Barclays High Yield Bond & Barclays High Yield Bond & Syndicated Loan Conference Robin Lampard SVP & CFO Robin Lampard, SVP & CFO Phoenix, AZ - May 2014
Forward-Looking Statements and Non-IFRS Financial Information • All financial references are expressed in US$ unless otherwise noted. • Financial numbers prior to 2010 were prepared in accordance with CGAAP, while numbers from 2010 onward have been prepared in accordance with IFRS. • 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. 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 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. p j g • 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
I. COMPANY OVERVIEW Company Snapshot • Norbord is a leading manufacturer of wood-based panel Panel Capacity by Region products and one of the largest global producers of OSB ─ I Installed OSB capacity of over 5 Bsf t ll d OSB it f 5 B f ─ 1,950 employees at 13 plants across the US, Europe Europe and Canada 27% US • 61% Listed on TSX (“NBD”) 6.1 Bsf 6 1 Bsf • Reports in US dollars and in accordance with IFRS • As at March 29, 2014: Canada 12% ─ Total assets of $1,213 million ─ LTM sales of $1,281 million LTM sales of $1 281 million ─ LTM EBITDA of $203 million Europe CANADA Oriented Strand Board Oriented Strand Board Medium Density Fibreboard Particleboard UNITED UNITED STATES KINGDOM GERMANY Furniture BELGIUM North FRANCE America 3
I. COMPANY OVERVIEW Norbord’s Products • Norbord’s operations include 11 OSB mills, two particleboard mills, one medium density fibreboard (“MDF”) mill and one furniture plant y ( ) p OSB – 84% of Capacity • New home construction • R Repair and remodel i d d l • Light commercial construction • Industrial applications Particleboard Particleboard – 10% of Capacity 10% of Capacity • New home construction • Repair and remodel • Furniture • Fixtures Fixtures MDF – 6% of Capacity • Furniture • Fixtures • Mill work 4
II. INDUSTRY OVERVIEW 5 Roof Roof Flooring Typical Uses for OSB Products Walls
II. INDUSTRY OVERVIEW Norbord Operates in the Two Significant Global OSB Markets Industry OSB Capacity (MMsf 3/8”) Industry OSB Capacity (MMsf 3/8 ) 30 20 10 0 0 North Europe South Asia America America Source: Company Documents and Other Public Filings 6
II. INDUSTRY OVERVIEW Norbord a Significant Player in Both Key Markets y North American OSB Industry o t e ca OS dust y European OSB Industry u opea OS dust y Other Smartply Louisiana- 7% 6% Egger Pacific* Tolko 8% 22% 8% Kronospan Huber 37% Sonae 8% 13% Industry Industry Capacity C C Capacity Ainsworth* 9% 28 Bsf 5 Bsf Georgia- Pacific 19% Norbord Weyer- 14% haeuser 11% Kronoswiss Norbord 21% 16% Source: Company Documents and Other Public Filings - Installed Capacity 7 *On September 4, 2013, Louisiana-Pacific announced an agreement to acquire all of the outstanding common shares of Ainsworth
II. INDUSTRY OVERVIEW Demand Growth Ahead in Both Key Markets OSB Share of Structural Panels 75% 75% 50% North America 25% Europe 0% 80 85 90 95 00 05 10 Source: FEA and Norbord Estimates 8
II. INDUSTRY OVERVIEW US Housing Starts Recovery is Real • Leverage to US housing recovery • Favourable long-term OSB industry fundamentals Favourable long term OSB industry fundamentals US Housing Starts (millions) 2 0 2.0 OVER built 1.5 UNDER built 1.0 Housing Starts g 0 5 0.5 Underlying Demand 0.0 Source: FEA 9
II. INDUSTRY OVERVIEW Additional OSB Capacity Restarting to Meet Additional Demand North American OSB Installed Capacity: 38 Mills in Operation 8 Mills Indefinitely Curtailed 6 Mill 6 Mills (Re)started in 2013 (R ) t t d i 2013 Norbord Mill Source: Company Documents and Other Public Filings 10
II. INDUSTRY OVERVIEW North American OSB Market Will Tighten as 2014 Progresses g Industry OSB Volume (Bsf 3/8”) 7 7 Operating Mills Nameplate Capacity 6 Effective Capacity 5 Demand 4 3 Q1 Q2 Q3 Q4 Source: Norbord Estimates 11
II. INDUSTRY OVERVIEW Attractive OSB Outlook • OSB prices are tied to demand for building products, which is influenced by the general economy, demographics and the need for housing g y g p g • With US housing recovering, OSB prices are projected to remain above trend North Central Benchmark OSB Price 400 350 C Price 16" 300 300 nnual Average NC US$ per Msf 7/1 10 year average 250 200 An 150 100 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F 2015F 2016F Sources: Random Lengths and FEA 12
II. INDUSTRY OVERVIEW Core European Housing Markets Recovering Housing Starts (000s) 300 250 Germany +12% per year Germany 12% per year 200 150 UK +30% in 2013 100 100 50 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 2014F 2014F Source: National House Builder Confederation (NHBC) , Construction Products Association (CPA) & Bundesbank 13
III. BUSINESS STRATEGY Norbord’s Strategy Focused on Growth in OSB • • Pursue growth in OSB Pursue growth in OSB • Own highest-quality assets with lowest cost position • Maintain a margin-focused operating culture • Focus on growth customers through best-in-class service and product development • Allocate capital with discipline 14
III. BUSINESS STRATEGY Norbord’s Growth Focused on OSB Norbord OSB Capacity (Billion Square Feet 3/8”) 6 5 5 4 3 3 2 1 0 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 15
III. BUSINESS STRATEGY Disciplined Capital Allocation • Track record of disciplined capital Capex Investment (US$ millions) allocation $180 ─ Accretive acquisitions $160 ─ Low cost capacity additions $140 ─ Divestment of non-core assets $120 $100 ─ Deleverage on cyclical upturns $80 $80 ─ Dividends $60 ─ Share buybacks $40 $20 $0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F Capex Greenfield Expansion 16
IV. FINANCIAL OVERVIEW Norbord’s Financial House Is In Order Manageable Debt Maturities (1) Strong Liquidity Strong Liquidity Q1 2014 US$ millions 300 Cash 117 llions 245 240 250 Revolving Bank Lines Bank Lines 242 242 5.375% 5 375% 200 200 Bank Lines B k Li alue - US $ mi 200 Bonds (Undrawn) 7.70% A/R Sec. (1) 100 Bonds 150 Liquidity 459 Principal Va 100 100 Stable Issuer Credit Ratings 50 Moody’s oody s Ba2 (Stable) a (S ab e) 0 2015 2016 2017 2018 2019 2020 S&P BB- (Positive) DBRS BB (Stable) (1) In addition, the Company has an undrawn $100 million 1-year evergreen A/R securitization program. 17
IV. FINANCIAL OVERVIEW Strong Operating Cash Flow Through Cycle g y Total EBITDA (US$ millions) Norbord Sensitivity to North American $700 OSB Price Changes: 631 $600 +$10/Msf 7/16” = +$36 million EBITDA 495 495 (at f ll capacit ) (at full capacity) $500 $400 287 287 $300 $300 10 10 year average 247 $198 million 203 188 $200 107 $100 45 45 42 42 0 $0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 LTM ($100) (60) North Central North Central 369 320 217 161 172 163 219 186 271 315 266 Benchmark OSB Price 18
IV. FINANCIAL OVERVIEW Stable Results Continue from European Operations p p • Norbord’s European operations provide greater sales and earnings diversification than other North American-based competitors European EBITDA (US$ millions) $100 81 81 $80 58 $60 49 49 46 46 44 39 37 35 $40 32 17 $20 $20 4 $0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 LTM 19
V. SUMMARY Attractive Investment Opportunity • Leverage to unfolding US housing recovery ─ Every +$10 in NA OSB price = +$36 million in EBITDA at full capacity Every $10 in NA OSB price $36 million in EBITDA at full capacity • Stable EBITDA contribution from European operations • Low-cost operating platform • Superior margins versus peers Superior margins versus peers • Track record of disciplined capital allocation • Strong financial liquidity and comfortable debt maturities • Dividend yield of 8% (at current share price) Dividend yield of 8% (at current share price) 20
Barclays High Yield Bond & Barclays High Yield Bond & Syndicated Loan Conference Robin Lampard SVP & CFO Robin Lampard, SVP & CFO Phoenix, AZ - May 2014
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