Bank of America Merrill Lynch Leveraged Finance Conference December 5, 2018
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. • 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. 2
Company Overview Norbord Snapshot North America • 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 Panel Capacity by Region (1) Europe Oriented Strand Board (OSB) Particleboard Medium Density Fiberboard (MDF) Furniture (1) Based on stated annual capacity as of December 31, 2017. 3
Industry Overview Favourable Long-term OSB Industry Fundamentals North American OSB Demand and Capacity 40.0 100% 35.0 90% 29.3 29.9 30.2 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 30.0 Effective Demand / Capacity 80% Capacity (Bsf-3/8") 25.0 70% 20.0 60% 15.0 50% 10.0 40% 5.0 – 30% Effective Capacity Mothballed Capacity Effective Demand / Capacity Source: Forest Economic Advisors, LLC (FEA) 4
Industry Overview North American Capacity Restarts Needed to Meet Growing Demand LP’s Dawson Creek, BC mill converting to Norbord’s Chambord, siding by middle of QC mill only Q1 2019 remaining idled mill (in Bsf- 3/8”) 2012 2017 Production 16.2 22.1 Restarts 4.4 1.6 New 1.2 =27% =13% North American OSB Installed Capacity: 37 Mills in Operation 7 Mills (Re)started in 2012/13 3 Mills Restarted in 2017/18 2 Greenfield Mills started in 2018 1 Idled Mill Norbord Mill Note: Excludes OSB siding production and capacity. Source: APA, company documents and other public filings 5
Industry Overview Attractive North American OSB Price • 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 $400 $350 Annual Average NC Price $300 US$ per Msf 7/16" 15-year average: $249 $250 $200 $150 $100 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q1 163 175 423 364 285 145 137 154 212 198 203 417 219 193 226 293 370 Q2 159 215 443 297 238 156 179 146 295 173 235 347 219 193 264 330 426 Q3 159 381 351 303 181 177 201 178 180 184 313 252 216 204 301 409 363 Q4 156 401 264 317 166 165 170 172 191 190 332 245 216 242 285 379 Average 159 293 369 320 217 161 172 163 219 186 271 315 218 209 269 353 6 Source: Random Lengths
Business Strategy Significant OSB Substitution Opportunity in Industrial End Uses 2017 North American Panel Consumption New Home Repair & Remodel Industrial 17% 21% 38% 16 Bsf- 3/8” 8 Bsf- 3/8” 50% ~21 Bsf- 3/8” 62% 33% 79% OSB Plywood MDF & PB Furniture EWP Commercial Roofing Engineered Packaging Norbord is a leading supplier to current industrial end uses Source: APA – The Engineered Wood Association, FEA, RISI, US Forest Products Annual Market Review and Prospects (USDA FS), US International Trade Commission, Norbord estimates 7
Industry Overview Europe: Strong Demand Growth European OSB Demand (million m 3 ) OSB Share of Structural Panels 75% 8% North America 2005-2018F CAGR 50% Europe 25% 0% 1982 1987 1992 1997 2002 2007 2012 2017 8 Source: Forest Economic Advisors, LLC (FEA), European Panel Federation (EPF) and Norbord estimates Source: Eurostat, UN Comtrade Database, Destatis and Norbord estimates
Business Strategy Inverness Mill Expansion Supports Increasing European Customer Demand - New continuous press line started up in Q4/2017 - Original two press lines demolished during Q2/2018 - Installation of new finishing end will be complete in Q4/2018 9
Business Strategy Disciplined Capital Allocation Capex Investment (US$ 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, Minimum Alabama mills. Maintenance $25 million • 2019 capex budget of $150 million (1) (1) 2015 onwards reflects Norbord following completion of merger with Ainsworth. Pre 2015 reflects Norbord excluding Ainsworth. 10
Financial Overview Leverage Metrics Significantly Improved Adjusted EBITDA vs Net Debt Quarterly Net Debt to Adj. EBITDA LTM Adj. EBITDA (in US$ millions) $300 12x 11.0x $275 $250 $225 9x $200 $175 $150 6x $125 $100 $75 3x $50 $25 0.4x $0 0x 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 11
Financial Overview Track Record of Value Creation 15 Year Average ROCE % (1) 24% 25% 20% 15% 10% 5% 0% Norbord Peer1 Peer2 Peer3 Peer4 Peer5 Peer6 Peer7 Peer8 Source: Capital IQ $200M >$1B >$1B Debt permanently repaid Capital invested Dividends 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). 12
Norbord Inc. Suite 600 One Toronto Street Toronto, Ontario, M5C 2W4 Canada Tel: 416-365-0705 www.norbord.com
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