Q2 Earnings Presentation July 2019 2 General: This presentation - PowerPoint PPT Presentation

Q2 Earnings Presentation July 2019

2 General: This presentation and comments associated with it contains Accordingly, readers should exercise caution in relying upon forward- historical information, descriptions of current circumstances and looking- statements and WFT undertakes no obligation to publicly statements about potential future developments and anticipated financial update or revise any forward-looking statements, whether written or results. Readers are cautioned that this presentation is qualified in its oral, to reflect subsequent events or circumstances except as required entirety by reference to, and must be read in conjunction with, the by applicable securities laws. Ltd. ’s (WFT’s) information contained in West Fraser Timber Co. management’s discussion and analysis for the annual and interim periods Non-IFRS Measures: This presentation makes reference to certain ended December 31, 2018 and June 30, 2019 respectively, (MD&A), and non-IFRS measures, such as EBITDA, Adjusted EBITDA and net debt the company’s annual audited and interim financial statements available to capital ratio. Non-IFRS measures do not have a standardized on SEDAR (www.sedar.com). A person is not entitled to rely on parts of meaning prescribed by IFRS and are therefore unlikely to be the information contained in this presentation to the exclusion of others. comparable to similar measures presented by others. For further information regarding the use of non-IFRS measures please refer to the Forward-looking Statements: This presentation contains “forward - “Non -IFRS Measures” section in the MD&A External Information: statements” looking (including those under the headings Supply Where this presentation quotes any information or statistics from any Conditions and Summary) within the meaning of applicable securities external source, it should not be interpreted that WFT has adopted or laws. Forward-looking statements, are presented to provide reasonable endorsed such information or statistics as being accurate. Some of the guidance to the reader but their accuracy depends on a number of information presented herein is based on or derived from statements by assumptions and is subject to various risks and uncertainties. In some third parties and has not been independently verified by or on behalf by cases, forward-looking statements can be identified by the use of WFT, and no representation or warranty, express or implied, is made as forward-looking terminology such as “plans”, “targets”, “expects” or to, and no reliance should be placed on, the fairness, accuracy, “does not expect”, “an opportunity exists”, “outlook”, “prospects”, completeness or correctness of this information or any other information “strategy”, “intends”, “believes”, or variations of such words and phrases or opinions contained herein. or state that certain actions, events or results “may”, “could”, “would”, “might”, “will”, “will be taken”, “occur” or “be achieved” . In addition, any Currency: In this presentation, all amounts are in Canadian dollars, statements that refer to expectations, intentions, projections or other unless otherwise indicated. characterizations of future events or circumstances contain forward- Terminology : References in this presentation to “ MMfbm ” or “ mmfbm ” looking information. Statements containing forward-looking information management’s mean million board feet, “SPF” means spruce-pine-fir and “SYP” means are not historical facts but instead represent expectations, estimates and projections regarding future events or southern yellow pine. For any other technical terms used in this circumstances . By their nature, forward-looking statements involve presentation, please see the Glossary of Industry Terms found in our numerous assumptions, inherent risks and uncertainties, both general most recent Annual Report. and specific, which contribute to the possibility that the predictions, forecasts and other forward-looking statements will not occur. Actual outcomes and results of these statements will depend on a number of “Risks factors including those matters described under and Uncertainties”, in our MD&A and may differ materially from those anticipated or projected. Reference should be made to the other factors discussed in public filings with securities regulatory authorities. .

Demand conditions U.S. 3 U.S. Housing Starts ( not seasonally adjusted) Leading indicator of Remodeling Activity Monthly $B 4 Qtr Moving Improvements and Repairs $350 8.0% 140 $340 7.0% 4 Qtr Moving rate of Change 120 $330 6.0% 100 Repair and renovation growth $320 5.0% continues 80 $310 4.0% Seasonally adjusted: 60 2017: 1,203 $300 3.0% 2018: 1,250 40 $290 2.0% 2019: 1,238 ytd June 20 $280 1.0% $270 0.0% 0 Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 Q119 J F M A M J J A S O N D Expenditures % change 2017 2018 2019 Source: US Census Bureau Source: Harvard Joint Centre for Housing Studies U.S. Housing Forecast (000) 2019 2020 50k annual RBC 1,313 1,335 ~600Mfbm increase in increase in Wells Fargo 1,270 1,290 housing starts lumber demand Mortgage Bankers 1,268 1,3285 RISI 1,265 1,290 NAHB 1,250 1,286 3% growth in ~1,000Mfbm repair and FEA 1,248 1,339 increase in renovation lumber demand APA 1,230 1,220 Fannie May 1,229 1,257 Average (May 2019 Fcst) 1,259 1,292 Limited growth needed for increased demand of 1 – 2 billion board feet

Supply conditions 4 Lumber Supply North America Curtailments Billion fbm MMfbm 25 800 Down 4% 700 Mix of 20 temporary 600 and permanent 500 15 Up 1% 400 Down 9% 10 300 Down 16% 200 5 100 0 0 BC Canada US Total NA 2018Q4 2019 Q1 2019 Q2 Ytd 04-18 Ytd 04-19 Source: Industry analysts, public filings, management estimates, FEA Source: Western Wood Products Association, management estimates Supply growth challenges • Temporary curtailments become permanent in the BC Interior • Over 1.9 billion feet of North America permanent curtailment already announced • Curtailments likely to have larger impact on supply in Q3/Q4 • Contractor availability and lead times inhibiting projects in the US South • Long start up curves on new projects in US South • Residual markets impacting (new and existing) facilities Curtailments likely to affect supply in second half

Consolidated Financial Results 5 $ Millions Adjusted EBITDA Q2-19 Q1-19 Q2-19 Q1-19 Sales $ 1,317 $ 1,241 Lumber $ 39 $ 84 Cost and Expenses 1,375 1,231 Panels 10 15 Restructure/Impairment 26 - Pulp & Paper 7 11 Operating earnings (84) 10 Corporate/Other - - Finance Expense (13) (11) Total $ 56 $ 110 Other (6) (5) EBITDA margin 4.2% 8.9% Earnings before Tax $ (103) $ (6) Tax recovery 45 1 Net earnings $ (58) $ (5) Diluted EPS $ (0.92) $ (0.12) Challenging conditions continue * Adjusted EBITDA is defined as operating earnings plus amortization, equity based compensation, restructuring and impairment charges and export duties.

Q2 Consolidated Adjusted EBITDA Reconciliation 6

Q2 Lumber Adjusted EBITDA Reconciliation 7

Q2-19 versus Q1-19 8 $ millions unless Q2 Q1 Change otherwise indicated 2019 2019 Lumber Production (MMfbm) 1,536 1,462 74 Production up slightly despite similar curtailments in both 5% quarters due to stronger operating performance Lumber Shipments (MMfbm) 1,686 1,444 242 SPF and SYP shipments higher as inventory reduced during 17% curtailment periods Pulp Shipments (Mtonnes) 305 318 (13) NBSK shipments slightly lower coming out of maintenance 4% shut downs Adjusted EBITDA $56 $110 $(54) Adjusted EBITDA off in all segments due to lower commodity (49%) pricing, fibre costs inflation and curtailment impacts Cash flow from operations $187 $(228) $(41) Seasonal log inventory reduction in western Canada, drawdown in lumber inventories Capital Expenditure $82 $108 $(26) Continuing to execute on capital plans and US South modernization program Net Debt $930 $1,001 $(71) Net debt down slightly from prior quarter, significant financial flexibility and wide margin of safety Net Debt to Capital 26% 27% Cumulative duties on deposit $312 $276 $36 Significant duties on deposit US$ Share buybacks $31 $50 $(19) Continued to return capital Despite difficult 2019 so far, maintaining focus on priorities

Liquidity 9 Scheduled maturities Available liquidity $900 $800 $900 $800 $700 $700 $600 $600 $500 $500 $400 $400 $300 $300 $200 $200 $100 $100 $0 $0 2017 2018 Q1-17 Q1-18 Q1-19 Q2-19 -$100 2019 2020 2021 2022 2023 2024 Bank lines Cash Increase in revolving credit facility Term loan Notes Revolver Other Ample financial flexibility Cash consists of cash and short-term investments less cheques issued in excess of funds on deposit.

Summary 10 10 First Half Headwinds Second Half Opportunities ✕ Major maintenance shut downs ✓ Resume normal operating schedules in pulp and lumber at both NBSK mills operations ✕ Cold and wet weather interrupts ✓ Moderating weather conditions operations, potentially affecting housing activity ✓ Potential for supply and demand ✕ Multiple production curtailments of lumber to rebalance disrupt operating rhythm ✓ Balance of year capital anticipated ✕ Multiple major capex projects to be less disruptive underway in US South