Q2 2016 Earnings Presentation July 26, 2016 Notices - PowerPoint PPT Presentation

Q2 2016 Earnings Presentation July 26, 2016

Notices Forward-Looking Statements & Non-IFRS Financial Information • All financial references are expressed in US$ unless otherwise noted. • 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 and quarterly 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

Q2 2016 Financial and Operational Highlights • Adjusted earnings of $0.49 per diluted share, a $0.63 improvement over Q2 2015 • Adjusted EBITDA of $94 million, $75 million higher than Q2 2015 • Captured $32 million in cumulative merger synergies ($39 million annualized), 87% of $45 million total commitment • Realized Margin Improvement Program gains of $14 million year-to-date • Record quarterly production at four mills – North American operating mills produced at 96% of stated capacity – European mills produced at 104% of stated capacity • North American manufacturing costs decreased 6% year-to-date • Declared CAD $0.10/share quarterly dividend payable September 21, 2016 3

US Housing Starts 1.20 (in millions) 1.11 1.00 0.93 0.78 0.61 2011 2012 2013 2014 2015 2016F (1) June YTD data: housing starts up 7% and single family starts up 13% YoY (1) Based on US housing economist forecasts Source: US Department of Commerce, except where otherwise noted 4

North American Benchmark OSB Prices 300 264 245 250 242 242 226 221 US $/Msf- 7/16” 215 204 204 North Central 193 200 191 176 South East 174 158 Western Canada 152 150 100 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Spread SE vs NC 19 28 21 11 19 Spread WC vs NC 41 46 38 35 22 Source: Random Lengths 5

European Indicative OSB Prices (1) 240 237 230 230 226 220 € /m 3 220 218 210 200 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 (1) European indicative average OSB price represents the gross delivered price to the largest continental market 6

Financial Summary Q2 Q1 Q2 6 mos 6 mos 2016 2016 2015 2016 2015 (US $ millions, except per share information) Sales $ 447 $ 384 $ 365 $ 831 $ 716 Adjusted EBITDA North America 85 53 11 138 22 Europe 11 10 10 21 17 Unallocated (2) (2) (2) (4) (4) Total 94 61 19 155 35 Earnings (loss) $ 44 $ 23 $ (23) $ 67 $ (60) Adjusted for: Merger transaction costs - - 1 - 8 Costs to achieve merger synergies 2 1 3 3 4 Costs related to High Level Fire 1 - - 1 - Costs on early debt extinguishment - - 25 - 25 Foreign exchange loss on Ainsworth Notes - - - - 28 Gain on derivative financial instrument on Ainsworth Notes - - - - (4) Reported income tax expense (recovery) 10 3 (22) 13 (36) Adjusted pre-tax earnings (loss) 57 27 (16) 84 (35) Income tax (expense) recovery at statutory rate (1) (15) (7) 4 (22) 9 Adjusted earnings (loss) 42 20 (12) 62 (26) Adjusted EPS, basic and diluted 0.49 0.23 (0.14) 0.72 (0.30) (1) Represents Canadian combined federal and provincial statutory rate 7

Adjusted EBITDA Variance Q2 2016 Q2 2016 6 mos 2016 vs. vs. vs. Q1 2016 Q2 2015 6 mos 2015 (US $ millions) Adjusted EBITDA – current period $ 94 $ 94 $ 155 Adjusted EBITDA – comparative period 61 19 35 Variance 33 75 120 Mill nets (1) 24 62 82 Volume (2) 13 10 19 Key input prices (3) 3 5 13 Key input usage (3) 5 4 9 Mill profit share and bonus (2) (3) (4) Other operating costs and foreign exchange (4) (10) (3) 1 Total $ 33 $ 75 $ 120 (1) The mill nets variance represents the estimated impact of change in realized pricing across all products. Mill nets are calculated as sales (net of outbound freight costs) divided by shipment volume. (2) The volume variance represents the impact of shipment volume changes across all products. (3) The key inputs include wood fibre, resin, wax and energy. (4) The other operating costs and foreign exchange category covers all remaining variances including labour and benefits, and maintenance. 8

Liquidity and Capital Resources Q2 Q1 Q2 6 mos 6 mos 2016 2016 2015 2016 2015 (US $ millions, except per share information) Cash provided by (used for) operating activities $ 83 $ 3 $ (3) $ 86 $ (55) Cash provided by (used for) operating activities per share 0.97 0.04 (0.04) 1.01 (0.64) Operating working capital 163 172 151 Investment in property, plant and equipment & 23 11 15 34 28 intangible assets • 2016 regular capex budget is $75 million • 2016 estimated capex of $45 million on $135 million Inverness project 9

Balance Sheet Jun 25, Mar 26, Dec 31, Jun 27, Bank Covenant 2016 2016 2015 2015 (US $ millions, unless otherwise noted) Long-term debt, principal value $ 755 $ 755 $ 755 $ 755 Add: Other long-term debt (1) - 55 30 50 Less: Cash (12) (14) (9) (10) Net debt 743 796 776 795 Less: Other long-term debt (1) - (55) (30) (50) Add: Letters of credit 8 8 5 4 Net debt for financial covenant purposes 751 749 751 749 Tangible net worth Min. $500 (2) 799 740 724 738 Net debt to capitalization, book basis Max. 65% 48% 50% 51% 50% Liquidity of $374 million = $12 million in cash + $237 million in unused credit lines + $125 million undrawn A/R securitization (1) Drawings under A/R securitization program (carved out of Net debt for financial covenant purposes) (2) TNW was reset to $500 million from $450 million when the bank lines were renewed in June 2016. 10

Appendices

Appendices OSB Prices Strong Over the Cycle Historical North Central Benchmark OSB Price $400 $350 $300 Annual Average NC Price US$ per Msf 7/16" $250 15-year average $200 $150 $100 $50 $0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q1 163 175 423 364 285 145 137 154 212 198 203 417 219 193 226 Q2 159 215 443 297 238 156 179 146 295 173 235 347 219 193 264 Q3 159 381 351 303 181 177 201 178 180 184 313 252 216 204 Q4 156 401 264 317 166 165 170 172 191 190 332 245 216 242 Average 159 293 369 320 217 161 172 163 219 186 271 315 218 209 12 Source: Random Lengths

Appendices Forecast OSB Pricing – North Central 7/16” Norbord does not provide guidance regarding its expectations of future OSB prices. The following is a sample of price forecasts by analysts as at July 20, 2016. It is not exhaustive. Annual Average North Central Benchmark OSB Price US$ per Msf 7/16” Analyst 2016F 2017F Dundee Capital Markets 231 236 Vertical Research Partners 240 300 Raymond James 245 280 Scotia Capital 247 258 BMO 253 270 CIBC 254 280 TD Securities 257 285 RBC Capital Markets 270 300 Average $250 $276 13

Appendices North American Capacity Restarted to Meet Growing Demand North American OSB Installed Capacity: 39 Mills in Operation 8 Mills Indefinitely Curtailed 6 Mills (Re)started in 2013 Norbord Mill 14 Source: Company documents and other public filings

Appendices Financial Sensitivities Adjusted EBITDA Impact (1) Direct Exposure Change (US$ millions) North American OSB $10 per Msf- 7/16” + $58 € 10 per 000 m 3 European OSB + $8 Canadian dollar (2) $0.01 per C$ + $3 Pound sterling £0.01 per € < $1 (1) Assumes operation at full stated capacity levels (including the indefinitely curtailed Huguley, Alabama and Val- d’Or, Quebec mills) Direct exposures only; before the impact of any cash flow currency hedges Approximate operating loss carry-forwards for tax purposes (gross) as at Dec. 31, 2015 – US $186 million, Canada C$483 million, Belgium € 33 million (2) Operating exposures only (excludes dividends on common shares) 15