INVESTOR PRESENTATION FIRST QUARTER 2018 TSX: HDI www.hdidist.com - PowerPoint PPT Presentation

INVESTOR PRESENTATION FIRST QUARTER 2018 TSX: HDI www.hdidist.com

Oak Retro Baltimore Dark Brown Crystalite Charleston Oak Rain Cloud Antique Oak Icy Mherge

Forward Looking Statement Certain statements contained in this presentation, including all statements that are not historical facts, contain forward-looking statements and forward-looking information within the meaning of applicable securities laws. Forward-looking statements normally contain words like believe, expect, anticipate, plan, intend, continue, estimate, may, will, should and similar expressions. Such statements are not guarantees of future performance. They are based on management's expectations and assumptions regarding historical trends, current conditions and expected future developments, as well as other factors that we believe are appropriate in the circumstances. Management has based these statements on estimates and assumptions that they believed were reasonable when the statements were prepared. Actual results could be substantially different because of the risks and uncertainties associated with the Company's business. More information about the risks and uncertainties affecting the Company's business can be found in the "Risk Factors" section of our Annual Information Form dated March 15, 2018 which is available under the Company's profile at SEDAR (www.sedar.com). Although we have attempted to identify factors that would cause actual actions, events or results to differ materially from those disclosed in the forward-looking statements or information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Also, many of the factors are beyond the control of Hardwoods. Accordingly, readers should not place undue reliance on forward-looking statements or information. Hardwoods undertakes no obligation to reissue or update any forward-looking statements or information as a result of new information or events after the date hereof except as may be required by law. All forward-looking statements and information herein are qualified by this cautionary statement. 2 3

Hardwoods is the #1 Distributor of Architectural Building Products in N.A.  The largest distributor of architectural building products with +1,100 employees, 63 locations, and annual sales of over $1 billion.  Publicly traded company on the TSX (HDI) with a market capitalization of +$400 million (1) .  Positioned to capitalize on U.S. housing and Import: Guararapes MDF: Commercial fixtures non-residential construction growth, with approximately 85% of revenues derived from the U.S.  Proven acquisition strategy, with 39 US locations acquired in the past 7 years, totaling approximately $535 million of annual revenue added.  Attractive returns with total shareholder Domestic Supplier: Arauco TFL: Residential Use return over the last three years of 52% (1) . 4 (1) Measured as at March 31, 2018

Critical Role in the Value Chain Approximately 1,000 Suppliers Worldwide Manufacturers 62 Distribution Locations North American Architects & Designers Sales Team 330 Strong Residential Commercial Customer Base Diversified 20% Customers 50% Customers 30% 37,000 + 5

Comprehensive North American Network Estimated N.A market share = 10% Revenue by Country 15% 85% Canada U.S.  Proven market leader for 50+ years in a fragmented industry  Diversified customer and supplier base, no significant concentration  Experienced management team, on average 15+ years with the Company 6

Our Products Decorative • Includes high-pressure laminates (“HPL”), thermally fused laminates (“TFL”), and engineered Surfaces Proportion of panels excluding hardwood plywood such as and Composites medium density fiberboard (“MDF”) and particle Sales board. 20 24 % % Hardwood • Extensive selection of plywood and veneer 23 33 products, available on virtually any core. Includes Plywood % % private labelled products. Decorative Surfaces and Composites Hardwood • All species, cuts, and grades of hardwood lumber, Hardwood Plywood Lumber includes specialty items from exotic markets. Hardwood Lumber Other Architectural Other Building Products • Includes doors, millwork, mouldings, solid Architectural surfaces, cabinet hardware, casework components, cabinets, countertops, adhesives, Building and coatings. Products 7

Track Record of Growing Sales with Stable Margins • Gross margin trades within a stable band Price changes passed through to customers (1) 2016 year includes approximately five and a half months of Rugby’s operations 8 8

Track Record of Earnings Growth • Sales increase results in consistent EBITDA growth (1) “Adjusted EBITDA” and “Adjusted EBITDA Margin” are non-IFRS and non-GAAP measures. See the Company’s Annual Report filed on SEDAR.com for a reconciliation of these measures to IFRS and GAAP measures. (2) 2016 year includes approximately five and a half months of Rugby’s operations 9 9

Accretive Growth For Shareholders • EBITDA growth translates to increases in profit (1) “Adjusted Profit” and “Adjusted EPS” are non-IFRS and non-GAAP measures. See the Company’s Annual Report filed on SEDAR.com for a reconciliation of these measures to IFRS and GAAP measures. (2) 2016 year includes approximately five and a half months of Rugby’s operations 10

Growth Plan: Capitalizing on Opportunities Organic 1) Improvements in U.S. housing market 2) Market leadership in core wood products 1) Growth in decorative surfaces and composites Shinnoki: Dusk Frake Living Room 2) Support our brands to achieve operational excellence Acquisitions • Further geographic diversification • Capture additional market share Tafisa: Smoothwood Nutmeg Residential Kitchen 11 11

Organic Growth: U.S. Housing Market Residential Construction • Prolonged period of below-average Meaningful multi year growth projected construction, potential for catch up growth • Population growth suggests there is significant pent up demand • Supply of existing homes at an all time low Per National Association of Home Builders, as at March 2018 Commercial Construction • Consistent demand for new projects • Strong N.A economy Per FMI Consulting; Construction Outlook Fourth Quarter Report 12 13 12

Organic Growth: Market Leadership in Core Wood Products • Core products: Hardwood lumber, Hardwood Plywood • Range of market share by brand, by location • Optimize market share opportunity  Product knowledge experts  Long-term industry relationships  Global sourcing advantage  Breadth of product portfolio 13

Organic Growth: Decorative Surfaces and Composites • High-growth product segment • Design trends and market preferences changing at a rapid pace • Opportunity to take advantage Decorative Surfaces Est. Market Share  Size, scale allows us to make investments to identify the next trend and respond 7%  N.A wide network that is attractive to manufacturers – provides us premier access to product and can be on an exclusive basis  Global sourcing solutions enable us to develop proprietary products 93%  One of the largest distributor employed specification rep teams in the industry 14

Organic Growth: Operational Excellence • HDI supports brands in the market place • Competitors generally will not have same support structure in place • Potential to build a sustainable competitive advantage Regional Competitor  Collaborative Marketing  Strategic HR  Financial Strength  Professional Sales and Product Training  Supply Chain Optimization  Technology Solutions 15

Acquisition Track Record • Significant market share available, fragmented industry • Robust acquisitions pipeline, dedicated internal resources • Financial capacity to execute March 2017 June 2016 July 2017 Price: $0.6 MM Price: US$107.0 MM Price: $6.0 MM 39 U.S. locations acquired in the last 5 years, EAGLE approximately $535MM PLYWOOD in revenue added • • Build on eastern US presence Increased eastern US presence • Took out a competitor • • Foothold in eastern US lumber Increased presence in the • Added key sales people market commercial market April 2014 May 2013 September 2011 Successfully completed Price: $15.0 MM Price: $2.8 MM Price: $13.5 MM 6 acquisitions in the last 7 years • Increased commercial exposure • • Expanded import lumber capabilities Increased commercial exposure, • Diverse/International customers leverage imports • New geographic markets 16

Macro Outlook Tailwinds Headwinds  U.S. Construction Market Growth  U.S trade environment  Residential and non-residential  Supply / demand adjusting low-to-mid single digit organic to US duties on hardwood growth plywood from China.  Favorable M&A Environment  Fragmented industry  Family owned businesses with limited succession plan  U.S. Government Policy  Significantly reduced corporate tax rate 17