Q2 2014 Investor Presentation August 2014 Forward-Looking - PowerPoint PPT Presentation

Q2 2014 Investor Presentation August 2014

Forward-Looking Statements and Non-IFRS Financial Information • 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 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

I. COMPANY OVERVIEW Company Snapshot • Norbord is a leading manufacturer of wood-based panel Panel Capacity by Region products and one of the largest global producers of OSB ─ Installed OSB capacity of over 5 Bsf ─ 1,950 employees at 13 plants across the US, Europe Europe and Canada 27% US • Listed on TSX (“NBD”) 61% 6.1 Bsf • Reports in US dollars and in accordance with IFRS • As at June 28, 2014: Canada 12% ─ Total assets of $1,196million ─ LTM sales of $1,227 million ─ LTM EBITDA of $134 million Europe CANADA Oriented Strand Board Medium Density Fibreboard Particleboard UNITED UNITED STATES KINGDOM B GERMANY Furniture BELGIUM North FRANCE America 3

I. COMPANY OVERVIEW Norbord’s Products Norbord’s operations include 11 OSB mills, two particleboard mills, one • medium density fibreboard (“MDF”) mill and one furniture plant OSB – 84% of Capacity • New home construction • Repair and remodel • Light commercial construction • Industrial applications Particleboard – 10% of Capacity • New home construction • Repair and remodel • Furniture • Fixtures MDF – 6% of Capacity • Furniture • Fixtures • Mill work 4

II. INDUSTRY OVERVIEW Typical Uses for OSB Products Roof Walls Flooring 5

II. INDUSTRY OVERVIEW Norbord Operates in the Two Significant Global OSB Markets Industry OSB Capacity (MMsf 3/8”) 30 20 10 0 North Europe South Asia America America Source: Company Documents and Other Public Filings 6

II. INDUSTRY OVERVIEW Norbord a Significant Player in Both Key Markets North American OSB Industry European OSB Industry Kalavela Other Louisiana- 5% 7% Smartply Tolko Pacific 6% 22% 8% Kronospan Sonae 33% 8% Huber 8% Industry Industry Capacity Capacity Egger Ainsworth 28 Bsf 6 Bsf 12% 9% Georgia- Pacific 19% Norbord Weyer- 12% haeuser Kronoswiss 11% 24% Norbord 16% Source: Company Documents and Other Public Filings - Installed Capacity 7

II. INDUSTRY OVERVIEW Demand Growth Ahead in Both Key Markets OSB Share of Structural Panels 75% 50% North America 25% Europe 0% 80 85 90 95 00 05 10 Source: FEA and Norbord Estimates 8

II. INDUSTRY OVERVIEW US Housing Starts Recovery is Real • Leverage to US housing recovery • Favourable long-term OSB industry fundamentals US Housing Starts (millions) 2.5 2.0 OVER built 1.5 UNDER 1.0 built 0.5 Housing Starts Underlying Demand 0.0 Source: FEA 9

II. INDUSTRY OVERVIEW Additional OSB Capacity Restarted to Meet Growing Demand North American OSB Installed Capacity: 38 Mills in Operation 8 Mills Indefinitely Curtailed 6 Mills (Re)started in 2013 Norbord Mill Source: Company Documents and Other Public Filings 10

II. INDUSTRY OVERVIEW Attractive OSB Outlook • OSB prices are tied to demand for building products, which is influenced by the general economy, demographics and the need for housing • With US housing recovering, OSB prices are projected to remain above trend North Central Benchmark OSB Price 400 350 Annual Average NC Price US$ per Msf 7/16" 300 10 year average 250 200 150 100 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F 2015F 2016F Sources: Random Lengths and FEA 11

II. INDUSTRY OVERVIEW Core European Housing Markets Recovering Housing Starts (000s) 300 250 Germany +12% per year 200 150 UK +30% in 2013 100 50 2009 2010 2011 2012 2013 2014F Source: National House Builder Confederation (NHBC) , Construction Products Association (CPA) & Bundesbank 12

III. BUSINESS STRATEGY Norbord’s Strategy is 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 13

III. BUSINESS STRATEGY Norbord’s Growth Focused on OSB Norbord OSB Capacity (Billion Square Feet 3/8”) 6 5 4 3 2 1 0 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 14

III. BUSINESS STRATEGY Low Cost Margin-Focused Operating Platform • Low cost operating platform providing superior margins versus peers North American OSB EBITDA Margin % 50% 40% 30% 20% 2008 40% 50% 2005 2006 2007 North American peer (1) 2009 2010 2011 2012 Norbord 20% 30% 0% 10% -10% -20% -30% 10% 0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 LTM -10% -20% -30% Norbord North American peer (1) Source: Company Documents and Other Public Filings (1) North American peer = Louisiana-Pacific 15

III. BUSINESS STRATEGY Margin Improvement is an Operational Priority • Margin Improvement Program MIP Gains (US$ millions) (MIP) gains help offset impact of industry-wide rising input costs, 56 without capex investment: $60 ─ Increased productivity $50 37 $40 ─ Reduced overhead costs 29 28 $30 25 23 ─ Reduced raw material usage 16 $20 14 ─ Improved product mix 9 $10 0 $0 (1) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 (1) The benefits of improved productivity and a richer value-added product mix were offset by higher maintenance spending in 2013. 16

III. BUSINESS STRATEGY Customer Strategy Sets Norbord Apart • New housing sales volume growing as US housing starts recover • Pro-dealer shipments now represent 50% of Norbord sales volume 2011 Q2 2014 (annualized) Industrial 20% 30% New Home 35% NA NA Construction Shipments Shipments 50% (Pro-dealers) 3.4 Bsf 2.9 Bsf 30% 35% Repair & Remodel (Big Box) 17

III. BUSINESS STRATEGY Disciplined Capital Allocation • Track record of disciplined capital Capex Investment (US$ millions) allocation $180 ─ Accretive acquisitions $160 ─ Low cost capacity additions $140 ─ Divestment of non-core assets $120 $100 ─ Deleverage on cyclical upturns $80 ─ Dividends $60 ─ Share buybacks $40 $20 $0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014F Capex Greenfield Expansion 18

IV. FINANCIAL OVERVIEW Strong Operating Cash Flow Through Cycle Total EBITDA (US$ millions) Norbord Sensitivity to North American $700 OSB Price Changes: 631 +$10/Msf 7/16” = +$36 million EBITDA $600 (at full capacity) 495 $500 $400 287 10 year average $300 247 $198 million 188 $200 134 107 $100 45 42 0 $0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 LTM ($100) (60) North Central 369 320 217 161 172 163 219 186 271 315 234 Benchmark OSB Price 19

IV. FINANCIAL OVERVIEW Stable Results Continue from European Operations Norbord’s European operations provide greater sales and earnings • diversification than other North American-based competitors European EBITDA (US$ millions) $100 81 $80 58 $60 49 46 44 39 37 35 $40 32 17 $20 4 $0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 LTM 20

IV. FINANCIAL OVERVIEW Norbord’s Financial House Is In Order Manageable Debt Maturities (1) Strong Liquidity Strong Liquidity Q2 2014 US$ millions 300 Cash 83 Principal Value - US $ millions 245 240 250 Revolving Bank Lines 242 5.375% 200 Bank Lines 200 Bonds (Undrawn) 7.70% A/R Sec. (1) 100 Bonds 150 425 Liquidity 100 Stable Issuer Credit Ratings 50 Moody’s Ba2 (Stable) 0 2015 2016 2017 2018 2019 2020 S&P BB- (Positive) DBRS BB (Stable) (1) In addition, the Company has an undrawn $100 million 1-year evergreen A/R securitization program. 21

V. SUMMARY Attractive Investment Opportunity • Leverage to unfolding US housing recovery ─ Every +$10 in NA OSB price = +$36 million in EBITDA at full capacity • Stable EBITDA contribution from European operations • Low-cost operating platform • Superior margins versus peers • Track record of disciplined capital allocation • Strong financial liquidity and comfortable debt maturities • Dividend yield of 10% (at August 27 th C$23.19 closing share price) 22

Appendices 23