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:Q220 15Ear nings
Call
MarketC apasofEventDate:15.69B
PriceasofEventDate:30 .69
Weyerhaeuser(WY)EarningsReport:Q22015
ConferenceCallTranscript
ThefollowingWeyerhaeuserconferencecalltookplaceonJuly31,2015,10:00AMET.Thisisatranscript
ofthatearningscall:
Co mpanyPar t ic ipant s
DeniseMerle;Weyerhaeuser;SVP-HumanResources,IR
DoyleSimons;Weyerhaeuser;C EO
PattyBedient;Weyerhaeuser;C FO
Ot he r Par t ic ipant s
MarkWeintraub;BuckinghamResearch;Analyst
AnthonyPettinari;C itigroup;Analyst
GailGlazerman;UBS;Analyst
KetanMamtora;BMO C apitalMarkets;Analyst
C hipDillon;VerticalResearchPartners;Analyst
GeorgeStaphos;BofAMerrillLynch;Analyst
TylerLangton;JPMorgan;Analyst
SteveC hercover;D.A.Davidson&C o.;Analyst
MarkC onnelly;C LSALimited;Analyst
C olinMings;RaymondJames;Analyst
PaulQ uinn;RBC C apitalMarkets;Analyst
MANAGEMENTDISC USSIO NSEC TIO N
Ope r at o r :
Atthistime,IwouldliketowelcomeeveryonetoWeyerhaeuser'ssecond-quarter2015earnings
conferencecall.
(O peratorInstructions)
IwouldnowliketoturnthecallovertoDeniseMerle,SeniorVicePresidentofHumanResourcesand
InvestorRelations.Pleasegoahead.
De nis e Me r le (SVP-HumanResources,IR):
Thankyou,Brent.Goodmorning,everyone,andthankyouforjoiningustodaytodiscussWeyerhaeuser's
second-quarter2015earnings.
O nthecallwithmethismorningareDoyleSimons,C EO ,PattyBedient,C FO ,andBethBaum,Directorof
InvestorRelations.Thiscallisbeingwebcastatwww.weyerhaeuser.com.O urearningsreleaseand
presentationmaterialscanalsobefoundonourwebsite.
Pleasereviewthewarningsstatementsisinourpressreleaseandonthepresentationslidesconcerning
theriskassociatedwithforward-lookingstatements,asforward-lookingstatementswillbemadeduring
theconferencecall.Wewilldiscussnon-GAAPfinancialmeasuresandareconciliationofGAAPcanbe
foundintheearningsmaterialsonourwebsite.
© 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:Q220 15Ear nings
Call
MarketC apasofEventDate:15.69B
PriceasofEventDate:30 .69
IwillnowturnthecallovertoDoyleSimons.
Do yle Simo ns (C EO ):
Thankyou,Denise,andwelcome,everyone.
ThismorningWeyerhaeuserreportedsecond-quarternetearningsof$133million,or$0.26perdiluted
share,onnetsalesof$1.8billion.Eachofourbusinessesdeliveredsolidoperatingresults,asoperational
excellenceeffortshelpedmitigatethedelayedarrivalofthespringbuildingseasonandthecontinuing
challengeofastrongUSdollar.
Inaddition,wereturnedover$150millionofcashtoshareholdersinthequarterthroughtherepurchase
ofcommonshares.C umulativerepurchaseatquarterendtotaled$610millionaswenearedcompletion
ofourexisting$700millionauthorization.
Iwillbeginthisdiscussionofourbusinessresultswithsomebriefcommentsaboutthehousingmarket.
Housingindicatorsremainchoppy,andthespringbuildingseasonwasslowtogathermomentuminthe
secondquarterasweeksofheavyrainandfloodinginthesouthhamperedbuildingactivity.However,
marketsgainedmomentumlateinthequarterastheweatherabatedandouroutlookfor2015remains
unchangedatapproximately1.1millionhousingstarts,whichrepresentsa10%improvementcompared
with204.
Wecontinuetobeoptimisticaboutthelonger-termprospectforhousingasrisingemployment,strong
consumerconfidence,historicallylowmortgagerates,andsignsofincreasedparticipationbyfirst-time
homebuyersshouldsupportcontinuingimprovementintheUShousingmarket.Inaddition,builder
sentimentinJulywasatthehighestlevelin10years,andourcustomerscontinuetotellustheyexpect
increasedhousingactivityinthesecondhalfoftheyear.
Letmenowturntoourbusinesssegment,startingwithTimberlands,charts3to5.Timberlands
contributed$127milliontothesecond-quarterearnings,comparedwith$162millioninthefirstquarter.
LoweraveragesalesrealizationsforwesternlogsandlowerearningsfromTimberlandsdispositionsmore
thanoffsetseasonallyhighsalesvolumes.
Inthewest,exportlogpricesremainedunderpressureduetothecontinuedstrengthoftheUSdollar.
However,exportvolumesincreasedsubstantiallycomparedwiththefirstquarterduetoseasonally
improveddemandfromourJapaneseandC hinesecustomers.
Domesticlogsalesrealizationsdeclinedthroughoutthequarteraslogmarketsremainedwellsupplied
duetofavorableharvestconditionsinthefirsthalfoftheyear.Inthesouth,feeharvestincreased
seasonallyaswewereabletoflexharvestsettingsaroundthesecondquarter'sextremewetweather.
Averagesalesrealizationsforsouthernlogswerecomparabletothefirstquarter.
Secondquarterincludedearningsof$5millionfromdispositionofnon-strategicTimberlands,areduction
of$12millioncomparedwiththefirstquarter.TheTimberlandsbusinesscontinuestobenefitfrom
operationalexcellenceinitiativesandremainsontracktomeetitsO pExtargetsfor2015.
Woodproducts,charts6and7,woodproductscontributed$71milliontosecond-quarterearnings,an
improvementof$9millioncomparedwiththefirstquarter.EBITDAincreasedto$98million.Improved
salesvolumesandreducedoperatingcostenabledthebusinesstoovercomeloweraveragerealizations
forlumberandorientedstrandboard.
Inlumber,EBITDAdeclined$6millioncomparedwiththefirstquarter.A5%declineinaveragesales
realizationswasmostlyoffsetbytheseasonallyhighersalesvolumes,lowerwesternlogcosts,and
operationalexcellenceinitiativestoreducemanufacturingcosts.InO SB,EBITDAdecreasedby$4million
© 2014TheStr eet,I nc.Al l R i ghtsR eser ved
Page2of18
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:Q220 15Ear nings
Call
MarketC apasofEventDate:15.69B
PriceasofEventDate:30 .69
duetoa3%declineinaveragesalesrealizations.
Iwasparticularlypleasedwiththeperformanceofengineeredwoodproductsinthequarteraswe
reportedEBITDAof$38million,anincreaseof$12millioncomparedwiththefirstquarter.Salesvolume
roseseasonallyacrossallproductlines,andper-unitmanufacturingcostsimprovedduetohigher
productionvolumeandoperationalexcellenceinitiatives.EBITDAforthedistributionbusinessincreased
by$5millioncomparedwiththefirstquarterduetoimprovedsalesvolumes,higherproductmargins,and
loweroverheadcost.
O urwoodproductsbusinessesremainrelentlesslyfocusedonoperationalexcellence.LumberandO SB
areontracktoachievetheir2015targets.Engineeredwoodproductsistrackingsignificantlyaboveits
full-yearEBITDAimprovementtarget,up$26millionyeartodatecomparedwith2014.
O urdistributionbusinesshasbeenchallengedbythesevereweatherinsomeofitskeymarketsinthe
firsthalfoftheyearandhasworktodotoachieveitstarget.However,thisbusinessiswellpositionedto
capitalizeontheexpandedbuildingactivityweexpectduringthesecondhalfof2015.
C ellulosefibers,charts8and9:cellulosefiberscontributed$27milliontoearningscomparedwith$33
millioninthefirstquarter.Pulpmarketstabilizedduringthesecondquarterasglobalinventories
declinedtomorebalancedlevels.
Averagepulprealizationsweredowncomparedwiththefirstquarter.Asexpected,maintenanceexpense
increasedsignificantlyinthesecondquarteraswecompletedaplannedextendedoutageatourFlint
River,Georgia,mill.Theoutageincludedscheduledmaintenanceandinstallationofenergy-related
capitalimprovements.
TheWestC oastportdisruptionresultedinapproximately$8millioninlingeringlogisticscostsinthe
secondquarter,butweanticipateminimaleffectsgoingforward.Thecellulosefiberbusinessmadegood
progressonoperationalexcellenceinitiativesinthesecondquarter,includingthesuccessfulstart-upof
aturbinegeneratorthatsignificantlyreducesenergycostatourFlintRivermill.Thisbusinessremainson
tracktoachieveits2015operationalexcellencetarget.
IwillnowturnitovertoPattytodiscussourthird-quarteroutlook.
Pat t yBe die nt (C FO ):
Thanks,Doyle,andgoodmorning,everyone.
Theoutlookforthethirdquarterissummarizedonchart13,andIwillbeginmycommentswith
timberlands.Inthewest,salesrealizationsforexportlogstoJapanareexpectedtoimproveslightlydue
toincreasedhousingdemands.AlthoughC hinainventorieshavedecreasedfromearlierintheyear,they
remainatabove-normallevels,puttingcontinuedpressureonprices.
Domesticlogrealizationsareanticipatedtoincreaseasaresultofconstrainedsuppliesduetofirerelatedharvestrestrictions.Feeharvestvolumesareexpectedtodecreaseaccordingly.
Inthesouth,averagesales--logsalesrealizationsareanticipatedtobecomparabletoQ 2.Feeharvest
volumesareexpectedtoincreaseonaslightlylowergrademixin--asQ 3typicallycarriesagreater
percentageofthinningvolume.Silviculturecostsareanticipatedtoincreasebothseasonallyand
becausesomeactivitieshadtobedeferredfromQ 2asaresultofwetweather.Earningsfromnonstrategiclandsalesareprojectedtobearound$10million,comparedto$5millioninQ 2.O verall
earningsinourTimberlandssegmentareexpectedtobeslightlylowerinQ 3comparedtoQ 2.
Turningtowoodproducts,althoughlumberandorientedstrandboardpriceshavedecreasedduringthe
© 2014TheStr eet,I nc.Al l R i ghtsR eser ved
Page3of18
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:Q220 15Ear nings
Call
MarketC apasofEventDate:15.69B
PriceasofEventDate:30 .69
monthofJuly,theaveragesalesrealizationsforthismontharestillhigherthantheQ 2averages.We
expectpricesforbothlumberandO SBtoincreaseintheremainderofthequarterfromtoday'slevels.We
anticipateaveragesalesrealizationsforengineeredwoodproductsinthethirdquartertobe
comparabletothesecondquarter.Salesvolumesareanticipatedtobeseasonallyhigheracrossmost
productlines.
WesternlogcostsareexpectedtobemodestlyhigherthanQ 2.Wewillbetakingsomeannual
maintenancedowntimeinourengineeredwoodproductsfacilities,whichwillnegativelyaffect
manufacturingcostsforthequarter.Weexpectcontinuedimprovementintheresultsofourdistribution
business.O verall,weanticipatethatthird-quarterearningsinourwoodproductssegmentwillbehigher
thanthesecondquarter,butlikelylowerthanthethirdquarteroflastyear.
Movingtothesaleoffibersbusiness,globalsoftwoodpulpinventorylevelsdecreasedduringthesecond
quarter,andwewerebasicallyinbalanceattheendofthequarter.However,becausetheindustry
typicallyplansfewermaintenanceoutagesinthethirdquarter,combinedwithuncertaintyaround
demandfromC hina,inventorylevelscouldtickup,leadingtosomesoftnessinpulppricesinthethird
quarter.Weexpecthighersalesvolumestopartiallyoffsetthepotentialeffectoflowersalesrealizations.
Weanticipatesubstantialcostimprovementinthethirdquarter.
Duringthesecondquarter,wehad46maintenance-relatedoutagedays,andthisquarterwehaveonly
minimaldaysplanned.Asaresult,wewillhavelowermaintenanceexpenseandhigherproductivity.In
addition,nowthattheWestC oastportdisputehasbeenresolved,wedonotanticipatearepeatofthe
$8millionnegativeeffectthatweexperiencedinQ 2.O verall,third-quarterresultsinourcellulosefibers
segmentshouldsignificantlyincreasecomparedtothesecondquarterandexceedthethird-quarter
earningsoflastyear.
C hart10summarizestheresultsofunallocateditems.Beforespecialitems,totalcostsdecreasedbyjust
over$60million.Thelargestitemmakingupthisvariancewasforeignexchange,astheC anadiandollar
appreciatedfromapproximately$0.79attheendofthefirstquarter,to$0.81attheendofthesecond
quarter.
Formodelingpurposes,everypennyintheexchangerateisroughly$4milliononapretaxbasis.The
otherlargeitemwastheeliminationofinter-segmentprofitandinventoryinLIFO .Thisitemisdifficultto
predict,asitfluctuatesbasedonthelevelandmixofinventoryfromquartertoquarter.However,wedo
notexpectachangeofthismagnitudeinthethirdquarter.
NowIwillwrapupwithsomeoverallfinancialcomments,beginningwithchart11.C ashflowfrom
operationsforthesecondquarterwas$366million,oranincreaseof$289millioncomparedtothefirst
quarter.Inadditiontoincreasedearnings,largepositivevariancesincludedlowerworkingcapitaland
lowerinterestpaymentscomparedtothefirstquarter.
C apitalexpendituresforthesecondquartertotaled$108million,bringingouryear-to-dateexpenditures
to$197million.Wecontinuetoexpecttotalexpendituresforthefullyeartoapproximate$500million.
Wedonothaveanydebtmaturitiesuntil2017,andhavenoborrowingsoutstandingunderour$1billion
lineofcredit.Asdetailedonchart12,duringthesecondquarterweused$154milliontorepurchaseour
commonstocks,andattheendofQ 2,wehadapproximately$90millionremainingunderourexisting
authorization.NowIwillturnthecallbacktoDoyle,andIlookforwardtoyourquestions.
Do yle Simo ns (C EO ):
Thankyou,Patty.
© 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:Q220 15Ear nings
Call
MarketC apasofEventDate:15.69B
PriceasofEventDate:30 .69
Thehousingmarketcontinuestogathermomentumandbuildingactivityisincreasing,althoughithas
comethisyearinfitsandstarts.Lookingforward,wearewellpositionedtocapitalizeonthis
improvement,andweremainrelentlesslyfocusedondrivingvalueforshareholdersthroughoperational
excellenceanddisciplinedcapitalallocation.
Andwiththat,Iwouldliketoopenupthefloorforquestions.
Q UESTIO NS&ANSWERS
Ope r at o r :
(O peratorInstructions)
YourfirstquestioncomesfromthelineofMarkWeintraubwithBuckinghamResearch.Pleasegoahead.
Mar kWe int r aub(Analyst-BuckinghamResearch):
Thankyou.Doyle,you'dmadeacomment,orPatty,thatyouareexpectinglumberandO SBpricestopick
upasthequarterprogresses.Iwascuriouswhatinformsthatview,whetherit'sasenseofwhere
inventoriesareinthechannel?Isatsensethatdemandisgoingtobegettingbetter?Whatwouldbethe
driversthatyouareexpectingtohelpusseelumberandO SBstartmovingintherightdirection?
Do yle Simo ns (C EO ):
Mark,it'sacombinationofthosefactors.AsImentionedinmypreparedcomments,intalkingto
customers,theycontinuetobeveryoptimisticabouthousingactivity.Infact,IwastalkingtoAdrian
Blockerjustthismorning.Hewaswithcustomersasrecentlyasyesterday,andjustveryoptimisticabout
activityoutthere.Inaddition,intermsofinventories,asyoumentioned,Iwouldtellyouinventoriesare
fairlyleanatthispointintime.
SoIthinkwhat'shappenedisthere'sbeenaconfluenceofeventsfromthesupplyside,Mark,asyouare
verywellawareof,intermsoftheC anadiandollar,andthat'sresultedinadditionalvolumecominginto
theUS.TheweaknessintheAsianexportmarketshasresultedinincreasecomingintotheUS.Thatata
timewhenwehadadelayinthespringbuildingseasonallresultedinpriceshavingsomepressureon
them.Ithinkasdemandcontinuestoimprove,supplyanddemandwillgetbackinbalance,and
hopefullywewillseesomeimprovementinlumberandO SBpricesaswemovethroughthebalanceofthe
quarter.
Mar kWe int r aub(Analyst-BuckinghamResearch):
Thankyou.Andonequickfollow-up.Doyouhavethoughtsonthepotentialexpirationofthesoftwood
lumberagreementandwhattypeofimplicationsthatmightormightnothaveforlumbermarketsaswe
goforward?
Do yle Simo ns (C EO ):
Intermsofthesoftwoodlumberagreement,aswe'vesaidpreviouslythisisanimportantissueto
Weyerhaeuser.There'sacouncilofindustryleadersthatarediscussingoptionsforrenewingthe
agreement,andWeyerhaeuserisactivelyparticipatinginthosediscussions,andwe'reveryhopefulthat
wecanreachanagreementandavoidtradelitigationgoingforward.Intermsoftheimplications,ifitruns
outinO ctober,Mark,there'stwotrainsofthought.
O neisthatwhenthatoccurs,thatadditionalsupplycomesonfromC anada,becausetherewon'tbeany
tariffsinplace,butthere'salsothethoughtthat,thatwillnotoccurbecauseoftheimplicationsthatit
couldpotentiallyhaveintradelitigationsdowntheroad.Sodon'tknowhowitwillplayout,andagain,
© 2014TheStr eet,I nc.Al l R i ghtsR eser ved
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:Q220 15Ear nings
Call
MarketC apasofEventDate:15.69B
PriceasofEventDate:30 .69
twodifferenttrainsofthought.We'lljusthavetoseewhathappensifwe'renotabletogetaresolutionin
placepriortothat,whichIthinkeverybodyisworkingtoward.
Mar kWe int r aub(Analyst-BuckinghamResearch):
Thankyou.
Ope r at o r :
YournextquestioncomesfromthelineofAnthonyPettinariwithC iti.Pleasegoahead.
Ant ho nyPe t t inar i(Analyst-C itigroup):
Goodmorning.
Do yle Simo ns (C EO ):
Goodmorning,Anthony.
Ant ho nyPe t t inar i(Analyst-C itigroup):
C ouldyoutalkaboutthemovementofwesternexportlogpricesasyoumovethroughQ 2andtheninto
July,andareyouseeinganyinflectionpointthere?Andthenmaybejustarelatedquestion.We'veheard
alotabouttheriskoffiresinBritishC olumbiaandPacificNorthwest.
Isthatsomethingthat'sactuallyimpactingpricesandvolumesrightnow,oristhatjustsomethingthatwe
needtokindofkeepaneyeoninAugustandSeptember?
Do yle Simo ns (C EO ):
Sobothimportantissues.Letmeaddresseachofthose.Intermsofexportmarkets,letmebreakitdown
bymarket.InJapanwesawpricesbottominJune,andpriceshavestartedtomoveupinJuly.Andthishas
beenduetotheimprovedJapanesehousingdemand.Andtoyoursecondquestion,I'llgetintoismore
detailonthisinjustaminute,thelowerlogsupplyprimarilyduetofirerestrictions.
Intermsofwhatwe'reseeinginC hina,thelogtakeawayfromC hineseportspickedupinthesecond
quarterbutremainsatrelativelylowlevels.Loginventories--Imean--yes,loginventoriesmoveddown
toabout3.1millioncubicmetersinthesecondquarterbuthassinceclimbedbackupjustabove4.
AndIcantellyouthesoftwoodlogimportsfromallregionsintoC hinaaredown,butasIsaid,the
inventoriesremainhighandwethinktherecontinuestobepressureinC hinaintermsofpricing.Related
tothat,inthedomesticmarketsinthewest,wethinkdomesticpricesaregoingtoriseduetothefire
season,andourvolumes,asPattymentioned,ourharvestvolumes,areprojectedtobedowninthethird
quarterversusthesecondbecauseofthefirerestrictions.
Nowletmeturntothecurrentfiresituation.AndIcantellyou,justdrivingaroundthePacificNorthwest,
it'sdryoutthere.Italmostlookslikeyou'reinArizonaasopposedtothenormallywetPacificNorthwest.
Intermsofwhat'shappening,thefireseasonstartedearlierthisyear,andatleastatthispointitlooks
likeitisgoingtolastlongerthannormal.
Ifyoulookatthelevelofrainfall,it'soneofthelowestlevelsinthelast70years.AndIcantellyoumost
westernacresarecurrentlyundereitherwhat'scalledlevel2,level3,orlevel4firerestrictions.Theseare
restrictionsthatareputinplacebyoutsideregulators.
Justtogiveyouasense,level2requiresmostoperationstoceaseby1.00PM.Level3requiresall
operationstoceaseby1.00PM,andfurtherrestrictscertainharvestactivitiessuchasusingpowersaws
© 2014TheStr eet,I nc.Al l R i ghtsR eser ved
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:Q220 15Ear nings
Call
MarketC apasofEventDate:15.69B
PriceasofEventDate:30 .69
andcables,cableyardingatalltimes.Andthenlevel4arecompletebanonentrytotheforest.Justa
coupleofdaysagoinO regon,alevel4restrictionwasputinplaceinportionsofO regon.There'snot
beenalevel4restrictioninplacesince1988,justtoputitincontext.
Andthatrestrictionimpactsabout15%ofourwesterntimberlands.Now,thatcanchangeovernightifwe
getsomerainortemperaturescooldownandallthosethings,butthatisthecurrentstate.Toyour
question,wedoanticipatelowerharvestinthethirdquarterversusthesecondasaresultofthesefire
restrictions,andwe'llcontinuetomonitorthemandseehowtheyplayoutgoingforward.
Pat t yBe die nt (C FO ):
Maybejusttoaddtothatalittlebit,asDoylesaid,thefirerestrictions,orthefireconcern,happened
earlierinthePacificNorthwestthannormal,andpeopleanticipatedthatthismayhappen.Someofthe
drierconditions,asyouheardustalkabout,inthesecondquarterledmanyofthemillsto--andI'm
talkingindustrynow--toputinafewmorelogs.
Sowehaven'tseenclosuresofmillsatthispoint,becauseofoutoflogdowntimebecausetheystillhave
someinventoryoflogs.ButIthinkaswegetintoAugustandintothemiddleofAugust,we'llseemoreof
thatconcern,asDoylesays,ifwedon'tgetmoreraininthePacificNorthwest,whichisn'ttheforecastas
wesitheretoday.Ithinkitwillbesomethingthatwe'llseemoreinthemonthofAugustthanwe'veseen
thusfarinJuly.
Ant ho nyPe t t inar i(Analyst-C itigroup):
O kay,that'sveryhelpfuldetail.Andthenmaybejustonefollow-upontimberlands.Duringthequarter,
wesawannouncementsfromafewlargetimberownersthattheywouldputlargepropertiesonthe
market.
Iwondergenerally,areyouseeinganychangeininstitutionalinterestfortimberlands?Isitbecominga
littlebitmoreofabuyer'smarket?Areyouseeinganytrendsinpriceschanging?Andistherean
opportunityforWeyerhaeuser,asabuyeroraseller,especiallyinthesouth?
Do yle Simo ns (C EO ):
SoIwouldsayoverall,whenyoustepback,Anthony,theamountofactivitystillisgenerallylowinthe
southandthewest.Asyoumentioned,thereweresometractsthatcameon--becameavailableinthe
firsthalfoftheyear.Iwouldsaymostofthosehavesomeuniquechallengesthatpeoplewillhavetowork
throughintermsofhowthey'regoingtovaluethose.
Iwouldsayweexpectmoreactivityinthesecondhalfoftheyear,andIcantellyouthere'sstillalotof
moneychasingdeals.So,no,Idon'tseeanydownwardpressureontimberlandpricesatthispointin
time.
IntermsofWeyerhaeuserspecifically,aswe'veconsistentlysaid,we'realwayslookingtogrowourtimber
land,butwewillcontinuetobeverydisciplinedandmakesureanyacquisitionisthatweadds--meets
ourappropriatelevelofreturnanddrivesvalueisforourshareholders.Sowelookateverythingthat
comesacross,ormosteverythingthatcomesacross,andweareinterestedingrowing,butwe'llcontinue
tobedisciplined.
Ant ho nyPe t t inar i(Analyst-C itigroup):
O kay.That'shelpful.I'llturnitover.
Ope r at o r :
© 2014TheStr eet,I nc.Al l R i ghtsR eser ved
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:Q220 15Ear nings
Call
MarketC apasofEventDate:15.69B
PriceasofEventDate:30 .69
YournextquestioncomesfromthelineofGailGlazermanwithUBS.
GailGlaz e r man(Analyst-UBS):
Goodmorning.First,justpickinguponacoupleofthingsthathavebeenasked,lookingattheC anadian
tradesituationmaybeshortertermtariffsaresettogodownfairlysignificantlyinAugust.Doyouhave
anyconcernstherethat,thatmightputincrementalsupplyinthemarketandweighonpricing?Ifnot,it
doesn'tlooklikeyoudo,sowhynot?
Do yle Simo ns (C EO ):
Asyoualludedto,tariffsarescheduledtogodownfrom15%to5%inAugust.Wedon'tanticipatethat,
that'sgoingtohaveabigimpactonthesupplysideoftheequation,butIguesswewilljusthaveto
watchittogether.Butoursenseisthatithasn'tbeen--the15%--evenwiththe15%we'veseen,we
continuetoseesupplycomeinfromC anadasowedon'tanticipateasignificantchangewhenthetariff
changesonamonthlybasis.
GailGlaz e r man(Analyst-UBS):
O kay.Andjustquicklyfollowingupontheviewonwesternlogsandthefirerestrictions,canyougive
maybeasense--haveyoustartedtoseeanytensioninthemarketsatallyet?Iappreciatewhatyouare
sayingthatitwillplayoutmoreinAugust,butcanyougiveasensemaybeyourJulypricingversusyour
second-quarteraverage?Hastherebeenanymovementyet?
Do yle Simo ns (C EO ):
Ittakesalittlebitoftimeforthattoflowthrough,Gail,butIdon'tthinkthere'sanydoubtthatthereis
tightnessinthemarket,andthat'sjustgoingtoincreaseasthesefirerestrictionscontinue.AsPattysaid
andIalludedto,bothinJapanandinwesterndomestic,weanticipatepricesincreasinginthethird
quarterversusthesecond,andwe'restartingtoseesignsofthat.
GailGlaz e r man(Analyst-UBS):
O kay.Andjustswitchinggearstocapitalallocation,youhaveobviouslyexhaustedbasically85%ofthe
existingbuybackauthorization.C anyoujustgiveussomethoughtsandperspectiveonhowtheBoard
mightbethinkingaboutincrementalallocationdividendbuybackmovingforward?
Do yle Simo ns (C EO ):
Intermsofcapitalallocation,firstandforemost,ournumber-onepriorityisreturningcashto
shareholders.Aswe'vesaid,that'sprimarilygoingtobethroughagrowingandsustainabledividend.In
addition,we'lllooktousesharerepurchaseasatoolwhereappropriate.
Aswelookforward,wewillcontinuetoworkwithourBoardregardingourdividend.Icantellyou,asyou
know,wehaveconstantlyraisedourdividendoverthepastfewyears.AsIsaidis,wewillworkwithour
Boardtodeterminetheappropriatedividendlevelgoingforward.
Intermsofsharerepurchase,asyousaid,weareapproachingthecompletionofour$700million
authorization,andwe'llworkwiththeBoardonthatissuegoingforward.Aswe'vealsosaid,wethinklong
term,theappropriatelevelofcashonourbalancesheetissomewhereinthe$300millionto$500million
range,andwearesignificantlyabovethatatthistime.
GailGlaz e r man(Analyst-UBS):
O kay.Justonequickfollow-uponthat.Withtherecentsharepricedecline,doyouthinkthat'ssomething
© 2014TheStr eet,I nc.Al l R i ghtsR eser ved
Page8of18
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:Q220 15Ear nings
Call
MarketC apasofEventDate:15.69B
PriceasofEventDate:30 .69
thattheBoardmaykindoffactorintoitsthinking?
Do yle Simo ns (C EO ):
IthinktheBoardlooksatlotsoffactorsindeterminingtheappropriatebalancebetweendividendsand
sharerepurchase,andthatclearlywouldbeafactorthattheBoardwould,infact,consider.
GailGlaz e r man(Analyst-UBS):
Thankyou.
Do yle Simo ns (C EO ):
Thankyou.
Ope r at o r :
YournextquestioncomesfromthelineofKetanMamtorawithBMO C apitalMarkets.Pleasegoahead.
Ke t anMamt o r a(Analyst-BMO C apitalMarkets):
Goodmorning.
Pat t yBe die nt (C FO ):
Goodmorning.
Ke t anMamt o r a(Analyst-BMO C apitalMarkets):
Ijustwantedtocomebacktowoodproducts.YourlumberEWPmarginslookquitegood(inaudible).C an
youtalkaboutwhatyou'reseeingandwhathasbeenthekeydriverthere?
Do yle Simo ns (C EO ):
I'msorry,I'mgoingtohavetoaskyoutorepeatthequestion.You'recuttingoutalittlebitonourend.
Ke t anMamt o r a(Analyst-BMO C apitalMarkets):
I'msorry.IwantedtoaskaboutthelumberEWPmargins.Theylookprettygoodrelative--especially
relativetoyourpeersthisquarter.Justwondered(inaudible)whathasbeenthekeydriverandwhatyou
areseeing.
Do yle Simo ns (C EO ):
Sointermsoflumber,wewereencouragedbythemarginsthisquarter,andIthinkwhatyousawthereis
acombinationofourO pExeffortsandlowerlogcoststhatprettymucharealmost--completelyoffsetthe
declineinpricesinthequarter.Sowe'recontinuingtomakeprogressonourO pEx,andthatisshowing
upinourbottomline,andwesawsomeofthebenefitofthatinthesecondquarter.
Ke t anMamt o r a(Analyst-BMO C apitalMarkets):
That'shelpful.Andjustonemore,switchinggearstotimberlands.C anyoutalkalittlebitaboutyour
offshoretimberlandsinUruguayandhowyouthinkaboutit?
Do yle Simo ns (C EO ):
Yes.Sowehave300,000acresoftimberlandsinUruguay.It'sabouthalfpineandabouthalfeucalyptus.I
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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:Q220 15Ear nings
Call
MarketC apasofEventDate:15.69B
PriceasofEventDate:30 .69
wasdowntherenottoolongago,andveryfertileground,andthetreesgrowveryquickly.Soit'sbeen-wedon'thavemanymaturetreesatthispoint.It'sstillfairlyearlyintherotation,andwe'respendinga
lotoftimefiguringoutexactlythebestwaytomonetizethosetreesthroughmanufacturinggoing
forward.
Ke t anMamt o r a(Analyst-BMO C apitalMarkets):
O kay.That'shelpful.I'llturnitover.
Ope r at o r :
YournextquestioncomesfromthelineofC hipDillonwithVerticalResearchPartners.Pleasegoahead.
ChipDillo n(Analyst-VerticalResearchPartners):
Goodmorning,everyone.
Do yle Simo ns (C EO ):
Goodmorning,C hip.
ChipDillo n(Analyst-VerticalResearchPartners):
Doyle,IwouldimagineyouandPatty,allofyouall,areprettypleasedwiththeengineeredwood
productsresult.Wouldyousayit'skindofgottenintothezoneofwhereyouwerehopingitwouldbe
whenyouembarkedonalotofyourinitiativesacoupleofyearsago,andifnot,howmuchfurtherdowe
thinkweneedtoseethatimprove?
Do yle Simo ns (C EO ):
Thanksforyourcomment,C hip,andwearepleasedwiththeprogressthatwe'vemadeinEWP,butwestill
havemoreworktodo.Thethreekeydriversthatwe'veseentogettouswherewearetodayis
continuingtoreduceourcontrollablemanufacturingcoststhroughourO pEx,somelowerSG&A
costs,andthengrowingprofitablesales.Sotoyourquestion,weareabsolutelyverypleased.
O urteamtherehasdoneareallynicejob,butwe'renottakingourfootofftheaccelerator.We'regoing
tocontinuetodothingstoimprovethatbusinessgoingforward.
ChipDillo n(Analyst-VerticalResearchPartners):
Gotyou.Andthenwhenyoulookatthedistributionbusiness,Iknowittendstonotreally--ittendsto
alwaysbelowmargin,butsometimesit'shardtoknowwhat'sgoingonbelowthesurface.Wouldyousay
that'sequallyalongthepathasEWPis,ordoesitstillmaybehavealittlefurthertogoversusEWP?
Do yle Simo ns (C EO ):
Itclearlyhasfurthertogo,C hip,versusEWP.Sowearemakingprogressthere,butfrankly,we'rebehind
schedule.Icantellyouportionofthatwasprimarilyduetosomeadverseweatherwehadinsomeofour
keymarketslikeTexasandDenver,buttogettoourO pExgoalsforthequarter,we'regoingtohaveto
hustle,we'regoingtohavetohavegoodexecutioninthesecondhalfoftheyear,andwe'll--andwe're
wellpositionedtocapitalizeonmarketsastheycontinuetoimprove.Butclearlywe'renotasfaralongin
distributionasweareinEWPandstillhavesomeworktodo.
ChipDillo n(Analyst-VerticalResearchPartners):
Great.Veryhelpful.Thankyou.
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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:Q220 15Ear nings
Call
MarketC apasofEventDate:15.69B
PriceasofEventDate:30 .69
Do yle Simo ns (C EO ):
Thankyou.
Ope r at o r :
YournextquestioncomesfromthelineofGeorgeStaphoswithBankofAmerica.Pleasegoahead.
Ge o r ge St apho s (Analyst-BofAMerrillLynch):
Thanks.Hi,everyone.Goodmorning.Thanksforallthedetails,andcongratsontheoperational
excellenceagain.IguessthefirstquestionIhad,canyoucommentastowhatroughlyyouwouldhavein
yourguidancethusfarforthethirdquarterforwoodproductpricing?
Wouldpriceshavetoriseabovethecurrentrunrateorthe--clearlythesecondquarteraverage,andif
socouldyouputabracketonwhatkindofgrowthratewewouldneedtoseeinpricingfromhere?
Do yle Simo ns (C EO ):
George,wherewearecurrentlyis,pricesareup.Soquartertodate,pricesareupversusthesecondquarteraverage.Solumberpricesforusareuproughly$10versusthesecond-quarteraverage,andO SB
pricesareuproughly$5.AsPattysaidinhercomments,weanticipatepriceswillmoveupfromthispoint
forward,butwe'llallwatchthattogether.
ButbecauseofthereasonsI'vesaidearlier,primarilydrivenbyimprovingdemand,it'sourbestguess,
anditisaguess,butitisourbestguessthatwe'llseepricesmoveupforthe--somewhatforthebalance
ofthequarterversuswheretheyaretoday.Butwearecurrenthigherthanwhere--thanthesecondquarteraverage.
Ge o r ge St apho s (Analyst-BofAMerrillLynch):
Hey,Patty,howareyou?
Pat t yBe die nt (C FO ):
WhenyouthinkaboutpricesinthemonthofJuly,theyactuallycamedown.Sowehadalittlebitofarally
lateinthesecondquarter,inJune,andthenaboutafterthe4thofJulyholiday,pricesstartedtotickback
down.
SotheaveragethatDoylewasgivingyouforJulyisactuallyalittlehigherthanwheretheywouldbewith
midweekprintrandomly.Butwedoanticipate,forallthereasonsthatDoylesaid,thatthosepriceswillbe
goingbackup.
Ge o r ge St apho s (Analyst-BofAMerrillLynch):
So,tosummarize,thirdquarterisadecentstartonanaveragebasis,butthemarketswouldneedtosee
moremovement,moreprogressrelativetowhatyouhaveembeddedinyourguidance.Wouldthatbe
fair?
Do yle Simo ns (C EO ):
That'sgenerallyfair,yes.
Ge o r ge St apho s (Analyst-BofAMerrillLynch):
O kay.Allright,thanks,Doyle.Intermsofthemills,canyoutelluswhereyouthinkyouareonthecost
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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:Q220 15Ear nings
Call
MarketC apasofEventDate:15.69B
PriceasofEventDate:30 .69
curve?Recognizingthatwe'renotat--hopefullyattheprecipiceofarecession.Iknowoneofthegoals
inthepasthasbeentogetallthemillsinthewoodsproductsbusiness,asmuchaspossible,tocash
breakevensothatwhenyoudogetintoadownturnyouwon'tbelosingcash.
Sowheredoyoustandintermsofgettingthemillstowhereyouwantthemtobeonthecostcurveand
positionedbothversuscompetitorsandversusthemacro?
Do yle Simo ns (C EO ):
Asyousaid,George,ourgoalisto,aswesayaroundhere,beblackatthebottom,andthat'sthecost
structurethatwe'reputtinginplaceinourwoodproductsfacilities.We'vemadeprogress,butwe'vestill
gotworktodo.We'velaidoutspecificO pExtargets,andlikeIsaid,we'remakinggoodprogressonthose.
Bytheendofthisyearwewillhavemetour2015targets,butwe'vestillgotadditionalworkthatneedsto
bedoneoverthenexttwotothreeyearstogetourcoststructurewhereultimatelyitneedstobe,tobe
blackatthebottom,fullycapitalizeonthisupturn,andmaybemostimportantly,outperformour
competitorsonanongoingbasisgoingforward.Soprogressmade,stilllotsofworktodo.
Ge o r ge St apho s (Analyst-BofAMerrillLynch):
Fairenough.Doyle,lastquestionandthenI'llturnitover.Ifwelookatthepulpmills,andagain,we're
downthepikeintermsofthe18-monthmaintenancecyclebeingbroughtinnowmaybeacoupleof
years,whatcontinuetobethelearningsthatyouaregettingfromthis?
Howhavethemillscomeupaftermaintenance?Anythingthatyouwouldtweakwiththestrategyona
going-forwardbasis?Anythoughtstherewouldbehelpful.Thankyou.
Do yle Simo ns (C EO ):
Thankyou.So,George,Iwouldtellyouthatthe18-monthoutageplanhasbeenasuccessforus.When
youtakemillsdown,itcanbedifficulttobringthembackup.
Wesawthatinthefirstquarter,aswetalkedabout,butthatoccurswhetherit'sdownevery12monthsor
downevery18months.Sowe'reencouragedbytheprogresswe'remakingonthe18-monthschedule,
andwethinkthathasbeenanetbenefittoourC ompanyandtoourshareholders.
Ge o r ge St apho s (Analyst-BofAMerrillLynch):
Isthereaparticularchallengewhenyougoup18monthsversus12months,orreallynodifference?
Do yle Simo ns (C EO ):
Youknow,Iwouldn'tsaythere'snodifference,George,butyoustillgottotake--asyouandItalked
aboutlastquarter,takingthesemillsdownandthenstartingthembackup,there'salwayschallenges
associatedwiththat,anditmaybealittlemorechallengingifit's18versus12,butwehaven'tseen
anythingsystematicorsystemicthatmakesitharder.
Youjustgotuniquechallengeswitheachoneofthesemillsasyoutakethemdownandbringthemback
up.Someofthemhavegoreally,reallywellandsomeofourshavegonewell,andthensomeofthem,
youhavechallenges.
Ge o r ge St apho s (Analyst-BofAMerrillLynch):
Goahead,Patty.
Pat t yBe die nt (C FO ):
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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:Q220 15Ear nings
Call
MarketC apasofEventDate:15.69B
PriceasofEventDate:30 .69
George,welookatourmills,andIthinkflintriverisagoodexampleofthat.Itwasnotonlyfactorof
takingthemilldownformaintenance,butwewerealsoinstallingsomereallyverybeneficialequipment
aroundenergycosts,soit'sacombinationofallofthosethings.
Ithinkitisimportanttoyourquestionthataswe'vegonethroughthisprocesstherearelearnings,andI
wouldcallthemonlytweaksthatyougetfromjustthemaintenance,whichisaveryisimportantpiecein
ourcellulosefibersbusiness.
Wearecapitalizingonlookingatthelearningsaswetakeamilldownandbringitbackup,tofactorthat
intoourmaintenancegoingforward,andthat'spartofouroperationalexcellence.
Ge o r ge St apho s (Analyst-BofAMerrillLynch):
Allright.Thanksforthethoughts.C ongratsonthequarterandgoodluckgoingforward.
Pat t yBe die nt (C FO ):
Thankyou.
Do yle Simo ns (C EO ):
Thankyou,George.
Ope r at o r :
YournextquestioncomesfromthelineofMarkC onnellywithC LSA.Pleasegoahead.
Do yle Simo ns (C EO ):
Mark?
Ope r at o r :
Mark,pleasemakesureyourlineisnotonmute.
Do yle Simo ns (C EO ):
Hello,Mark.
Pat t yBe die nt (C FO ):
Whydon'twetakethenextquestion.
Ope r at o r :
YournextquestioncomesfromthelineofTylerLangtonwithJPMorgan.Pleasegoahead.
T yle r Langt o n(Analyst-JPMorgan):
Yes,goodmorning.Thanks.JusthadaquestiononlumberandO SBprices.Iguesstheytickeddown
recently.Iknowit'snotabigdecrease,butisthereanythingyoucanpointtothat'smaybedrivingthat
drop?
Pat t yBe die nt (C FO ):
Youknow,IthinkitreallyisjustthefactorsthatDoylewentthrough.We'vehadweakerdemandfrom
Asia,whichimpactstheexportsthatcomeoutofC anada.We'vehadsomechangesincurrencythatputs
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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:Q220 15Ear nings
Call
MarketC apasofEventDate:15.69B
PriceasofEventDate:30 .69
someheadwindsthere.
AndthenIthink,notwithstandingthefactthathousinghasbeentickingupoflateintermsofpeople
havereiteratedtheirfull-yearguidancefortheyear,thefirsthalfwasalittledisappointingintermsof
wherewethoughtthingswouldbe.
Soaswelookathousingforthesecondhalf,ourguidancereallyhasn'tchanged.Sincewedidn'thave
greatresponseinthefirsthalf,thatwouldbodeforthesecondhalfbeingbetter.ButasDoylesaid,we'll
havetowaitandsee.Therearejustalotofmovingpartsouttherewithallofthis.
T yle r Langt o n(Analyst-JPMorgan):
O kay,great.Andthenjust--Iknowit'sstillearly,butIthinkyoumentionedC apExof$500millionthis
year.C anyougivearoughsenseofarangeofwhereitcouldbefornextyear?
Pat t yBe die nt (C FO ):
Wereallydon'thavearangefornextyearthatwewouldgiveintermsofguidanceatthispoint,Tyler.We
willdothatasweapproachyearend.ButonethingthatIwouldsayabouttheprojectsthatwe'reputting
in,andthe$500millionisalittlehigherthanwherewespendhistorically,butwe'vegotsomegreatwood
productsprojectsthatareunderwaythatIthinkwillpayadditionaldividendsaswelookatbringingour
costsdownacrossthatsystem.
Soreallyexcitedabouttheprojectsthatwearespendingthatmoneyon,butalittletoosoontotellyou
exactlywhatwewillbedoingfornextyear.
T yle r Langt o n(Analyst-JPMorgan):
Thenjustalastquestion,southernsellingprices.Iknow,Ithinklastquarteryouwerelookingformaybea
3%to4%increase.Priceshavebeengenerallyflat.Doyouthinkit'smoreofthatpricesareflatforthis
year?
Do yle Simo ns (C EO ):
Tyler,westillanticipatethatsouthernpriceswillbeupkindofinlinewithwhatthey'vebeenupoverthe
pastcoupleofyears,whichwouldbesomewhereinthe2%to3%rangeyearoveryear.
T yle r Langt o n(Analyst-JPMorgan):
Gotit.O kay,great.Thankssomuch.
Do yle Simo ns (C EO ):
Thankyou.
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.
Do yle Simo ns (C EO ):
Goodmorning,Steve.
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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:Q220 15Ear nings
Call
MarketC apasofEventDate:15.69B
PriceasofEventDate:30 .69
St e ve Che r c o ve r (Analyst-D.A.Davidson&C o.):
soifI'mnotmistaken,thetranspacificpartnershiptradenegotiationsshouldconcludetoday,andIdon't
thinkit'sahighlyvisiblepieceofthepuzzle,butC anada'seffectivebanonlogexportsispartofthe
equation.That'smainlyBC ,obviously.ButifBC werecompelledtoexportlogs,canyoutellushowthat
wouldimpactyourPacificNorthwestoperations?
Pat t yBe die nt (C FO ):
Aswelookatthat,Steve,we'lljusthavetoseehowthatactuallyplaysoutintermsofwhatthefinal
resolutionwillbe.Sodifficultforusreallytotellwhatthatresultwillbe.
St e ve Che r c o ve r (Analyst-D.A.Davidson&C o.):
Hasbeenonyourradar?C learlyC anadaisabigsupplierofsawandlumber.Arethereports,forinstance,
conducivetologshipsasopposedtolumberships?
Pat t yBe die nt (C FO ):
Itissomethingthatwehavetracked,butit'snotsomethingthatIwouldsaywehaveacommentthatwe
wouldmakeaboutitintermsofportsatthispoint.
St e ve Che r c o ve r (Analyst-D.A.Davidson&C o.):
Allright.Thankyou,Patty.
Pat t yBe die nt (C FO ):
Youbet.
Ope r at o r :
YournextquestioncomesfromthelineofMarkC onnellywithC LSA.Pleasegoahead.
Mar kCo nne lly(Analyst-C LSALimited):
Thankyou.Hopefullyyoucanhearmethistime.Iapologize.
Do yle Simo ns (C EO ):
Wecanhearyou.
Mar kCo nne lly(Analyst-C LSALimited):
Great.Firstquestionis,it'saroundbutnotreallyabouttransferpricing.I'mcuriouswhetheryourinternal
logpricestoyourWestC oastlumberoperationswereupasimilaramounttoyouroutsidelogsales.
O bviously,there'sgoingtobemixandotherdifference.I'mjustcurioushowtheytendtotrack,
understandingmixandgeographicdifferences.
Pat t yBe die nt (C FO ):
Mark,justtobeclear,yourquestionisrelatedtohowwedotransferpricingtoour-Mar kCo nne lly(Analyst-C LSALimited):
Youmentionedthatexternallogsalesrealizationsareup.AndI'mcuriouswhetheryourinternallogcosts
areupbyasimilaramount,andwhetherthosetwothingstendtotrackovertime.I'mnotaskingwhether
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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:Q220 15Ear nings
Call
MarketC apasofEventDate:15.69B
PriceasofEventDate:30 .69
youdotransferpricing,honestly.O bviouslyyoudo.
Pat t yBe die nt (C FO ):
Yes.Actuallytheyarecorrelated,becausetheyallcomefromthesamegeography.Thereisadifferent
mix,however,asyouthinkaboutwhatwewouldsendexports,forexample,toJapanversusthegrade
thatourdomesticsawmillswoulduse.Directionally,theyusuallydotrack,buttheywillnotbesimilar
absolutepricingbecauseofthegrademix.
Mar kCo nne lly(Analyst-C LSALimited):
O kay,that'sveryhelpful.That'sjustwhatIwaslookingfor.Secondquickquestion.DoestheUSdollar
strengthincreaseyourrelativeinterestinoverseastimberlandacquisitions?
Do yle Simo ns (C EO ):
Mark,aswe'vesaidbefore,wearelookingtogrowourtimberlands.Wethinkourbiggestopportunities
willbedomestic,whetheritbeinthesouthorthePacificNorthwest.
We'llalsocontinuetolookinternationally,butwe'regoingtomakesurethatweappropriatelyriskadjust
anyacquisitionthatwewouldmakeinternationally.Sothat'skindofgenerallythewaywethinkaboutit.
C urrencyisgoingtomoveup,currencyisgoingtomovedownsowewon'toveremphasizethatinany
decisionwemaymakeversusacquisitions.
Mar kCo nne lly(Analyst-C LSALimited):
Veryhelpful,Doyle,thankyou.
Ope r at o r :
YournextquestioncomesfromthelineofC ollinMingswithRaymondJames.Pleasegoahead.
Co linMings (Analyst-RaymondJames):
Goodmorning,DoyleandPatty.
Do yle Simo ns (C EO ):
Goodmorning,C ollin.
Co linMings (Analyst-RaymondJames):
Iguessmyfirstquestion,justPatty,asitgoesbacktotheguidanceofsignificantlyincreasedresultsinthe
cellulosefibersbusiness.Ithink,Patty,youindicatedinthepreparedremarksthatwouldbeabovelast
year's3Q ,butcouldweseethatbounceallthewaybackupto,callit,aboutthe$90millionfigurethat
youpostedafewquarterslastyear,oristhatabittoooptimistic?
Pat t yBe die nt (C FO ):
You'reprobablyjustalittleoptimisticthere,C ollin.Ifyoukindofthinkaboutguidanceforthesaleof
fibersbusiness,wewereat$27million,Ibelieve,inthesecondquarter.We'vegot46daysinthesecond
quarter,andprobablylessthanahandfulinthethirdquarter.
Sobetweenthemaintenanceexpenseandbetterproductivityaswerunmoredays,Iwouldsaythat's
probablygoingtobearound,justtogiveyousomesense,aroundthe$45million-ishnumber.Wesaidwe
willhavelikelylowerrealizations,butIwouldexpectthattobeoffsetbysomehighervolumes,aswellas
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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:Q220 15Ear nings
Call
MarketC apasofEventDate:15.69B
PriceasofEventDate:30 .69
someadditionalpotentialforcostimprovementinotherways.
SoIthinkthatwillhelpyougetalittlebitinthezipcode.Ithink$90million,lovetohave$90million,but
thatmightbealittleoptimisticatthispoint.
Co linMings (Analyst-RaymondJames):
O kay.That'sveryhelpful.Iguessalso,Patty,justgoingbacktoTyler'squestion,justthinkingaboutthe
C apEx,Iknowit'sobviouslytooearlyfor2016,butthecommentsasfaraskindofistheramp-upoverthe
lastcoupleofyears,shouldweviewthe$500millionaskindofahigh-watermark,ordoyouthinkthere's
apotentialtoseeahighernumberatsomepointasyoucontinuetoinvestinyourmills?
Pat t yBe die nt (C FO ):
Yes.Ithinkwouldyouthinkabout$500millionasbeingclosertothehigh-watermark,C olin.Idon'tthink
wewouldbelookingatsomethingthatissignificantlyabovethat.Ithinklastyearin2014wewere
aroundinthe$400million,maybe$450million.Sowehaverampedthatupalittlebit.ButIwouldn'tsee
usbeingsignificantlyabove$500millionfor2016.
Co linMings (Analyst-RaymondJames):
O kay.
ThenIguessjustthelastquestion,kindofgoingbacktoGail'squestionearlier,justabouttheshare
repurchases.O nethingthatsurprisedmealittlebitduringthequarterwasthattherewasamoderation
inrepurchaseactivityrelativeto1Q ,particularlyincontextofthedropintheshareprice.
Anythingthatweshouldreadintothatoranysortofrestrictionsonpreventingyoutobuybackstock
duringaperiodofthequarter?C anyouputanyadditionalcoloraroundthat?
Do yle Simo ns (C EO ):
Yes,C ollin,there'snothingthatshouldbereadintothat.That'sjustwhereitendedupforthequarter
underourprogram,andwe'llcontinuetoreport,onaquarterlybasis,ourprogressgoingforward.
Co linMings (Analyst-RaymondJames):
O kay.Great.Goodluckduringthequarter,guys.
Pat t yBe die nt (C FO ):
Thankyou.
Ope r at o r :
YourfinalquestioncomesfromthelineofPaulQ uinnwithRBC C apitalMarkets.Pleasegoahead.
PaulQuinn(Analyst-RBC C apitalMarkets):
Hi.Goodmorning,DoyleandPatty.JustaquestionforDoyle.You'vebeenrunningWeyerhaeuserfora
coupleofyearsnow,andyou'vehadoperationalexcellenceinplaceforquiteabitofthattime.Just
wonderingifyou'rehappywiththecurrentportfolioofassets?Andbesidestimberlands,whatbusiness
segmentlooksgoodforgrowth?
Do yle Simo ns (C EO ):
C ollin--Imean,Paul,onyourfirstpoint,onO pEx,we'reencouragedbytheprogresswe'vemadethere.
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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:Q220 15Ear nings
Call
MarketC apasofEventDate:15.69B
PriceasofEventDate:30 .69
Stillmoreworktodo.Intermsofopportunitiestogrowourportfoliogoingforward,we'veconsistently
said,Ithinknowoverthelastcoupleofyears,thatwethinkourbiggestopportunitytogrowwillbein
timberlands,butwewouldlookatgrowingotherpartsofourC ompanyaswellifwecanfindappropriate
growthopportunitiesthatmeetourhurdlerequirementsanddrivevalueforshareholders.Sothat's
generallyhowwethinkaboutgrowthgoingforward.
Thebeautyofitis,wedon'thavetogrowtobesuccessful.Wecanbeverydisciplined.Wehavebeen,
andwe'llcontinuetobe.ButifwecanfindtheappropriateopportunitiestogrowthisC ompany,that's
absolutelysomethingwe'lllooktodotodrivevalueforourshareholdersgoingforward.
PaulQuinn(Analyst-RBC C apitalMarkets):
O kay,great.Thanksverymuch.Bestofluck.
Pat t yBe die nt (C FO ):
Thanks,Paul.
Ope r at o r :
Thankyou.IwouldnowliketoturnthecallbackovertoDoyleforanyclosingremarks.
Do yle Simo ns (C EO ):
AsIunderstandit,thatwasourfinalquestion,andIwouldjustliketothankeverybodyforjoiningusthis
morningforourcall,andmoreimportantly,thankyouforyourinterestinWeyerhaeuser.Haveagood
day.
Ope r at o r :
Thankyou.Thisconcludestoday'sconferencecall.
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