Weyerhaeuser to Enhance Southern Timberlands Portfolio

Rhea-AI Summary

Weyerhaeuser Company (NYSE: WY) has entered into purchase and sale agreements with Forest Investment Associates to divest approximately 69,600 acres in Upstate South Carolina for $170 million and to purchase approximately 60,700 acres of high-quality timberlands in Coastal North Carolina, South Carolina, and Mississippi for $163 million. The acquisition includes mature, highly productive acreage integrated with existing Weyerhaeuser timberlands and mill operations, with an expected average harvest of 6.9 tons per acre annually over the first five years. The company expects an average Adjusted EBITDA from timber operations of approximately $130 per acre annually over the first five years. Weyerhaeuser aims to optimize its Southern Timberlands portfolio, improve cash flow, and create long-term value for shareholders through this transaction.

Positive

• Acquisition of high-quality timberlands with attractive timber attributes
• Expected average Adjusted EBITDA from timber operations of approximately $130 per acre annually over the first five years
• Opportunity to enhance real estate cash flows and returns on high-optionality coastal assets
• Structured as a tax-efficient like-kind exchange with minimal transaction costs
• Weyerhaeuser will own or manage more than 870,000 acres of timberlands in North and South Carolina and approximately 1,190,000 in Mississippi

Negative

• None.

Purchase and sale agreements with Forest Investment Associates set to increase cash flow and optimize portfolio value 

SEATTLE, Nov. 30, 2023 /PRNewswire/ -- Weyerhaeuser Company (NYSE: WY) today announced it has entered into two distinct agreements with Forest Investment Associates to divest approximately 69,600 acres in Upstate South Carolina for $170 million, and to purchase approximately 60,700 acres of high-quality timberlands in Coastal North Carolina, South Carolina and Mississippi for $163 million.

Key attributes of the transaction:

• Adding high-quality timberlands with attractive timber attributes, including:
• Mature, highly productive acreage that is well-integrated with existing Weyerhaeuser timberlands and mill operations.
• Fee ownership with 80 percent planted pine acreage and strong site productivity, delivering strong long-term timber returns.
• Well-stocked timber inventory producing attractive sawlog mix and expected average harvest of 6.9 tons per acre (or 420,000 tons) annually over the first five years.
• Expected average Adjusted EBITDA from timber operations of approximately $130 per acre (or $7.7 million) annually over the first five years.
• Acquiring core timberland acreage at an Adjusted EBITDA multiple of 21x¹, while divesting less strategic ownership at an Adjusted EBITDA multiple of 47x¹.
• Opportunity to enhance real estate cash flows and returns on high-optionality coastal assets.
• Structured as a tax-efficient like-kind exchange with minimal transaction costs.

1)	Adjusted EBITDA multiple calculated as purchase price divided by Weyerhaeuser's forecasted 5-year annual average Adjusted EBITDA from timber operations.

"This transaction represents a unique opportunity to further optimize Weyerhaeuser's Southern Timberlands portfolio with high-quality, highly productive acreage that is well-integrated with our existing operations," said Devin W. Stockfish, president and chief executive officer. "As we've demonstrated over the last several years, we are committed to active portfolio management across our unmatched timber holdings, and we remain focused on transactions that improve our cash flow and returns while creating long-term value for our shareholders."

With this transaction, Weyerhaeuser will own or manage more than 870,000 acres of timberlands in North and South Carolina and approximately 1,190,000 in Mississippi. The company employs more than 1,300 people and has significant operations and infrastructure across the three states, including seven mills, two distribution centers, two tree nurseries and multiple mitigation banks and real estate development projects. The transaction is subject to customary closing conditions and is expected to close in the fourth quarter of 2023.

ABOUT WEYERHAEUSER
Weyerhaeuser Company, one of the world's largest private owners of timberlands, began operations in 1900. We own or control approximately 11 million acres of timberlands in the U.S. and manage additional timberlands under long-term licenses in Canada. We manage these timberlands on a sustainable basis in compliance with internationally recognized forestry standards. We are also one of the largest manufacturers of wood products in North America. Our company is a real estate investment trust. In 2022, we generated $10.2 billion in net sales and employed approximately 9,200 people who serve customers worldwide. Our common stock trades on the New York Stock Exchange under the symbol WY. Learn more at www.weyerhaeuser.com. 

NON-GAAP FINANCIAL MEASURES
This news release references forward-looking estimates of Adjusted EBITDA, which is a non-GAAP measure that management uses to evaluate the performance of the company. Adjusted EBITDA, as we define it, is operating income adjusted for depreciation, depletion, amortization, basis of real estate sold and special items. Adjusted EBITDA should not be considered in isolation from, and is not intended to represent an alternative to, our GAAP results. We have not provided a reconciliation of this forward-looking non-GAAP financial measure to the most comparable GAAP measure of net income because Adjusted EBITDA, as we define it, excludes the impact of certain items listed above in our definition of Adjusted EBITDA, and management cannot estimate these items or the impact they will have on Adjusted EBITDA on a forward-looking basis without unreasonable effort. As a result, investors may be unable to accurately compare the expected impact of the acquisition to our historical results or the results or expected results of other companies that may have treated such matters differently. Nonetheless, management believes that providing this forward-looking non-GAAP information about the acquisition is useful to investors, and given the uncertain nature of forward-looking statements, we believe investors are able to take into account the inherent limitations of this forward-looking non-GAAP information. We cannot predict the occurrence, timing or amount of any of the items that we exclude from our Adjusted EBITDA estimate. Accordingly, the actual effect of these items, when determined, could potentially be significant to the calculation of Adjusted EBITDA and actual results may differ materially from our estimate.

FORWARD-LOOKING STATEMENTS
This news release contains statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995 including, without limitation, with respect to the company's expectations concerning the occurrence, timing, taxation, operational benefits and expected financial contributions and benefits of its acquisition of certain North Carolina, South Carolina and Mississippi timberlands and its disposition of certain South Carolina timberlands. Forward-looking statements may be identified by the fact that they do not relate strictly to historical or current facts, by references to expected performance over a period of time or by the use of certain words such as "committed," "expected," "opportunity," "will" and similar words. Forward-looking statements are based on our current expectations and assumptions and are not guarantees of future events or performance. The realization of our expectations and the accuracy of our assumptions are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include, but are not limited to, those identified in our 2022 Annual Report on Form 10-K, as well as those set forth from time to time in our other public statements, reports, registration statements, prospectuses, information statements and other filings with the SEC. We may not be able to complete the transactions referenced herein within the stated time period, or at all, because of a number of factors, including without limitation the occurrence of any event, change or other circumstances that could give rise to a termination, or the failure by either party to satisfy other closing conditions, under the relevant transaction documents. There is no guarantee that any of the events anticipated by these forward-looking statements will occur, and if they do occur, there is no guarantee what effect they will have on the company's business, results of operations, cash flows, financial condition and future prospects. The company undertakes no obligation to update these forward-looking statements after the date of this news release.

For more information contact:
Analysts – Andy Taylor, 206-539-3907
Media – Nancy Thompson, 919-861-0342

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SOURCE Weyerhaeuser Company

FAQ

What is the nature of Weyerhaeuser Company's (NYSE: WY) agreements with Forest Investment Associates?

Weyerhaeuser has entered into purchase and sale agreements with Forest Investment Associates to divest approximately 69,600 acres in Upstate South Carolina for $170 million and to purchase approximately 60,700 acres of high-quality timberlands in Coastal North Carolina, South Carolina, and Mississippi for $163 million.

What is the expected average Adjusted EBITDA from timber operations over the first five years?

Weyerhaeuser expects an average Adjusted EBITDA from timber operations of approximately $130 per acre annually over the first five years.

How does the acquisition aim to benefit Weyerhaeuser's shareholders?

The acquisition aims to optimize Weyerhaeuser's Southern Timberlands portfolio, improve cash flow, and create long-term value for shareholders.

What is the total acreage of timberlands Weyerhaeuser will own or manage after the transaction?

Weyerhaeuser will own or manage more than 870,000 acres of timberlands in North and South Carolina and approximately 1,190,000 in Mississippi.

When is the expected closing date for the transaction?

The transaction is subject to customary closing conditions and is expected to close in the fourth quarter of 2023.