Good morning, and welcome to Weyerhaeuser’s 2012 Annual Shareholder Meeting.
Thank you, Chuck, for your introduction. I want to also thank our Board of Directors for your counsel, diligence, and guidance as we continue to focus on delivering Superior Sustainable Solutions for the World.
Since Weyerhaeuser’s founding in 1900, we’ve been a company of high-achievers — a talented team of passionate people, building a legacy for the future, while delivering current results, day-after-day.
We don’t wait for success to come to us.
We go after it.
Throughout our long history, we’ve encountered many circumstances that required a reinvention of who we are, and how we operate.
It is from this deep well of experience that we’ve drawn the fortitude to navigate the unprecedented economic headwinds of the last several years.
For us, it’s not about weathering the storm; it’s about adapting to the climate.
We keep a steady hand on the tiller, and hold fast to a simple truth that has sustained our company for more than a hundred years. The marketplace values the work we do, and the products we produce. Our sustainable, renewable-resource solutions bring comfort to people, and improve lives in essential ways.
Every action we take reflects the promise our company’s founders made 112 years ago, when they embarked on a Westward journey seeking new opportunity for their children, and their children’s children.
Today, I’d like you to travel with me, in your mind’s eye, to a forest about 50 miles south of this room – forestland that was part of our founding purchase. It’s a Weyerhaeuser forest, one that was harvested a few years ago.
On this land, a young tree planted by our crews, stretches toward the sky.
As it grows, it will be nurtured by rich soils, and abundant rain. It will benefit from our wealth of forestry expertise — becoming strong, straight and healthy. Eventually, we will harvest this tree, and make products that are useful to everyday lives. Then, we will replant, and begin again for the next generation. In this cycle, we find balance between short-term needs and long-term prosperity.
A single tree can’t last forever, but a forest can.
For Weyerhaeuser, this single tree is a symbol of our potential. The regenerating forest is a symbol of our perseverance. Both inspire our vision.
Regardless of economic conditions, each year that sapling pushes higher, and the forest around it thickens. As both forest and tree grow and strengthen, so too does Weyerhaeuser.
Last year, I told you we were a stronger company than the year before. Today, I can say — with even greater conviction — we are a much stronger company than a year ago.
We keep getting better-- because we know how to make the best of any hand we are dealt and we know how to change the game.
In the past year, our people have again tackled challenges, and seized opportunities, with clear vision and dogged determination. They have made our company nimble. They have made our company profitable. They have embraced the discipline of continuous daily improvement, punctuated with innovative solutions for changing customer needs.
This is not just talk. Let me give you a few examples.
In Timberlands, our people were again able to quickly respond to a significant increase in log demand from China, a critical emerging global market.
We applied all aspects of our competitive strengths and expertise to seize this opportunity: efficient harvesting and hauling, advantageous port access, and effective sales and marketing.
At the same time, we maintained historic high volumes for our long-term customers in Japan, maintaining supply lines as they rebuilt in the wake of the tsunami that struck just a little over one year ago.
Our ability to capitalize quickly on strong log export markets helped offset continued weakness in U.S. housing demand, and bolstered Timberlands net contribution to the company’s overall earnings for the year.
Our Wood Products team has faced deep challenges during this historic housing recession, where we’ve seen annual new single-family housing starts fall 75% from their peak in 2005 — yes, 75%. And yet, in every area we control, our people improved performance year-over-year.
This team refuses to stand still, implementing new ideas for reducing cost and increasing revenue wherever there is opportunity.
For example, our Oriented Strand Board team built new customer relationships to secure contracts with The Home Depot — serving the Great Lakes region and four Southern states — and with Lowe’s, serving stores in Colorado and Washington.
Our Lumber team continues to grow its innovative Framer Series lumber. This product uses computerized grading to virtually eliminate warp, has an arrow on every board to clearly indicate the crown, and is treated with a factory-applied mold inhibitor.
Our Engineered Lumber team recently introduced an I-joist with a fire-resistant coating, which will help builders address evolving building code requirements across the country. We call it Flak Jacket, and it generated a lot of buzz at this year’s International Builders’ Show, where it was recognized as one of the top new product innovations in the industry.
Despite the very rough road they’ve traveled, the people who work in our mills, distribution centers and offices across the continent, demonstrate, every day, an impressive resiliency and can-do spirit that we can quantify on our bottom line, and that positions us for the recovery that will come.
In our Real Estate business, we continue to develop land and build homes in ways responsive to local market conditions and customer needs. Our homebuilding companies operate on the front lines of the housing markets, giving them ample opportunity to show off their capacity to adapt quickly — not just to survive, but to win.
To win business among homebuyers today is no easy task. This is a very nervous consumer group, whose access to financing is strained, and whose preferences are always changing.
In response, our real estate teams have made strategic changes, large and small — including fresh product offerings, flexible home sizes, expanded customization choices, and innovative services to help minimize financial risk for buyers.
Consumers are responding, as demonstrated by industry-leading customer satisfaction ratings from our buyers, and a sales pace well ahead of last year.
We’re also looking for every opportunity to take innovative ideas that are working in one market, and implement them elsewhere.
For example, our Living Smart program, which was first developed by our Pardee Homes operation in California & Nevada, attracts buyers who want energy efficient and earth-friendly homes. Our other homebuilding companies – Quadrant, Winchester, Trendmaker and Maracay are now in the process of adopting Living Smart in their own local markets — giving their buyers the option to choose from a suite of Energy Smart, Water Smart, Health Smart and Earth Smart features.
This ability to move quickly and precisely in response to shifting market demands, while leveraging our innovations across all markets, has enabled our real estate business to not only be profitable, but also perform in the top quartile among its peers.
Finally, let’s recognize our Cellulose Fibers team, which again delivered record financial results in 2011. Yes — that’s two years in a row. The performance of this business was helped by strong global demand, but the real story of its success lies in the disciplined execution of strategies by our people to achieve operational excellence, and innovate to meet diverse customer needs.
With every incremental improvement and every new idea put into action, this team positioned itself early to take full advantage of strong markets when they came.
For example, two years ago we introduced an innovative new pulp product, called Pearl, which is used as a cost-effective extender for expensive dissolving wood pulps. We expected Pearl to garner a premium price in the marketplace, and we were not disappointed. In 2011, Pearl established a lucrative new market for Cellulose Fibers, with sales that exceeded even our own expectations.
But our innovation in Cellulose Fibers is not limited to products.
In 2011, we broke ground for a new manufacturing facility in Gdansk, Poland, which is the result of a unique, strategic relationship with our largest customer, Proctor & Gamble. This facility, which is expected to start up early next year, will run fluff pulp produced in our Southern U.S. mills through a proprietary treatment process that makes the fibers more absorbent. This plant will primarily serve the needs of P&G in that region, and represents our commitment to grow with our key global customers.
All these examples showcase our remarkable people — their ability to flex quickly in response to changing market demands, and to forge new markets. Our teams hold themselves accountable for improving results, regardless of external conditions, and most importantly, they do so safely and with integrity.
The evidence of their tremendous work is showing up on our bottom line.
In the past two years, we have steadily improved our overall profitability from operations, and we remain determined to deliver the results you expect and deserve.
Performance is the critical driver that propels us toward our vision — to deliver Superior Sustainable Solutions for the World. Our simple goal is to be the First Choice — for our customers who make all this possible, and for you, our investors.
But we cannot succeed with performance alone. There are two other critical areas we must manage just as attentively.
The first is caring about people. This means doing what it takes to attract and retain the talent we need. The examples I’ve shared with you today demonstrate the deep expertise and boundless energy of the people who work at Weyerhaeuser.
For us, caring about people also means looking beyond the borders of our own company and into the communities where we operate.
We have a strong culture of volunteerism and citizenship at Weyerhaeuser. As you walked into our corporate headquarters today, you couldn’t help but notice the endless stacks of diapers lining the windows and circling the building. You must have wondered: “What is going on?”
No, we’re not returning to the past to become a diaper manufacturer again. We’re leaving that opportunity to our growing global customers.
What these diapers do represent is our latest companywide giving project, which we launched last month in partnership with our Federal Way neighbor, World Vision. These diapers are a very visible example of the end use of our fluff pulp products, as well as our commitment to community, and the tremendous generosity of our people.
Also our competitiveness!
One of the highest needs among families living in poverty is diapers. They are not covered by most social programs, and as a result, many babies across the continent are left in soiled diapers for much too long, as parents struggle to stretch their dollars.
Weyerhaeuser employees from across the company gathered forces to donate more than 400,000 diapers to this cause, which World Vision will distribute through local charities.
I am so proud of our people for their limitless spirit of giving. Together, we’re making a difference in the face of this urgent need.
If any of you in the audience want to join us in this effort, we welcome your support. You can visit our website to donate online, or you can drop some cash in the collection box on your way out today.
Finally, in addition to driving performance and caring about people, we must also consider our effect on the planet that we all share.
For more than a hundred years, we’ve been in the business of growing and harvesting trees. Deep understanding and respect for the environment is written into our DNA. I sincerely believe our company is the very best example of what it means to be sustainable.
But it is not enough for me to believe it. We must — and do— seek third-party validation that our company is meeting the ever-rising standards of what it takes to achieve short-term results, without compromising long-term success.
Weyerhaeuser has been included in the Dow Jones Sustainability Index for North America since its inception in 2005. In 2011, for the first time, we were also added to the Dow Jones Sustainability World Index, which tracks economic, environmental and social performance among a wide range of global companies. This recognition validates not only our strong environmental stewardship, but also our demonstrated support for the communities where we operate, and for our unwavering commitment to meeting our financial goals.
As the U.S. economy emerges from its darkest days since the Great Depression, I’m both optimistic about the journey ahead, and cautious about predicting how quickly the rebound will come.
Uncertainties remain, including many factors that are beyond our control — actions that Congress may take before year end to address critical budget challenges, or, perhaps worse, a failure by Congress to act.
Especially in an election year, potential homebuyers pay attention to these issues — they have no choice if they listen to the radio or watch TV. The purchase of a home requires confidence in the future, something that has been in short supply for some time.
While our own sales signal some promising signs of a recovery on the horizon, we’re not waiting for it. Our people are moving forward now -- with a strong bias for action.
We are eliminating needless cost. We are improving operational efficiency. We are developing new markets and finding new sources of revenue. We are reinventing who we are, and how we do business to succeed, no matter what external forces we face.
During the Super Bowl this year, I was touched by the Chrysler commercial featuring Clint Eastwood, who, by the way, was a Weyerhaeuser employee long before he became a movie star.
In the commercial, Eastwood talks about it being “half-time in America” — that if the economic crisis of the past four years were a football game, it would be a very rough first half.
But at half-time, you can’t look back. You can only look ahead to the second half, and do whatever it takes to make a comeback.
Your Weyerhaeuser team is bringing the full force of our expertise, ingenuity and energy to change this game and win. We still have a distance to go, but we are stronger, leaner and ready to seize every opportunity in front of us.
Thank you for your continued support, and for continuing with us on our journey.
