2015 Annual General Meeting May 12, 2015
Peter Gordon Chair
Peter Wijnbergen President & Chief Executive Officer
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 (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.
4
Notices
Agenda
5
Introduction
A Look Back at 2014
Executing Our Long-Term Strategy
The Market as We See It
Strong Platform for Value Creation
2013 2014
Shipments (MMsf-3/8”) 4,906 5,174
North Central Price (US$/Msf-7/16”) $315 $218
Sales (US$ millions) $1,343 $1,198
Adjusted EBITDA (US$ millions) $287 $90
Earnings per Share Diluted (US$) $2.79 $0.48
Dividends Paid per Share (US$) $1.78 $2.15
2014 Financial Highlights
6
Financial Results
+5%
-31%
-11%
-69%
Note: All results reflect pre-merger Norbord only
2015 US housing starts forecast at 1.15 million
Customer optimism
Improving North American demand/capacity ratios
Improving UK housing starts and home sales
Continued pressure on European OSB prices, but accelerating substitution from plywood
Lower oil prices = lower resin prices
Weaker Canadian dollar
Well Positioned In An Improving Market Environment
7
Outlook
Positive External Indicators
Executing Our Long-Term Strategy
Norbord’s Strategy
9
Executing Our Long-Term Strategy
Pursue growth in OSB 2
Own high-quality assets with low-cost positions 3
Maintain a margin-focused operating culture 4
Allocate capital with discipline 5
Focus on growth customers through best-in-class service and product development
6
Develop a world-class safety culture 1
Improving Safety Is Our First & Foremost Priority
10
Norbord’s Strategy – Develop a World-Class Safety Culture
OSHA Recordable Injury Rate
1
0
2
4
6
8
10
12
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
YTD
Ainsworth
Norbord
Norbord’s Strategy
11
Executing Our Long-Term Strategy
Pursue growth in OSB 2
Own high-quality assets with low-cost positions 3
Maintain a margin-focused operating culture 4
Allocate capital with discipline 5
Focus on growth customers through best-in-class service and product development
6
Develop a world-class safety culture 1
Norbord’s Growth Focused on OSB
12
Norbord’s Strategy – Pursue Growth in OSB
0
1
2
3
4
5
6
7
8
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 PF
2
Norbord OSB Capacity (Bsf-3/8”)
(1)
(1) Pro Forma for the Ainsworth Merger
Transformational, Growth-Oriented Merger
• Complementary, low-cost mills
• Innovation and product development expertise
• Expanded geographic diversification and market access
13
Norbord’s Strategy – Pursue Growth in OSB 2
Existing Norbord OSB Mills
Ainsworth OSB Mills
Building On The Best of Both Companies
14
Norbord’s Strategy – Pursue Growth in OSB 2
Improving our Operations, Realizing Synergies
15
Norbord’s Strategy – Pursue Growth in OSB 2
Operational Best
Practices Corporate Overhead
Sales & Logistics
Product Specialization
Single Public Company
$45 Million in Annual Merger Synergies Achievable over 18-24 months
Ainsworth’s Forming Technology
Operational Standardization
Continuous Press Experience
Order File Optimization
Purchasing Savings
Norbord’s Strategy
16
Executing Our Long-Term Strategy
Pursue growth in OSB 2
Own high-quality assets with low-cost positions 3
Maintain a margin-focused operating culture 4
Allocate capital with discipline 5
Focus on growth customers through best-in-class service and product development
6
Develop a world-class safety culture 1
High Quality Assets
• Production up 6%
• Annual production records at 6 mills
17
Norbord’s Strategy – Own High-Quality Assets with Low-Cost Positions 3
Joanna, South Carolina Unique Opportunity to Debottleneck Continuous Press
• Production per employee up 35% over last 7 years
Norbord’s Strategy
18
Executing Our Long-Term Strategy
Pursue growth in OSB 2
Own high-quality assets with low-cost positions 3
Maintain a margin-focused operating culture 4
Allocate capital with discipline 5
Focus on growth customers through best-in-class service and product development
6
Develop a world-class safety culture 1
Margin Improvement is an Operational Priority
19
Norbord’s Strategy – Maintain a Margin-Focused Operating Culture 4
37
28
56
9
14
29
16
25 23
0
24
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
(1) The benefits of improved productivity and a richer value-added product mix were offset by higher maintenance spending in 2013
(1)
Margin Improvement Program Gains ($ in millions) “In Control of Our Controllables”
Norbord’s Strategy
20
Executing Our Long-Term Strategy
Pursue growth in OSB 2
Own high-quality assets with low-cost positions 3
Maintain a margin-focused operating culture 4
Allocate capital with discipline 5
Focus on growth customers through best-in-class service and product development
6
Develop a world-class safety culture 1
Investing in Our Mills
• Invested $77 million in capital projects in 2014
• 2015 capex target of $70 million (pro forma)
Optimizing Debt Profile
• Refinanced existing Ainsworth bonds
• Manageable debt maturities (2017, 2020 and 2023)
Returning Cash to Shareholders
• Variable dividend policy
• Paid $116 million in dividends in 2014
Prudent Capital Decisions
21
Norbord’s Strategy – Allocate Capital with Discipline 5
Norbord’s Strategy
22
Executing Our Long-Term Strategy
Pursue growth in OSB 2
Own high-quality assets with low-cost positions 3
Maintain a margin-focused operating culture 4
Allocate capital with discipline 5
Focus on growth customers through best-in-class service and product development
6
Develop a world-class safety culture 1
Diversified Sales in North America, Europe & Asia
23
Norbord’s Strategy – Focus on Growth Customers 6
64%
32%
4%
2014 Sales by Geography (1)
(1) Pro forma the Ainsworth merger - Ainsworth sales converted to US$ at an average exchange rate of C$1.1046 / US$
• Strong North American footprint
• Stable margin operations: – Europe – Asia-focused exports
• Provides greater diversification than North American-based competitors
• Better positioned to weather market cycles
Europe
North America
Asia
Diversified Customer Strategy Sets Norbord Apart
24
Norbord’s Strategy – Focus on Growth Customers 6
(1) Pro Forma the Ainsworth merger
New Home Construction (Pro-Dealers)
50%
Repair & Remodel (Big Box)
25%
Industrial 20%
Export 5%
5.3 Bsf-3/8” (1)
2014 North American Shipments (1)
The Market As We See It
Favourable North American OSB Demand Fundamentals
26
Market Outlook – North America
0.5
1.0
1.5
2.0
2.5
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015F
U.S. Housing Starts
Underlying Demand
US Housing Starts and Underlying Demand (millions)
1.5 mm Over-Built 3.7 mm
Under-Built
Source: US Census Bureau and Forest Economic Advisors, LLC (FEA); As of April 2015
US Housing Starts Underlying Demand
Improving North American Demand/Capacity Ratios
27
Market Outlook – North America
North American OSB Demand and Capacity (Bsf-3/8”)
Source: Forest Economic Advisors, LLC (FEA); As of April 2015
21.4
22.8
24.0
24.8
25.9
26.9
27.8 27.9
26.3
22.6
21.9 21.4
20.4
21.2
23.6
24.7 25.3
26.3
30%
40%
50%
60%
70%
80%
90%
100%
15
17
19
21
23
25
27
29
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015F 2016F 2017F
Effective Capacity Effective Demand / Capacity
Core European Housing Markets Recovering
28
Market Outlook - Europe
Source: National House Builder Confederation (NHBC), Construction Products Association (CPA) & Bundesbank & Norbord estimates
50
75
100
125
150
175
200
225
250
275
2009 2010 2011 2012 2013 2014
Housing Starts (000’s)
UK +18% in 2014
Germany +5% in 2014
0%
5%
10%
15%
20%
25%
30%
35%
40%
80 85 90 95 00 05 10
European OSB Share of Structural Panels
The Asian Opportunity
29
Market Outlook – Asia
Japanese Structural Panel Consumption
OSB Suppliers to Japan
77%
10%
8%
5%
Domestic Plywood
Imported Plywood
Imported OSB
Particleboard/MDF
Source: Interex Forest Products Ltd. & Norbord estimates
Japan – Established Export Market
China – Advancing Market Opportunities
78%
Others 22%
Well Positioned to Meet Growing Demand
30
Growth Opportunities
High Level, Alberta, Canada Continued Ramp-Up
Huguley, Alabama, United States Press Rebuild
Grande Prairie Line II, Alberta, Canada Potential Completion of Second Line
Inverness, Scotland, United Kingdom Potential Mill Expansion
31
Conclusion
World’s largest OSB producer
Leading market position in three growth geographies
Established relationships with premier customers
Diversified product range
Strong liquidity and balance sheet
Strong Platform For Value Creation
Questions
2015 Annual General MeetingPeter Gordon�ChairPeter Wijnbergen�President & Chief Executive OfficerForward-Looking Statements & Non-IFRS Financial Information Agenda2014 Financial HighlightsWell Positioned In An Improving Market EnvironmentSlide Number 8Norbord’s StrategyImproving Safety Is Our First & Foremost PriorityNorbord’s StrategyNorbord’s Growth Focused on OSBTransformational, Growth-Oriented MergerBuilding On The Best of Both CompaniesImproving our Operations, Realizing SynergiesNorbord’s StrategyHigh Quality AssetsNorbord’s StrategyMargin Improvement is an Operational PriorityNorbord’s StrategyPrudent Capital DecisionsNorbord’s StrategyDiversified Sales in North America, Europe & AsiaDiversified Customer Strategy Sets Norbord ApartSlide Number 25Favourable North American OSB Demand FundamentalsImproving North American Demand/Capacity RatiosCore European Housing Markets RecoveringThe Asian OpportunityWell Positioned to Meet Growing DemandStrong Platform For Value Creation Slide Number 32
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