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

INVESTOR PRESENTATION THIRD 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

HDI is the #1 Distributor of Architectural Building Products in N.A. • Five year average (1) annual sales Outstanding track record of growth growth 25%, Adj. EBITDA growth of 22%, and Adj. EPS growth of 17% • 42 US locations acquired in past Proven acquisitions strategy seven years • $550 million of annual revenue added • HDI market share estimated at 10% Highly fragmented industry Import: Guararapes MDF: Commercial fixtures • Dividend has been increased every Shareholder returns year for the past seven years • +50 year old business Disciplined business model • Experienced management team • Low debt leverage • No significant supplier/customer concentration Domestic Supplier: Arauco TFL: Residential Use 4 (1) Measured from December 31, 2013 to September 30, 2018

History of Growth and Diversification 2010 2018 2014 15% Sales Mix 20% 20% by Market 15% 50% 20% 60% Residential 30% 70% Commercial Other 15% 25% Sales Mix 40% by Country 60% 75% 85% USA Canada Locations 26 32 63 + 2,100 + 10,000 + 35,000 Customers 2 5

Critical Role in the Value Chain Approximately 1,000 Suppliers Worldwide Manufacturers 61 Distribution Locations North American Architects & Designers Sales Team 330 Strong Residential Commercial Customer Base Diversified 20% Customers 50% Customers 30% + 35,000 6

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 7

Our Products Higher value decorative products, generally non-commoditized and subject to stable pricing Decorative • Includes high-pressure laminates (“HPL”), ~20% of sales thermally fused laminates (“TFL”), and engineered Surfaces panels such as medium density fiberboard and Composites (“MDF”) and particle board. Hardwood ~33% of sales • Extensive selection of plywood and veneer Plywood products, available on virtually any core. Includes private labelled products. Hardwood ~23% of sales • All species, cuts, and grades of hardwood lumber, Lumber includes specialty items from exotic markets. Other • Includes doors, millwork, mouldings, solid ~24% of sales Architectural surfaces, cabinet hardware, casework Building components, cabinets, countertops, adhesives, and coatings. Products 8

Latest Quarter – Summary Statistics HDI ($CAD) (millions) Q3 2018 Q3 2017 Chng Chng % +$30.9 +11.9% Sales $290.4 $259.5 US Organic ($USD) +$12.5 +7.0% US Acquisitions ($USD) +$3.8 +2.2% CAD Organic ($CAD) +$0.2 +0.6% Gross Profit $51.4 $47.6 $3.9 +8.1% Gross Profit % 17.7% 18.3% Operating Expenses $39.1 $35.7 $3.4 +9.6% Operating Expenses % 13.5% 13.8% Adjusted EBITDA $15.2 $15.2 - - +2.3% Adjusted diluted EPS $0.43 $0.42 $0.01 9

Track Record of Growing Sales with Stable Margins Sales Growth % 21% 23% 25% 38% 31% 7% Sales Growth % 18% 10% 9% 5% 5% 6% excluding acquisitions and FX translation impact 8 10

Accretive Growth For Shareholders % Increase 100% 9% 52% 4% 15% 4% (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. 11

HDI’s Strategy 1. Market Growth +2% revenue growth per annum VALUE CREATION 2. Strategic Initiatives 4. Optimize the Platform GOAL: $1.5 billion in +2-4% revenue growth per annum Drive improvements in EBITDA margin revenue, +6% EBITDA margin 3. Acquisitions Target 3-5% revenue growth per annum 11 12

1. US Construction Market Improving, Capture Share Residential Construction Prolonged period of below-average construction, potential for catch up growth • Population growth / demographics suggest pent up demand • Supply of existing homes at an all time low Per National Association of Home Builders, August 2018 Commercial Construction • Consistent demand for new projects • Strong N.A economy Per FMI Consulting; Construction Outlook Q3 2018 Report Four-Quarter Moving Rate of Change Remodeling Activity • Homeowner improvements expected to increase 12 13 13 Source: Harvard Joint Centre for Housing

2. Additional Market Share, Strategic Product Categories Decorative Surfaces and Composites Wood Products • • High-growth product segment Core competency of HDI • • Design trends and market preferences Core products: Hardwood lumber, changing at a rapid pace Hardwood Plywood • • Under-represented from a Range of market share by brand, by location market share perspective • Optimize market share opportunity • Opportunity to take advantage Decorative Surfaces Wood Products Est. Market Share Est. Market Share 7% 15% 85% 93% 14

3. Acquisitions, Capitalize on Significant Opportunity • Significant market share available, highly fragmented industry 42 U.S. locations acquired in the last 5 years, approximately • Robust acquisitions pipeline, dedicated internal resources $550MM in revenue added Acquisition Target Price Paid Annual Revenues Optimization Plan (US $) at acquisition (US $) Date Status and Highlights • Strategic HR: Acquire key salespeople 2018 $3.7 M $13 M • Status: Complete • Financial strength: Provide liquidity • Strategic HR: Leverage HDI existing leadership in region 2017 $6.0 M $25 M • EBITDA margin improvement achieved: +50 bps • Status: Ongoing EAGLE • Strategic HR: Acquire key salespeople 2017 $0.6 M $5 M PLYWOOD • Status: Complete • Supply chain: Consolidate vendors, rebates, product access • Marketing: Coordinated approach, enhanced offering • Products: Product differentiation, expertise added • Specification: Add talent, contacts, consolidate teams 2016 $107.0 M $282 M • Strategic HR: Significant addition of talent • Technology: Consolidate operating systems, add functions • Financial strength: Provide liquidity • EBITDA margin improvement achieved: +60 bps • Status: Ongoing • Supply chain: fill in product gaps, unique offering 2014 $15.0 M $30 M • Status: Complete • Supply chain: fill in product gaps, unique offering 2013 $2.8 M $4 M • Status: Complete • Supply chain: Leverage HDI import program, product access • Strategic HR: Acquire talent 2011 $13.5 M $40 M • Financial strength: Provide liquidity • EBITDA margin improvement achieved: +200 bps 15 • Status: Complete

4. Optimize the Platform • HDI supports brands in the market place • Competitors generally will not have same support structure in place • HDI opportunity (represented by the grey color in circles below) to optimize the platform • Potential to build a sustainable competitive advantage Regional Competitor  Supply Chain Optimization  Collaborative Marketing  Professional Sales and Product Training  Specification sales channel  Strategic HR  Technology Solutions  Financial Strength EBITDA Margin 5-7% 3-5% 16