Post on 29-Sep-2020
Bank of America Merrill LynchLeveraged Finance ConferenceDecember 5, 2018
Forward-Looking Statements & Non-IFRS Financial Information
2
Notices
• All financial references are expressed in US$ unless otherwise noted.
• This presentation contains forward-looking statements and estimates.
• Such statements and estimates are based on assumptions as to the future and on management’s current expectations and are, naturally, subject to risks and uncertainties.
• 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 and quarterly MD&A, and on Norbord’s website (www.norbord.com) 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.
Norbord Snapshot
• Leading manufacturer of wood-based panel products
• Largest global producer of Oriented Strand Board (OSB)
– Stated OSB capacity of 8.4 Bsf-3/8”(1)
– Stated panel capacity (including particleboard & MDF) of 9.4 Bsf-3/8”(1)
– Approximately 2,750 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
• Q3/18 LTM sales of $2.5 billion
3
Company Overview
North America
Europe
Oriented Strand Board (OSB)
Particleboard
Medium Density Fiberboard (MDF)
Furniture
Panel Capacity by Region(1)
(1) Based on stated annual capacity as of December 31, 2017.
Favourable Long-term OSB Industry Fundamentals
4
Industry Overview
North American OSB Demand and Capacity
Source: Forest Economic Advisors, LLC (FEA)
24.0 24.8 25.9
26.9 28.0 28.6 29.2
28.3 27.6 27.0 26.7 26.9 27.9 28.3 28.4 27.9 27.9
29.3 29.9 30.2
30%
40%
50%
60%
70%
80%
90%
100%
–
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
Effective
De
man
d / C
apacity
Cap
acit
y (B
sf-3
/8")
Effective Capacity Mothballed Capacity Effective Demand / Capacity
North American Capacity Restarts Needed to Meet Growing Demand
5
Industry Overview
37 Mills in Operation
3 Mills Restarted in 2017/18
North American OSB Installed Capacity:
Norbord Mill
7 Mills (Re)started in 2012/13
Note: Excludes OSB siding production and capacity.
Source: APA, company documents and other public filings
(in Bsf-3/8”)
2012 2017
Production 16.2 22.1
Restarts 4.4 1.6
New 1.2
=27% =13%
2 Greenfield Mills started in 2018
1 Idled Mill
LP’s Dawson Creek, BC mill converting to
siding by middle of Q1 2019
Norbord’s Chambord, QC mill only
remaining idled mill
Attractive North American OSB Price
6
Industry Overview
Source: Random Lengths
• OSB prices are tied to demand for building products, which is influenced by the general economy, demographics and the need for housing
North Central Benchmark OSB Price
Q1 163 175 423 364 285 145 137 154 212 198 203 417 219 193 226 293 370
Q2 159 215 443 297 238 156 179 146 295 173 235 347 219 193 264 330 426
Q3 159 381 351 303 181 177 201 178 180 184 313 252 216 204 301 409 363
Q4 156 401 264 317 166 165 170 172 191 190 332 245 216 242 285 379
Average 159 293 369 320 217 161 172 163 219 186 271 315 218 209 269 353
$100
$150
$200
$250
$300
$350
$400
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
An
nu
al A
vera
ge N
C P
rice
US$
per
Msf
7/1
6"
15-year average: $249
Significant OSB Substitution Opportunity in Industrial End Uses
7
2017 North American Panel Consumption
EWPFurniture Commercial Roofing Engineered Packaging
79%
21%
New Home
62%
38%
Repair & Remodel
OSB Plywood
Source: APA – The Engineered Wood Association, FEA, RISI, US Forest Products Annual Market Review and Prospects (USDA FS), US International Trade Commission, Norbord estimates
Business Strategy
17%
33%
50%
Industrial
MDF & PB
Norbord is a leading supplier to current industrial end uses
~21 Bsf-3/8” 16 Bsf-3/8” 8 Bsf-3/8”
Europe: Strong Demand Growth
8
Industry Overview
OSB Share of Structural Panels
Source: Forest Economic Advisors, LLC (FEA), European Panel Federation (EPF) and Norbord estimates
0%
25%
50%
75%
1982 1987 1992 1997 2002 2007 2012 2017
European OSB Demand (million m3)
Source: Eurostat, UN Comtrade Database, Destatis and Norbord estimates
8%2005-2018F CAGR
North America
Europe
Inverness Mill Expansion Supports Increasing European Customer Demand
9
Business Strategy
- New continuous press line started up in Q4/2017 - Original two press lines demolished during Q2/2018- Installation of new finishing end will be complete in Q4/2018
10
Business Strategy
Capex Investment (US$ millions)
• Three main priorities:
– Re-invest in the business– Optimize capital structure– Return cash to shareholders
• 2018 capex forecast of $200 million
Includes investments to prepare Chambord, Quebec mill for restart (when warranted by customer demand) and expand capacity at Grande Prairie, Alberta and Huguley, Alabama mills.
• 2019 capex budget of $150 million
Disciplined Capital Allocation
(1)
(1) 2015 onwards reflects Norbord following completion of merger with Ainsworth. Pre 2015 reflects Norbord excluding Ainsworth.
Minimum Maintenance $25 million
0x
3x
6x
9x
12x
$0
$25
$50
$75
$100
$125
$150
$175
$200
$225
$250
$275
$300
Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18
Leverage Metrics Significantly Improved
11
Financial Overview
Adjusted EBITDA vs Net Debt
Quarterly Adj. EBITDA
(in US$ millions)
Net Debt toLTM Adj. EBITDA
11.0x
0.4x
24%
0%
5%
10%
15%
20%
25%
Norbord Peer1 Peer2 Peer3 Peer4 Peer5 Peer6 Peer7 Peer8
Track Record of Value Creation
12
Financial Overview
15 Year Average ROCE %(1)
Source: Capital IQ
$200MDebt permanently repaid
>$1BCapital invested
>$1BDividends paid out
(1) Return on capital employed (ROCE) is a measure of financial performance focusing on cash generation and the effective use of capital. ROCE is calculated as Adjusted EBITDA divided by average capital employed (operating working capital, PP&E, goodwill, intangibles, timberlands & licences).
Norbord Inc.
Suite 600One Toronto Street
Toronto, Ontario, M5C 2W4Canada
Tel: 416-365-0705
www.norbord.com