co ns t r uc t io n
EventDescription:Q320 15Ear nings
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MarketC apasofEventDate:15.0 0 B
PriceasofEventDate:29.33
typeacquisitionsinourotherbusinessesthatmakesenseanddrivevalueforshareholders,that's
somethingwewouldconsider.Butourprimaryfocus,especiallyinthetwobusinessesthatyoujust
highlighted,arecontinuingtoimproveourexistingoperations.
Ale xOvs he y(Analyst-GoldmanSachs):
Thanks,Doyle.
Do yle Simo ns (C EO ):
Thankyou.
Ope r at o r :
YourfinalquestioncomesfromthelineofC ollinMingswithRaymondJames&Associates.Pleasego
ahead.
Co llinMings (Analyst-RaymondJames):
Hi.Goodmorning,Doyle.Goodmorning,Patty.
Do yle Simo ns (C EO ):
Goodmorning,C ollin.
Pat t yBe die nt (C FO ):
Goodmorning,C ollin.
Co llinMings (Analyst-RaymondJames):
Justfirstonthecapitalallocationfront.Goingbacktowhenyouannouncedyour$700millionbuyback,I
thinkyouguysmadeitprettyclearthatyoufullyintendedtoutilizethatincontextwiththeTRIPointe
deal.Howshouldwebethinkingaboutreallythislatestsharerepurchaseannouncementjustgiven
whereyourcashbalanceis?Nowshouldweviewthatasyouaregoingtofullyexecutethat?O risitjust
kindofatoolyouwantatyourdisposal?
Do yle Simo ns (C EO ):
Ithinkwhenweannouncedthesharerepurchase,ourintentwhenweannounceditistofullyexecuteit.
Sowe'llcontinuetoupdateeverybodyonexactlywhereweareonaquarter-to-quarterbasis,butour
intentionwouldbetoexecutethat--thesharerepurchaseovertime.
Co llinMings (Analyst-RaymondJames):
O kay.No,itjustlookedliketherewasalittlebitofapause,thatyoucompletedthefull$90millioninthe
thirdquarter.Andtherewasn'treallyanythingincrementalfortheremainderofthequarter.Sothatwas
kindofthe--wherethequestionwascomingfrom.
Do yle Simo ns (C EO ):
There'snothingtobereadintothat,C ollin.
Co llinMings (Analyst-RaymondJames):
O kay.AndthenjustI'mcuriousifyoucantalkalittlebitmoreabout--therehavebeenafewlumber
productioncurtailmentsannouncedintheUSsouthrecently,andobviouslyinresponsetowherelumber
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C ompanyName:We ye r hae us e r Co
C ompanyTicker:WY
Sector:Indus t r ialGo o ds
Industry:Mat e r ials &Co ns t r uc t io n
EventDescription:Q320 15Ear nings
Call
MarketC apasofEventDate:15.0 0 B
PriceasofEventDate:29.33
pricingwasinthethirdquarter.AndjustmaybewhathaveyouseenintermsofyourTimberlands
businessasitrelatestothat?Haveyouhadtogivebackatpricingatall?Haveyoulostalittlebitof
volumetoacoupleofmills?Justmaybeupdateusincontextofsomeoftheannouncementsinthethird
quarter.
Do yle Simo ns (C EO ):
IntermsofoursouthernTimberlands,Iwouldsayour--whiletherearetheseone-offs,ourdemandhas
been--continuedtobefairlyconsistent.Andpricinginthethirdquarterwasupslightlyversusthe
secondquarter.Andfor2015versus2014,ourbestguessispriceswillbeupsomewhereinthe2%to3%
rangeaswehadindicatedearlierthisyear.So,yes,wastheresomeimpactfromthoseannouncements?
Yes.Butwasit--didithaveasignificantimpactonourTimberlands,eithervolumeorprice?No.
Co llinMings (Analyst-RaymondJames):
O kay.Andthenjustbiggerpicture,Iknowyou'vementionedacoupleoftimesonthiscall,again,Doyle,
justthefocusonlookingatgrowingpotentiallythatTimberlandsplatform,maybemoreopportunitiesin
theUSsouth.Butcanyoujusttalkabout--giventhatwe'venowseentwoofthelargerdealsthatwere
outtherethisyearareeitherclearedorintheprocessofclearingthemarket,justwhatyou'reeven
seeingintermsofopportunities?
Do yle Simo ns (C EO ):
There'snotalotoutthererightnow,C ollin.Iwouldtellyou,especiallyforhigh-qualityTimberlands,when
somethingdoescome--becomeavailable,there'salotofinterest,alotofcompetition,andstillalotof
moneyoutthereinterestedininvestinginthisassetclass.Butintermsofspecificopportunitiesother
thanthetwothatyoujustmentioned,notseeingalotofactivityintermsofavailability.
Co llinMings (Analyst-RaymondJames):
O kay.Andthenjustonelastone,justkindofpiggybackingoffacoupleoftheotherquestions.Again,
congratulationsonalltheprogress,particularlyontheengineeredwoodproductsbusiness.Shouldwe
thinkabout--justgiventhattherestillsoundslikesomeotheropportunitiesyouwantedtoexplorethere
oncostsavingsovertime,doyouthinkaboutthisasnowbeingkindofatminimum$140millionto$150
millionayearintermsofEBITDAbusiness?Imean,justmaybespeaktothesustainabilityofthe
improvementsthatwe'veseenhere,particularlyoverthelastcoupleofquarters.
Do yle Simo ns (C EO ):
Idothinktheimprovementsthatwe'veseenaresustainable.Idobelievethatwehave,asIalludedto
earlier,additionalopportunitiestoimprovethatbusinessgoingforward.Sotoyourpoint,very
encouragedabouttheprogress,veryencouragedabouttheworkofouremployeesinthatbusiness.And
there'snoreasonthatthingsthatwe'vedonearen'tsustainableandthattherearen'tadditional
opportunitiestoimprovethatbusinessgoingforward.
Co llinMings (Analyst-RaymondJames):
Allright.Thankyouverymuch.
Do yle Simo ns (C EO ):
Thankyou,C ollin.
Ope r at o r :
© 2014TheStr eet,I nc.Al l R i ghtsR eser ved
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C ompanyName:We ye r hae us e r Co
C ompanyTicker:WY
Sector:Indus t r ialGo o ds
Industry:Mat e r ials &Co ns t r uc t io n
EventDescription:Q320 15Ear nings
Call
MarketC apasofEventDate:15.0 0 B
PriceasofEventDate:29.33
Thankyou.IwouldliketoturnthecallbackovertoDoyleforanyclosingremarks.
Do yle Simo ns (C EO ):
Letmejustclosebysayingthanks,everybody,forjoininginthismorning.Andmoreimportantly,thank
youforyourinterestinWeyerhaeuserandeverybodyhaveagoodday.
Ope r at o r :
Thankyou.Thisconcludestoday'sconferencecall.Youmaynowdisconnect.
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