Q4 Earnings Presentation February 2020 2 General: This - PowerPoint PPT Presentation

Q4 Earnings Presentation February 2020

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, 2019, (MD&A), and the company’s annual audited non-IFRS measures, such as EBITDA, Adjusted EBITDA and net debt and interim financial statements available on SEDAR (www.sedar.com). A to capital ratio. Non-IFRS measures do not have a standardized person is not entitled to rely on parts of the information contained in this meaning prescribed by IFRS and are therefore unlikely to be 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 3 Leading indicator of Remodeling Activity U.S. Housing Starts ( not seasonally adjusted) $B 4 Qtr Moving Improvements and Repairs $340 8.0% 140 $330 7.0% 120 4 Qtr Moving rate of Change $320 6.0% 100 $310 M Starts 5.0% 80 $300 Seasonally adjusted: 4.0% 60 $290 2017: 1,203 3.0% 40 2018: 1,250 $280 2.0% 2019: 1,298 $270 20 1.0% $260 0 $250 0.0% J F M A M J J A S O N D Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 Q119 Q219 Q319 Q419 2017 2018 2019 Expenditures % change Source: US Census Bureau Source: Harvard Joint Centre for Housing Studies North America Offshore Exports World Chemical Pulp Shipments 600 6.0 500 5.5 400 MM tonnes MMfbm 300 5.0 2017: 5,462 200 2017: 61.7 2018: 5,199 4.5 100 2018: 61.1 2019: 4,041 ytd November 2019: 57.3 ytd November 0 4.0 J F M A M J J A S O N D J F M A M J J A S O N D 2017 2018 2019 2017 2018 2019 Source: PPPC Source: Statistics Canada, US Census

Supply conditions 4 North America Curtailments Impact Lumber Supply Billion fbm MMfbm (Annualized) 80 Down 5% 3,500 60 3,000 Mix of Flat temporary 2,500 40 Down 11% and Up 2% 2,000 permanent 20 Down 21% 1,500 1,000 0 BC Canada US US Total NA 500 South 0 Ytd 11-18 Ytd 11-19 2018 2019 Source: WWPA, SFPA, COFI Source: Analyst reports, public filings, management estimates North America Offshore Imports 500 2018: 1,574 450 2019: 1,533 400 350 300 MMfbm 250 200 150 100 50 0 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Source: Statistics Canada, US Census Curtailment impact second half of 2019 more significantly

British Columbia Supply Chain Volatility 5 3.6 600 Oversupply from shipment of backlogs Shipments > Production 3.4 550 3.2 500 Working Capital Liquidation from Billion Board Feet Curtailments US $ / Mfbm (Shipments > 3 450 Production) Undersupply from transportation delays Production > Shipments 2.8 400 2.6 350 2.4 300 2.2 250 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 BC Production BC Shipments Random Lengths SPF- 2x4 US 2&Btr (R-axis) Production to shipment volatility expected to normalize

Consolidated Financial Results 6 $ Millions Adjusted EBITDA Q4-19 Q3-19 Q4-19 Q3-19 Lumber $ 69 $ 39 Sales $ 1,129 $ 1,190 Cost and Expenses 1,152 1,245 Panels 13 13 Restructure/Impairment 8 (1) Pulp & Paper (1) 3 Operating earnings (31) (54) Corporate/Other (1) - Finance Expense (13) (12) Total $ 80 $ 55 Other (2) 2 Adjusted EBITDA 7.1% 4.6% Earnings before Tax $ (46) $ (64) margin Tax recovery 4 19 Net earnings $ (42) $ (45) Diluted EPS $ (0.61) $ (0.73) Improved pricing and lower fibre costs in lumber segment * Adjusted EBITDA is defined as operating earnings plus amortization, equity based compensation, restructuring and impairment charges and export duties.

Q4 Consolidated Adjusted EBITDA Reconciliation 7 Diligent management of fibre costs improves profitability

Q4 Lumber Adjusted EBITDA Reconciliation 8 Improved pricing, lower fibre costs

Q4-19 versus Q3-19 9 $ millions unless Q4 2019 Q3 2019 Change otherwise indicated Variable operating schedules in BC, Chasm closure Lumber Production (MMfbm) 1,423 1,493 (70) impact, 100 Mile House shift elimination, partially offset by increases in Alberta Less inventory draw down in Q4 than in Q3 (right-sizing Lumber Shipments (MMfbm) 1,385 1,541 (156) of inventory largely completed in Q3) Pulp & Paper Shipments 338 323 15 Better BCTMP production and shipments (Mtonnes) Lower costs, especially in lumber, led to improved Adjusted EBITDA $80 $55 $25 results, price a minor contributor Better cash flow before working capital, offset by working Cash flow from operations $40 $116 $(76) capital changes (lumber drawdown in Q3, log inventory build in Q4) Continuing to execute on capital plans, significant Capital Expenditure $87 $133 $(46) projects completed in first nine months. Net Debt $1,045 $983 $62 Net debt up slightly from prior quarter, significant financial flexibility and wide margin of safety Net Debt to Capital 30% 28% Cumulative duties on deposit $373 $344 $29 Significant duties on deposit US$ Impact of 2019 actions taking hold

10 10 Liquidity Available liquidity Scheduled maturities $900 $900 $800 $800 $700 $700 $600 $600 $500 $500 $400 $400 $300 $300 $200 $200 $100 $100 $0 $0 2017 2018 2019 Q3-19 Q4-19 2020 2021 2022 2023 2024 Bank lines Cash Term loan Notes Revolver Ample financial flexibility Cash consists of cash and short-term investments less cheques issued in excess of funds on deposit.