Raymond James Institutional Investors Conference March 8, 2016

Transcription

1 Raymond James Institutional Investors Conference March 8, 2016

2 Notices Forward-Looking Statements & Non-IFRS Financial Information All financial references are expressed in US$ unless otherwise noted. This presentation contains forward-looking statements and estimates. Actual company results could differ materially from a conclusion, forecast or projection in the forward-looking information. Certain material factors or assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information. Additional information can be found in the Company s annual information form, annual MD&A, and on Norbord s website ( about the material factors that could cause actual results to differ materially from the conclusion, forecast or projection in the forward-looking information, and the material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information. During the course of this presentation, certain non-ifrs financial information will be presented. Definitions and reconciliation of terms can be found in the Company s annual and quarterly MD&A. 2

3 Company Overview

4 Company Overview Norbord Snapshot Leading manufacturer of wood-based panel products Largest global producer of Oriented Strand Board (OSB) Stated OSB capacity of 8.0 Bsf-3/8 (1) (2) Stated panel capacity (including particleboard & MDF) of 8.9 Bsf-3/8 (1) (2) Approximately 2,600 employees at 17 plants across the US, Canada and Europe Listed on the NYSE and TSX ( OSB ) Report in US dollars and in accordance with IFRS 2015 sales of $1.5 billion (2) US 43% Panel Capacity by Region Europe 20% North America Europe 8.9 Bsf-3/8" (1)(2) Canada 37% Oriented Strand Board (OSB) Particleboard Medium Density Fibreboard (MDF) Furniture (1) Excludes the incomplete 600 MMsf-3/8 Grande Prairie, Alberta Line 2 ( GP2 ). (2) Results reflect combined performance following completion of merger with Ainsworth 4

5 Enterprise Value ($USmm) OSB Capacity (Bsf-3/8") Company Overview The Leading Global OSB Company Top 10 Global OSB Producers Norbord Louisiana-Pacific Georgia-Pacific Weyerhaeuser Kronospan Huber Tolko KronoSwiss Egger Martco $3,000 $2,500 $2,000 $1,500 $1,000 $500 $- Enterprise Value West Fraser Louisiana-Pacific Norbord Canfor Corp. Interfor Western Forest Products Source: Bloomberg and company filings. Enterprise values as at February 8,

6 Company Overview Norbord s Products Norbord s operations include 15 OSB mills and two other plant locations in the UK producing particleboard, MDF and related value-added products OSB 90% of Capacity New home construction Repair and remodel Light commercial construction Industrial applications Particleboard 6% of Capacity New home construction Repair and remodel Furniture Fixtures MDF 4% of Capacity Furniture Fixtures Mill work 6

7 Industry Overview

8 Industry Overview Typical Uses for OSB Products OSB is an innovative, affordable and environmentally sustainable structural panel Serves many of the same uses as plywood, but produced at a lower cost Norbord expects OSB will continue to capture market share from plywood Currently, OSB represents 66% of total North American structural panel production Roof Window Header Webstock Wall Sheathing Garage Door Header Flooring Rimboard Door Header Source: APA, January

9 Industry Overview Global OSB Industry Industry OSB Capacity (MMsf-3/8 ) North America Europe South America Asia Norbord operates in the two significant global OSB producing regions Source: Company documents and other public filings 9

10 Industry Overview North American & European OSB Industries North American OSB Industry European OSB Industry Huber 8% Tolko 8% Other Martco 3% 3% 26% Sonae 7% Kalavela 4% Others 2% Smartply 5% Kronospan 39% Weyerhaeuser 11% Industry Capacity 28 Bsf-3/8" 11% Industry Capacity 8 Bsf-3/8" Georgia- Pacific 19% Louisiana- Pacific 22% Egger 12% KronoSwiss 20% Norbord is a significant player in both key markets Source: Company documents and other public filings stated industry capacity 10

11 Industry Overview Demand Growth Ahead in Both Key Markets 75% OSB Share of Structural Panels 50% North America 25% 0% Europe % Source: FEA and Norbord estimates 11

12 Capacity (Bsf-3/8") U.S. Housing Starts (mm) Industry Overview US Housing Recovery is Real US Housing Starts and Underlying Demand mm Over-Built 3.7 mm Under-Built U.S. Housing Starts Underlying Demand North American OSB Demand and Capacity F 2017F 2018F 100% 90% 80% 70% 60% 50% 40% 30% Effective Demand / Capacity Effective Capacity Mothballed Capacity Effective Demand / Capacity Source: US Census Bureau and Forest Economic Advisors, LLC (FEA) Favourable long-term OSB industry fundamentals 12

13 Industry Overview North American Capacity Restarted to Meet Growing Demand North American OSB Installed Capacity: 39 Mills in Operation 8 Mills Indefinitely Curtailed 6 Mills (Re)started in 2013 Norbord Mill Source: Company documents and other public filings 13

14 Annual Average NC Price US$ per Msf 7/16" Industry Overview Attractive North American OSB Price Outlook OSB prices are tied to demand for building products, which is influenced by the general economy, demographics and the need for housing With US housing recovering, OSB prices are projected to rise above trend North Central Benchmark OSB Price $400 $350 Historical Price Forecasted Price $300 $ year average: $229 $200 $150 $100 $50 $ F 2017F Source: Random Lengths and Forest Economic Advisors, LLC (FEA); As of January

15 Industry Overview Core European Housing Markets Recovering 250 Housing Starts (1) (000 s) 50% European OSB Share of Structural Panels Germany +6% in % % % UK +6% in % % (1) Values for Germany represent housing completions Source: Euroconstruct and Norbord estimates 15

16 Industry Overview Japanese Housing Market Stable Significant growth opportunity OSB accounts for only ~10% of the structural panel market in Japan compared to >60% in North America Japanese Housing Starts (000 s) 1,236 1,285 All Other Wooden ,061 1, Source: Japanese Ministry of Land, Infrastructure, Transport and Tourism and Company documents 16

17 Business Strategy

18 Business Strategy Norbord s Strategy is Well Defined 1 Develop a world-class safety culture 2 Pursue growth in OSB 3 Own high-quality assets with low-cost positions Maintain a margin-focused operating culture Focus on growth customers through best-in-class service and product development Allocate capital with discipline 18

19 Business Strategy Norbord s Growth Focused on OSB 8 Norbord OSB Capacity (Bsf-3/8 ) (1) (1) 2015 reflects Norbord following completion of merger with Ainsworth. Pre 2015 reflects Norbord excluding Ainsworth. 19

20 Business Strategy Margin Improvement is an Operational Priority Margin Improvement Program (MIP) gains help offset impact of industry-wide rising input costs: Increased productivity Reduced overhead costs Reduced raw material usage Improved product mix Margin Improvement Program Gains (1) ($ in millions) In Control of Our Controllables (3) MIP has delivered $304 million of margin improvements over the past 12 years with minimal capital investments MIP gains of $43 million 0 (2) (1) Measured relative to prior year at constant prices and exchange rates (2) The benefits of improved productivity and a richer value-added product mix were offset by higher maintenance spending in 2013 (3) 2015 reflects Norbord following completion of merger with Ainsworth. Pre 2015 reflects Norbord excluding Ainsworth. 20

21 Business Strategy Further MIP Ahead Through Identified Merger Synergies $45 Million in Annual Merger Synergies (1) Captured $18 million in synergies ($27 million annualized) in 2015 Product Specialization Ainsworth s Forming Technology Order File Optimization Sales & Logistics Corporate Overhead Operational Best Practices Operational Standardization Continuous Press Experience Single Public Company Purchasing Savings (1) Costs to achieve ~50%; Achievable over months 21

22 Business Strategy Diversification From European & Asian End Market Exposure Strong North American footprint 2015 Shipments by Origin (2) Stable margin operations: Europe Asia-focused exports (1) Europe 24% Provides greater diversification than North American-based competitors Europe 7.2 Bsf-3/8" North North America America 76% Better positioned to weather market cycles (1) Exports to Asia are included in North American shipments. Net sales to Asian markets were $48 million in (2) Results reflect combined performance following completion of merger with Ainsworth 22

23 Business Strategy Focused Customer Strategy Sets Norbord Apart New housing sales volume growing as US housing starts recover Industrial and export sales at more stable margins Industrial 15% 2015 North American Shipments (1) Export 5% 5.5 Bsf-3/8" New Home Construction (Pro-Dealers) 55% Repair & Remodel (Big Box) 25% (1) Results reflect combined performance following completion of merger with Ainsworth 23

24 Business Strategy Business Strategy Three main priorities: Investing in our mills Optimizing debt profile Returning cash to shareholders $180 $160 $140 $120 $100 $80 Capex Investment (US$ millions) $60 $40 $20 $ Target (1) (1,2) Capex Greenfield Expansion (1) 2015 and 2016 numbers reflect Norbord following completion of merger with Ainsworth. Pre 2015 reflects Norbord excluding Ainsworth. (2) Excluding $135 million strategic reinvestment in Inverness, Scotland OSB mill over next two years. 24

25 Financial Overview

26 Financial Overview Strong Operating Cash Flow Through The Cycle 921 Total Adjusted EBITDA (US$ millions) Norbord Combined Adjusted EBITDA Ainsworth Adjusted EBITDA Norbord (excluding Ainsworth) Adjusted EBITDA (2) (1) Norbord Sensitivity to North American OSB Price Changes: +$10/Msf 7/16 = +$58 million Adjusted EBITDA (at full capacity) year average: $264 million North Central Benchmark OSB Price US Housing Starts (000s) $369 $320 $217 $161 $172 $163 $219 $186 $271 $315 $218 $209 1,956 2,068 1,801 1, ,003 1,111 (1) As disclosed in the Q MD&A (2) As disclosed in Ainsworth s historical MD&As; converted to USD using annual average exchange rate 26

27 Financial Overview Stable Results from European Operations Norbord s European operations provide greater sales and earnings diversification than other North American-based competitors European Adjusted EBITDA (US$ millions)

28 7.70% 5.375% 6.25% Financial Overview Strong Balance Sheet & Liquidity Manageable Debt Maturities (US$ millions) Strong Liquidity Profile (US$ millions) $200 $240 $315 Q Cash $ 9 Bank Lines (1) 240 A/R Securitization (2) 95 Liquidity $344 Stable Issuer Credit Ratings Moody s S&P DBRS Ba2 (Stable) BB- (Stable) BB (Negative) (1) $245 million of bank lines less $5 million outstanding letters of credit drawn at quarter-end (2) $125 million of A/R Securitization limit less $30 million drawn at quarter-end 28

29 Summary Attractive Investment Opportunity Leverage to unfolding US housing recovery Every +$10 in NA OSB price = +$58 million in Adjusted EBITDA at full capacity Diversification from European operations, North American industrial sales and Asian export sales High quality asset base with low operating costs Focused customer strategy and strong customer partnerships Superior margins versus peers Track record of disciplined capital allocation Strong financial liquidity and comfortable debt maturities 29

30 Norbord Inc. Suite 600 One Toronto Street Toronto, Ontario, M5C 2W4 Canada Tel: Fax: