Investor Presentation September 2019
2 General: This presentation and comments associated with it contains securities regulatory authorities. Accordingly, readers should exercise historical information, descriptions of current circumstances and caution in relying upon forward-looking- statements and WFT undertakes statements about potential future developments and anticipated financial no obligation to publicly update or revise any forward-looking statements, results. Readers are cautioned that this presentation is qualified in its whether written or oral, to reflect subsequent events or circumstances entirety by reference to, and must be read in conjunction with, the except as required by applicable securities laws. information contained in West Fraser Timber Co. Ltd.’s (WFT’s) management’s discussion and analysis for the year ended December 31, Non-IFRS Measures: This presentation makes reference to certain non- 2018 (MD&A), available on SEDAR (www.sedar.com). A person is not IFRS measures, such as Adjusted EBITDA. Non-IFRS measures do not entitled to rely on parts of the information contained in this presentation to have a standardized meaning prescribed by IFRS and are therefore the exclusion of others. unlikely to be comparable to similar measures presented by others. For further information regarding the use of non-IFRS measures please refer Forward-looking Statements: This presentation contains “forward - to the “Non - IFRS Measures” section in the MD&A. looking statements” within the meaning of applicable securities laws. Forward-looking statements, are presented to provide reasonable External Information: Where this presentation quotes any information or guidance to the reader but their accuracy depends on a number of statistics from any external source, it should not be interpreted that WFT assumptions and is subject to various risks and uncertainties. In some has adopted or endorsed such information or statistics as being accurate. cases, forward-looking statements can be identified by the use of Some of the information presented herein is based on or derived from forward- looking terminology such as “plans”, “targets”, “expects” or “does statements by third parties and has not been independently verified by or not expect”, “an opportunity exists”, “outlook”, “prospects”, “strategy”, on behalf by WFT, and no representation or warranty, express or implied, “intends”, “believes”, or variations of such words and phrases or state is made as to, and no reliance should be placed on, the fairness, that certain actions, events or results “may”, “could”, “would”, “might”, accuracy, completeness or correctness of this information or any other “will”, “will be taken”, “occur” or “be achieved”. In addition, any statements information or opinions contained herein. that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward- Currency: In this presentation, all amounts are in Canadian dollars, looking information. Statements containing forward-looking information unless otherwise indicated. are not historical facts but instead represent management’s expectations, estimates and projections regarding future events or circumstances . By their nature, forward-looking statements involve numerous assumptions, Terminology : References in this presentation to “ MMfbm ” or “ mmfbm ” inherent risks and uncertainties, both general and specific, which mean million board feet, “SPF” means spruce -pine- fir and “SYP” means contribute to the possibility that the predictions, forecasts and other southern yellow pine. For any other technical terms used in this forward-looking statements will not occur. Actual outcomes and results of presentation, please see the Glossary of Industry Terms found in our these statements will depend on a number of factors including those most recent Annual Report. matters described under “Risks and Uncertainties”, in our MD&A and may differ materially from those anticipated or projected. Reference should be made to the other factors discussed in public filings with
West Fraser Overview
We Attain Value from 100% of Our Resources 4 Sustainably managed forest lands Plywood & LVL Lumber Reforestation Sawdust & shavings Chips Bark (fuel) MDF Supply agreements BCTMP Pulp NBSK Pulp Bioproducts Heat & (e.g. pellet plants) Electricity Integrated fiber strategy to maximize the value of the log
Product & Geographic Diversification 5 Lumber Panels Pulp & Paper 7 mills 33 mills 5 mills Plywood: 860 MMsf3/8” SPF 3.6 Bfbm NBSK: 570 Mtonnes 250 MMsf3/4” SYP 3.2 Bfbm MDF: BCTMP: 690 Mtonnes Total 6.8 Bfbm LVL: 2.6 MMcf Newsprint: 135 Mtonnes 2018 Revenue Mix by Business Segment Lumber Panels Pulp 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2018 Revenue Mix by Country Canada China Other US 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Diversified across multiple end uses
Operations Diversification 6 Strong presence in key lumber producing regions and forest product markets
North American Lumber Capacity 7 2018 West Fraser Lumber Capacity 2004 2.8 Billion feet US South West Fraser 11% Alberta Canfor 12% Weyco British Top 10 represent Interfor Columbia 77% 48% of capacity GP West Fraser Lumber Capacity 2018 7.1 Billion feet Sierra Pacific British Columbia Resolute 31% US South Hampton 45% Tolko Idaho Forest Alberta 24% 0 2000 4000 6000 8000 Note: Pro-forma capacity after Chasm/100 Mile MMfbm permanent curtailment: 6.8 B ft (BC 27% of capacity) West Fraser has largest share of a growing market Source: Public filings, Forest Economic Advisors and West Fraser estimates
Consolidated Financial Results 8 $ Millions Adjusted EBITDA Q2-19 Q1-19 Q2-19 Q1-19 Sales $ 1,317 $ 1,241 Lumber $ 38 $ 84 Cost and Expenses 1,375 1,231 Panels 10 15 Restructure/Impairment 26 - Pulp & Paper 7 11 Operating earnings (84) 10 Corporate/Other 1 - Finance Expense (13) (11) Total $ 56 $ 110 Other (6) (5) EBITDA margin 4.2% 8.9% Earnings before Tax $ (103) $ (6) Tax recovery 45 1 Net earnings $ (58) $ (5) Diluted EPS $ (0.92) $ (0.12) Challenging conditions continue * Adjusted EBITDA is defined as operating earnings plus amortization, equity based compensation, restructuring and impairment charges and export duties.
Liquidity 9 Scheduled maturities Available liquidity $900 $800 $900 $800 $700 $700 $600 $600 $500 $500 $400 $400 $300 $300 $200 $200 $100 $100 $0 $0 2017 2018 Q1-17 Q1-18 Q1-19 Q2-19 -$100 2019 2020 2021 2022 2023 2024 Bank lines Cash Increae in revolving credit facility Term loan Notes Revolver Ample financial flexibility Cash consists of cash and short-term investments less cheques issued in excess of funds on deposit.
Capital Investment 10 10 Capital Expenditure vs Amortization $400 200% Grade $350 $300 150% Capacity / Recovery $250 Production $200 100% $150 $100 50% $50 Modernization initiatives $0 0% 2015 2016 2017 2018 Capital Depreciation Percent Segment Capital Expenditure Capital Expenditure by type $10 $17 $60 $117 $16 $236 $284 Lumber Panels Pulp and Paper Corporate Profit improvement Maintenance Safety Consistent investment in the operations
Balanced Capital allocation 11 11 2015 through 2018 $3,000 $2,801 $1,199 $1.1B returned to $2,500 shareholders $2,000 $602 $1,500 $100 $110 $942 $1,000 $500 $1.8B Reinvested in the business $42 $90 $0 Cash from Capital Acquisitions Debt service Dividends Buybacks Other Retained cash operations Expenditure and leverage flow Debt, Other & Retained , -2% Buybacks & Dividends, 38% Consistently deploying Capital Expenditure, capital to create value 43% Acquisitions, 21%
Share repurchases 12 12 Cumulative investment in repurchases Price: Shares: (millions of dollars) 2013 $44.60 64,554 $1,138 $1,200 $1,057 $1,000 2014 $51.86 2,217,454 $800 2015 $55.57 1,078,856 $600 $381 $364 $400 2016 $44.06 4,306,159 $174 $115 $200 $3 2017 $68.45 245,645 $0 2013 2014 2015 2016 2017 2018 2019 2018 $83.13 8,135,796 2019 $68.30 1,178,400 To date $66.05 17,226,864 Total volume traded (000) 150,000 100,000 As of June 30, 2019 50,000 0 2013 2014 2015 2016 2017 2018 Ytd June-19 annualized Consistently buying back shares, trading liquidity remains robust
West Fraser Total Shareholder Return 13 13 TSR June 2006 to June 2019 Share Value Traded Cdn$ Million 14% 10,000 Source: TD 12% 11.0% 10.4% 8,000 10% 6,000 8% 6.5% 5.5% 5.4% 4,000 6% 5.1% 4.2% 4% 2,000 2% 0 0.4% 2018 2017 2016 0% West Dow DAX S&P/TSX FTSE Competitor Competitor Competitor WFT CFP IFP Fraser A B C ✓ Proven ability to generate strong cash flow, even in difficult markets ✓ Consistent, straightforward business plan ✓ Loyal, long-term employee and management base ✓ Conservative financial management coupled with proven ability to grow strategically ✓ Strong historical shareholder returns
Market Overview
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