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

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

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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 14, 2019 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%, and Adj. EPS growth of 16% • 43 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 • Share repurchase plan in place and being utilized • +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 December 31, 2018

History of Growth and Diversification 2010 2018 2014 10% 15% Sales Mix 20% by Market 15% 50% 20% 40% 60% Residential 70% Commercial Diversified 10% 25% Sales Mix 40% by Country 60% 75% 90% USA Canada Locations 26 32 62 + 2,100 + 10,000 + 35,000 Customers 2 5

Critical Role in the Value Chain Approximately 1,000 Suppliers Worldwide No significant supplier concentration (largest less than 6% of purchases) Manufacturers 62 Locations North American Sales Team Architects & Designers 440 Strong Residential Commercial Customer Base + 35,000 Diversified 10% Customers 50% Customers 40% No customer concentration (largest less than 2% of sales) 6

Comprehensive North American Network Estimated N.A market share = 10% Revenue by Country 10% 90% 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 • Approximately 25% of the products are exclusive or semi-exclusive offerings • Includes globally sourced, proprietary brands Decorative • Includes high-pressure laminates (“HPL”), ~22% of sales Surfaces thermally fused laminates (“TFL”), and engineered and Composites panels such as medium density fiberboard (“MDF”) and particle board. Hardwood • ~34% of sales Extensive selection of plywood and veneer Plywood products, available on virtually any core. Includes private labelled products. Hardwood • ~22% of sales All species, cuts, and grades of hardwood lumber, Lumber includes specialty items from exotic markets. Other • ~22% of sales Includes doors, millwork, mouldings, solid Architectural surfaces, cabinet hardware, casework Building components, cabinets, countertops, adhesives, and coatings. Products 8

FY 2018 – Summary Statistics HDI ($CAD) (millions) FY 2018 FY 2017 Chng Chng % +8.5% Sales $1,134 $1,046 +$88 US Organic ($USD) +$46.4 +6.6% US Acquisitions ($USD) +$20.4 +3.0% CAD Organic ($CAD) +$3.8 +2.8% Gross Profit $201 $192 $9.0 +4.5% Gross Profit % 17.7% 18.3% Operating Expenses $154 $143 $11 +8.0% Operating Expenses % 13.6% 13.7% Adjusted Profit $35 $33 $2 +4.6% +4.5% Adjusted diluted EPS $1.61 $1.54 $0.07 9

Track Record of Growing Sales with Stable Margins Sales Growth % 21% 23% 25% 38% 31% 9% 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% 5% (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 Long Term Growth Strategy • Anticipated market growth of 2% per year • Strategic initiatives yielding an additional 2% - 4% per year • Acquisitions targeting another 3% - 5% per year +$1.5 billion $175 m $150 m $125 m +$1.1 billion $1.1 $1.5 2018 1. Market 2. Organic 3. Acquisitions 2023 Growth Growth 11 12

1. US Construction Market, Capture Share 2,500 Housing starts (in Prolonged period of below-average Residential Construction 2,000 construction, potential for catch up growth millions) 1,500 • Population growth / demographics suggest pent up demand 1,000 • Supply of existing homes at an all time low 500 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019E 2020E Per National Association of Home Builders Commercial Construction • Consistent demand for new projects • Strong N.A economy Per FMI Consulting; Construction Outlook Q4 2018 Report 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 43 U.S. locations acquired in the last 5 • Robust acquisitions pipeline, dedicated internal resources years, + $550MM in revenue added • Attractive purchase multiples, accretive Acquisition Target Price Paid Annual Revenues Optimization Plan Date (US $) at acquisition (US $) Status and Highlights • Strategic HR: Leverage HDI existing leadership in the region 2019 $3.6 M $12 M • Financial strength: Provide liquidity • Status: Ongoing • 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