Year-End 2012 Investor Presentation February 2013 Forward-Looking - PowerPoint PPT Presentation

Year-End 2012 Investor Presentation February 2013

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 restated or 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 ─ 1,900 employees at 13 plants across the US, Europe Europe and Canada 27% US • 61% Listed on TSX (“NBD” and “NBD.WT”) 6.1 Bsf • Reports in US dollars and in accordance with IFRS • As at December 31, 2012: Canada 12% ─ Total assets of $1,115 million ─ LTM sales of $1,149 million ─ LTM EBITDA of $188 million 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 The OSB Market • OSB is an innovative, affordable and environmentally “smart” structural panel ─ Serves many of the same uses as plywood, but produced at a lower cost • Norbord expects that OSB will continue to capture market share from plywood North American Structural Panels Market Share Sources: APA-The Engineered Wood Association (“APA”) and Forest Economic Advisors, LLC (“FEA”) 5

II. INDUSTRY OVERVIEW US Housing Starts Recovery is Real • Leverage to US housing recovery • Favourable long-term OSB industry fundamentals US Housing Starts (millions) 2.0 1.7m homes OVER built 1.5 5.3m homes 1.0 UNDER built Housing Starts 0.5 Underlying Demand 0.0 Source: Forest Economic Advisors, LLC (“FEA”) 6

II. INDUSTRY OVERVIEW OSB Industry Curtailments Continue Operating Mills - unutilized capacity 9% Mothballed Mills - announced restarts 15% for 2013 & 2014 Industry Operating Mills - 60% Capacity: 16.8 Bsf Production 28 Bsf in Q4/2012 (annualized) 16% Mothballed Mills - remaining Sources: APA & Norbord Estimates 7

II. INDUSTRY OVERVIEW Significant OSB Industry Capacity Curtailment North American OSB Installed Capacity: 38 Mills in Operation 9 Mills Indefinitely Curtailed 6 Mills Curtailed, but 2013/14 Restarts Announced Source: Company Documents 8

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 rise Average North Central Benchmark OSB Price per Msf (7/16”) 400 Benchmark OSB Price per Msf (7/16") 350 Average North Central 300 250 200 150 100 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E Sources: Random Lengths and FEA 9

II. INDUSTRY OVERVIEW Norbord a Significant Player in OSB Industry North American OSB Industry European OSB Industry Industry Industry Capacity Capacity 28 Bsf 5 Bsf Source: Company Documents - Installed Capacity 10

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 11

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 12

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% % 0 % 1 0 % 2 0 % 3 0 % 4 0 0 5 0 % % - 1 % 3 0 - - 2 0 % 10% 0% 2005 2006 2007 2008 2009 2010 2011 2012 -10% -20% -30% Norbord North American peer (1) Source: Company Documents 13 (1) North American peer = Louisiana-Pacific

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 $50 ─ Increased productivity 37 $40 35 ─ Reduced overhead costs 29 28 $30 25 23 ─ Reduced raw material usage 16 $20 14 ─ Improved product mix 9 $10 $0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 14

III. BUSINESS STRATEGY Customer Strategy Sets Norbord Apart • New housing sales volume growing as US housing starts recover • Norbord’s pro-dealer shipments grew 35% in 2012 2011 2012 Industrial 30% New Home 35% NA NA Construction Shipments Shipments (Pro-dealers) 3.1 Bsf 2.9 Bsf 35% Repair & Remodel (Big Box) 15

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 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013F Capex Greenfield Expansion 16

IV. FINANCIAL OVERVIEW Strong Operating Cash Flow Through Cycle Total EBITDA (US$ millions) $700 Norbord Sensitivity to North American 631 OSB Price Changes: $600 +$10/Msf 7/16” = +$36 million EBITDA 495 (at full capacity) $500 365 $400 $300 Average 247 $206 million 188 $200 107 $100 45 42 0 $0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 0 ($100) (60) North Central 293 369 320 217 161 172 163 219 186 271 Benchmark OSB Price 17

IV. FINANCIAL OVERVIEW Strong 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) $90 81 $80 $70 58 $60 $50 44 39 36 35 $40 32 29 $30 17 $20 $10 4 $0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 18

IV. FINANCIAL OVERVIEW Norbord’s Financial House Is In Order Manageable Debt Maturities (1) Strong Liquidity Strong Liquidity Q4-2012 US$ millions Cash 128 Bank Lines 242 Revolving 6.25% Bank Lines Bonds (Undrawn) A/R Sec. (1) 85 7.70% Bonds Liquidity 455 Stable Issuer Credit Ratings DBRS BB(low) Moody’s Ba3 S&P BB- (1) In addition, the Company has an $85 million 1 year evergreen A/R securitization program. 19

V. SUMMARY Attractive Investment Opportunity • Leverage to accelerating US housing recovery ─ Every +$10 in OSB price = +$36 million in EBITDA at full capacity • Low-cost operating platform • Superior margins versus peers • Track record of disciplined capital allocation • Well positioned for recovery ─ Strong customer partnerships ─ Diversification from European operations ─ Strong financial liquidity and comfortable debt maturities ─ Significant industry capacity permanently and indefinitely idled 20

21 Appendices

OSB Prices Strong Over the Cycle Average North Central Benchmark OSB Price per Msf (7/16”) 15 year Average Q1 157 217 261 132 163 175 423 364 285 145 137 154 212 198 203 Q2 195 291 240 190 159 215 443 297 238 156 179 146 295 173 235 287 301 171 180 159 381 351 303 181 177 201 178 180 184 313 Q3 178 230 155 140 156 401 264 317 166 165 170 172 191 190 332 Q4 Average 204 260 207 160 159 293 369 320 217 161 172 163 219 186 271 Source: Random Lengths 22