Q3 2016 Earnings Presentation October 28, 2016 Notices - PowerPoint PPT Presentation

Q3 2016 Earnings Presentation October 28, 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

Q3 2016 Financial and Operational Highlights • Adjusted earnings of $0.67 per diluted share, a $0.72 improvement over Q3 2015 • Adjusted EBITDA of $114 million, a more than threefold increase over Q3 2015 • Merger synergies target of $45 million (cumulative, annualized) now fully captured • North Central average benchmark OSB price up 48% year-over-year • North American manufacturing costs decreased 3% year-to-date • Declared CAD $0.10/share quarterly dividend payable on December 21, 2016 • Reached agreement with LP to exchange ownership of Val- d’Or, Quebec mill for Chambord, Quebec 3

US Housing Starts (in millions) ~1.20 1.11 1.01 0.93 0.78 0.61 2011 2012 2013 2014 2015 2016F (1) September YTD data: housing starts up 4% and single family starts up 9% YoY (1) Based on US housing economist forecasts. Source: US Department of Commerce, except where otherwise noted 4

North American Benchmark OSB Prices 350 301 300 265 264 256 245 242 242 250 US $/Msf- 7/16” 226 North Central 221 215 South East 204 204 Western Canada 200 191 176 158 150 100 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q3 2016 Spread SE vs NC 28 21 11 19 45 Spread WC vs NC 46 38 35 22 36 Source: Random Lengths 5

European Indicative OSB Prices (1) 250 237 235 230 226 220 200 150 € /m 3 100 50 0 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q3 2016 (1) European indicative average OSB price represents the gross delivered price to the largest continental market. 6

Financial Summary Q3 Q2 Q3 9 mos 9 mos 2016 2016 2015 2016 2015 (US $ millions, except per share information) Sales $ 453 $ 447 $ 378 $ 1,284 $ 1,094 Adjusted EBITDA North America 106 85 22 244 44 Europe 10 11 11 31 28 Unallocated (2) (2) (3) (6) (7) Total 114 94 30 269 65 Earnings (loss) $ 55 $ 44 $ (9) $ 122 $ (69) Adjusted for: Merger transaction costs - - - - 8 Severance costs related to merger - - - - 2 Costs to achieve merger synergies 4 2 - 7 2 Costs related to High Level fire - 1 - 1 - Costs on early debt extinguishment - - - - 25 Foreign exchange loss on Ainsworth Notes - - - - 28 Gain on derivative financial instrument on Ainsworth Notes - - - - (4) Reported income tax expense (recovery) 19 10 3 32 (33) Adjusted pre-tax earnings (loss) 78 57 (6) 162 (41) Income tax (expense) recovery at statutory rate (1) (20) (15) 2 (42) 11 Adjusted earnings (loss) 58 42 (4) 120 (30) Adjusted EPS, basic (2) 0.68 0.49 (0.05) 1.40 (0.36) (1) Represents Canadian combined federal and provincial statutory rate. 7 (2) Basic and diluted Adjusted EPS are the same except diluted Adjusted EPS for Q3 2016 is $0.67 and for the 9 months 2016 is $1.39.

Adjusted EBITDA Variance Q3 2016 Q3 2016 9 mos 2016 vs. vs. vs. Q2 2016 Q3 2015 9 mos 2015 (US $ millions) Adjusted EBITDA – current period $ 114 $ 114 $ 269 Adjusted EBITDA – comparative period 94 30 65 Variance 20 84 204 Mill nets (1) 23 87 169 Volume (2) (5) (1) 17 Key input prices (3) (3) 5 19 Key input usage (3) - 1 10 Mill profit share and bonus - (3) (7) Other operating costs and foreign exchange (4) 5 (5) (4) Total $ 20 $ 84 $ 204 (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 Q3 Q2 Q3 9 mos 9 mos 2016 2016 2015 2016 2015 (US $ millions, except per share information) Cash provided by (used for) operating activities $ 97 $ 83 $ 23 $ 183 $ (32) Cash provided by (used for) operating activities per share 1.13 0.97 0.27 2.14 (0.38) Operating working capital 156 163 145 Investment in property, plant and equipment & 29 23 15 63 43 intangible assets • 2016 regular capex budget is $75 million • Excludes 2016 estimated capex of $45 million on $135 million Inverness project 9

Balance Sheet Sep 24, Jun 25, Dec 31, Sep 26, 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) - - 30 44 Less: Cash (74) (12) (9) (2) Net debt 681 743 776 797 Less: Other long-term debt (1) - - (30) (44) Add: Letters of credit 24 8 5 5 Net debt for financial covenant purposes 705 751 751 758 Tangible net worth Min. $500 (2) 848 799 724 722 Net debt to capitalization, book basis Max. 65% 45% 48% 51% 51% Liquidity of $420 million = $74 million in cash + $221 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 reset to $500 million from $450 million when bank lines 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 159 381 351 303 181 177 201 178 180 184 313 252 216 204 301 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 October 26, 2016. It is not exhaustive. Annual Average North Central Benchmark OSB Price US$ per Msf 7/16” Analyst 2016F 2017F Scotia Capital 258 270 CIBC 264 280 Vertical Research Partners 265 300 TD Securities 266 295 BMO 268 286 RBC Capital Markets 270 300 Raymond James 275 300 Average $267 $290 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 as of September 2016

Appendices Financial Sensitivities Adjusted EBITDA Impact (1) 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