Investor Presentation Q1 2012 May 2012
Forward Looking Statements and Non-IFRS Financial Measures • 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 restated or 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. • 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 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. • 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
Norbord in Brief • 5 Bsf of installed OSB capacity • Assets – $1 billion • 2,000 employees across US, Europe and Canada • Listed on TSX (“NBD” and “NBD.WT”) • Reports in US Dollars and in accordance with IFRS 3
Attractive Investment Opportunity Low-cost operating North American OSB EBITDA Margin % • platform 50% Leverage to housing • 40% recovery Well positioned for 30% • recovery 20% Strong customer • partnerships 10% Diversification from • European operations Strong financial liquidity and • 0% comfortable debt maturities 2005 2006 2007 2008 2009 2010 2011 LTM Significant industry capacity • -10% permanently and indefinitely idled -20% Superior margins versus • Norbord Peers (1) peers Source: Company Documents 4 (1) Peers = volume-weighted average of Louisiana-Pacific and Ainsworth
Norbord Assets Strategically Located Panel Capacity by Region Europe 27% US 6 Bsf 61% Canada 12% Benefits � geographic diversification through European footprint � proximity to markets � proximity to low-cost fibre 5
Norbord a Significant Player in OSB Industry North American OSB European OSB Other Louisiana- Smartply 11% Pacific 6% Egger 20% Tolko 9% 5% Huber Sonae Kronospan 7% 13% 38% Industry Industry Capacity Capacity Georgia- Ainsworth 28 Bsf 5 Bsf Pacific 10% 17% Norbord 13% Weyer- haeuser Kronoswiss 14% Norbord 21% 16% Source: Company Documents - Installed Capacity 6
Norbord Strategy Well Defined Pursue growth in OSB • Own highest-quality assets • with lowest cost position Maintain a margin-focused operating • culture Focus on growth customers through • best-in-class service and product development Allocate capital with discipline • 7
OSB Prices Strong Over the Cycle North Central Benchmark OSB Prices 400 350 US$ per Msf 7/16" 300 14 year Average 250 200 150 100 50 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q1 157 217 261 132 163 175 423 364 285 145 137 154 212 198 203 Q2 195 291 240 190 159 215 443 297 238 156 179 146 295 173 Q3 287 301 171 180 159 381 351 303 181 177 201 178 180 184 178 230 155 140 156 401 264 317 166 165 170 172 191 190 Q4 204 260 207 160 159 293 369 320 217 161 172 163 219 186 Average Source: Random Lengths 8
Strong Operating Cash Flow Through Cycle Total EBITDA US $ Millions 700 631 600 Norbord Sensitivity to North American OSB Price Changes: 495 500 +$10/Msf 7/16” = +$36 million EBITDA (at full capacity) 365 400 300 247 Average $196 million 200 107 89 100 52 45 42 0 (60) 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 LTM (100) NC Benchmark OSB Price 159 293 369 320 217 161 172 163 219 186 188 9
Significant OSB Industry Capacity Curtailment North American OSB Installed Capacity: 36 Mills in Operation 17 Mills Indefinitely Curtailed 15 Mills Permanently Shut/Converted Source: Company Documents 10
OSB Industry Operated at 56% of Capacity in 2011 Operating Mills - unutilized capacity 14% New Mills - 9% never started Industry Operating Mills - 56% Capacity: 15 Bsf Production 28 Bsf in 2011 21% Mothballed Mills Source: APA & Norbord Estimates 11
Customer Strategy Sets Norbord Apart 65% of shipments now directed away from new housing 2005 2011 Industrial 10% 30% 35% New Home 20% Construction 2.9 Bsf 3.6 Bsf (Pro-dealers) 70% 35% Repair & Remodel (Big Box) 12
Low Cost Position Key to Long-Term Success $280 million in margin improvements over 10 years MIP gains help offset impact of Margin Improvement Program Gains industry-wide rising input costs, (US $ Millions) without capex investment: 56 60 50 Increased productivity • 37 40 35 31 29 28 30 25 Reduced overhead costs • 16 20 14 9 Reduced raw material usage 10 • 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Improved product mix • 13
Track Record of Disciplined Capital Allocation Accretive acquisitions Capex Investment • Low cost capacity • additions Cordele Line 2 Greenfield: $135 million for 550 MMsf 3/8” capacity Divestment of non-core • assets Deleverage on cyclical • Sustaining capex upturns $15 million/yr Special dividends • Normal course issuer bids • 14
Strong Results from European Operations Norbord’s European operations provide greater sales and earnings diversification than other North American competitors European EBITDA UK business less reliant on • a housing recovery US $ Millions 100 81 Diverse product offering – 80 • 58 OSB, MDF, PB and value 60 36 44 44 added products 32 35 40 21 29 17 20 4 Premier customer base & • 0 significant market shares M 2 3 4 5 6 7 8 9 0 1 0 0 0 0 0 0 0 0 1 1 T 0 0 0 0 0 0 0 0 0 0 L 2 2 2 2 2 2 2 2 2 2 15
UK-Based Manufacturing Provides Competitive Advantage Norbord is the largest panel producer in the UK Systemic lack of • available housing in the UK Pent up demand • continues to grow Currency trends • favour Norbord’s UK-based manufacturing 16
Demographics Support a US Housing Recovery Housing starts sustainable at 1.5 million per year: US Housing Starts “Demographic forces will lift household growth over the coming decade regardless of whether immigration is 2.5 suppressed or the echo boomers delay forming independent households.” 2.0 50-year Average Millions 1.5 1.0 0.5 0.0 1959 1969 1979 1989 1999 2009 2015F Sources: US Census & APA - The Engineered Wood Association & Harvard Joint Center for Housing Studies 17
US Housing Activity Improving Housing recovery is coming: US Housing Starts New home inventories lowest • in 50 years Actual & Forecast 000’s Existing home inventories at 2,000 • 1,800 10 year lows 1,750 OSB Affordability at generational 1,500 • 1,354 highs OSB 1,250 1,125 945 Cheaper to own a home than 905 • 1,000 rent in most urban centres 765 Plywood 750 609 587 554 Repair & renovation activity • 500 growing 250 Plywood substitution trend • 0 continues in new home 2006 2007 2008 2009 2010 2011 2012F2013F 2014F construction Source: Zelman & Associates 18
Norbord’s Financial House Is In Order Manageable Debt Maturities (1) Strong Liquidity Q1-2012 US$ millions 300 270 Cash 60 Principal Value - US $ millions 240 Revolving 250 Bank Lines 267 Bank Lines 200 7.25% (Undrawn) 200 Bonds Liquidity (2) 327 7.95% Bonds 150 Stable Credit Ratings 100 DBRS BB(low) 50 Moody’s Ba3 0 S&P BB- 2010 2011 2012 2013 2014 2015 2016 2017 (1) In addition, the Company has an $85 million 1 year evergreen A/R securitization program. (2) Excludes a $120M standby loan commitment from Brookfield, which can be used to repay the 2012 bonds if needed. 19
Key Takeaways Norbord well positioned to deliver superior returns High quality assets with low cost position • MIP drives productivity and cost improvement • Benefit through bottom of cycle from geographic • diversification and strong customer partnerships Leveraged to US housing market recovery • Favourable long-term OSB industry fundamentals • Financial house in order • 20
21 Appendices
Financial Sensitivities EBITDA Impact (1) (2) Exposure Change ($ millions) North American OSB $10 per Msf 7/16” + $36 European OSB €10 per m 3 + $7 Canadian dollar $0.01 per Cdn$ + $1 Pound sterling £0.01 per € + $2 (1) Assumes operation at full capacity levels (2) Tax operating loss carry-forwards as at Dec. 31, 2011 – US $172 million, Canada C$76 million, Belgium €37 million 22
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