West Fraser Timber Co. Ltd. · TSX:WFG
West Fraser Timber — Shareholder Meeting (2014)
26 slides from West Fraser Timber's shareholder meeting presentation, Oct 1, 2014
Slide 1: Annual General Meeting 2014
ANNUAL GENERAL MEETING 2014 Quesnel, B.C.
Slide 2: U.S. Housing Starts
U.S. Housing Starts US Housing Starts (thousands) Monthly Averages Peak Jan 73 2,450 Peak Feb 84 Peak Jan 06 Peak April 78 Underlying demand 1,950 1,450 950 Bottom Feb 75 Bottom Jan 82 Bottom Jan 91 Bottom Nov 2009 450 2 Source: U.S. Census Bureau/FEA
Slide 3: U.S. Housing Starts
U.S. Housing Starts 1,200 1,100 1,000 900 Thousands 800 700 600 500 400 2009 2010 2011 2012 2013 2014 3 Source: U.S. Census Bureau
Slide 4: U.S. Existing Home Sales
U.S. Existing Home Sales 7,700 7,200 6,700 6,200 Pre-bubble average 5,700 Thousands 5,200 4,700 4,200 3,700 3,200 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 4 Source: National Association of Realtors/FEA
Slide 5: U.S. Existing Home Inventory
U.S. Existing Home Inventory 4,200 Seasonally Adjusted 3,700 3,200 Thousands 2,700 Pre-bubble average 2,200 1,700 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 5 Source: National Association of Realtors/FEA
Slide 6: U.S. Household Formation
6 Source: FEA 2018 2017 2016 2015 2014 Average 1980-2007 2013 2012 2011 2010 2009 2008 2007 2006 2005 U.S. Household Formation 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983 1982 1981 1980 1,600 2,000 1,800 1,400 1,200 1,000 200 0 800 60
Slide 7: U.S. Real Home Prices
U.S. Real Home Prices Median Single-Family Home Prices in 2014 Q1 dollars 300,000 280,000 260,000 240,000 220,000 200,000 180,000 160,000 140,000 120,000 Trend for 1970-2000 period 100,000 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 7 Source: FEA
Slide 8: U.S. Home Price-to-Rent Ratio
U.S. Home Price-to-Rent Ratio Index, 2000=100 170 160 150 140 130 120 Average for 1983-2000 period 110 100 90 80 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 8 Source: FEA
Slide 9: U.S. Home Affordability Index
U.S. Home Affordability Index 220 200 180 160 140 120 100 80 60 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 9 Source: National Association of Realtors, FEA
Slide 10: U.S. New Home Inventory
U.S. New Home Inventory 700 Seasonally Adjusted 600 500 Pre-bubble average 400 Thousands 300 200 100 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 10 Source: U.S. Census Bureau/FEA
Slide 11: Canadian Shipments to China
Canadian Shipments to China 3,500 Equivalent to 300,000 housing starts 3,000 2,500 2,000 MMfbm 1,500 1,000 500 0 2006 2007 2008 2009 2010 2011 2012 2013 11 Source: Council of Forest Industries
Slide 12: Benchmark Lumber Prices
Benchmark Lumber Prices $500 SYP W-#2 W $450 SPF-2&Btr $400 SPF-#3 Util US$/Mfbm $350 $300 $250 $200 $150 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 2011 2012 2013 2014 12 Source: Random Lengths
Slide 13: Benchmark Pulp Prices
Benchmark Pulp Prices $1,100 $1,000 NBSK China $900 BCTMP China US$/tonne $800 $700 $600 $500 $400 $300 2011 2012 2013 13 Source: RISI
Slide 14: Financial Summary
Financial Summary 2013 2012 Sales 3,474 3,000 Earnings 349 77 EBITDA 529 275 Net debt to capital 8% 12% 14 ($ millions, except as otherwise indicated)
Slide 15: Employees and Development
Employees and Development • Hired 475 employees in 2013 – 283 of salaried employees (21%) changed jobs • Increased apprenticeships by 400% since 2007 • Growth and development – College of New Caledonia “West Fraser Tech Centre” – Internal programs, mentoring – Sauder School of Business, UBC • Named
Slide 16: Chasm Trimsaw - Before
Chasm Trimsaw- Before 16 16
Slide 17: Chasm Trim Saw - After
Chasm Trim Saw- After \e 3 aS
Slide 18: Lumber Segment
Lumber Segment 2013 2012 Production (Million board feet) Canada 3,571 3,466 United States 1,582 1,488 Sales 2,315 1,855 Operating Earnings 314 90 Capital Expenditures 281 114 18 ($ millions, except as otherwise indicated)
Slide 19: West Fraser Lumber Capacity
West Fraser Lumber Capacity Lumber Capacity 2004 Pro Forma Lumber Capacity (after planned capital 2H-2015) 4.3 Billion feet 6.3 Billion feet U.S. South 9% U.S. Alberta B.C. B.C. South 21% 70% 39% 37% Alberta 24% B.C. Interior Alberta U.S. South 19
Slide 20: B.C. Interior Lumber Production
B.C. Interior Lumber Production 16,000 15,000 14,000 Forecast 13,000 12,000 MMfbm 11,000 10,000 9,000 8,000 7,000 6,000 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 Post-beetle production back to 1980’s and 90’s levels. 20 Source: West Fraser/ Wood Markets
Slide 21: Wood Costs Are Rising Quickly
Wood Costs Are Rising Quickly Average Wood Cost Trend 52% increase Average Wood Cost $/m3 21% increase January 2011 January 2012 January 2013 January 2014 Quesnel Alberta 21
Slide 22: Panels Segment
Panels Segment 2013 2012 Plywood Production Million square feet (MMsf 3/8” basis) 781 793 MDF Production (MMsf ¾” basis) 204 195 LVL Production 1,848 1,964 Thousand cubic feet (Mcf) Sales 467 448 Operating Earnings 28 38 Capital Expenditures 5 5 22 ($ millions, except as otherwise indicated)
Slide 23: Pulp & Paper Segment
Pulp & Paper Segment 2013 2012 Production BCTMP (thousand Mtonnes) 603 620 NBSK (thousand Mtonnes) 496 529 Newsprint (thousand Mtonnes) 119 128 Sales 780 775 Operating Earnings 58 62 Capital Expenditures 71 38 23 ($ millions, except as otherwise indicated)
Slide 24: Major Capital Projects
Major Capital Projects Major Energy Projects – Hinton: Continuous kiln – Chetwynd: ORC energy system – Huttig: 2nd continuous kiln, – Fraser Lake: ORC energy planer sorter system – Joyce: 2nd continuous kiln – QRP: Low consistency refiners – Leola: 2nd continuous kiln and – Slave Lake Pulp: Biogas p
Slide 25: West Fraser Capital Spending
West Fraser Capital Spending $ Millions 400 300 200 100 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 25
Slide 26: West Fraser
ES West Fraser