Keweenaw Land Association, Ltd. · OTC:KEWL
Keweenaw Land Association — Proxy Contest (March 2018)
37 slides from Keweenaw Land Association's proxy contest presentation, March 2018
Slide 1: Keweenaw Land Association March Investor Presentation
Keweenaw Land Association, Limited March Investor Presentation March 2018 Keweenaw Land Association, Limited
Slide 2: Forward Looking Statement
Forward Looking Statement Statements in this document may constitute “forward-looking” statements regarding Keweenaw and its business. Forward looking statements involve significant risks and uncertainties and are not representations as to or guarantees of future results. The risks and uncertainties
Slide 3: Table of Contents
Table of Contents • Executive Summary • Company Overview • Industry Trends and Challenges • Key Market Opportunities • Financial Overview • Why Cornwall’s Directors are Not the Right Choice • The Right Leadership and Board 3
Slide 4: Executive Summary: Why We're Here
Executive Summary: Why We’re Here Keweenaw’s Board and management are executing on the Company’s strategic initiatives and driving long-term value creation. Record operating performance in 2017 shows that the Company’s strategy is gaining momentum. In the process of converting to a REIT to enh
Slide 5: Keweenaw at a Glance
Keweenaw at a Glance Major supplier of logs and pulpwood in the Lake States region o 185,750 acres of fee timberland o 402,000 acres of severed and attached mineral rights o Annual harvest of over 95,000 cords per year o Forest Stewardship Council (FSC) certified for over 20 years Principal Busi
Slide 6: A Deeper Look: Four Principal Business Segments
A Deeper Look: Four Principal Business Segments Forest Management Log Sales and Marketing Owns and manages 185,750 acres of timberland in the Western Harvests timber and sells logs directly to forest products companies Upper Peninsula of Michigan and Northern Wisconsin primarily both regionally
Slide 7: Industry Trends and Challenges
Industry Trends and Challenges As a timberland company, our results can vary significantly depending on market conditions both locally and at the macro level Steady decline in coated paper demand Continued consolidation of logging and trucking contractors Seasonality resulting in short-term im
Slide 8: Strategy Overview
Strategy Overview Acquisition Strategy Management Strategy Disposition Strategy Practice price discipline in asset Enhance timber growth by selectively Anticipate market cycles and dispose selection harvesting mature timber and of assets during periods of attractive thinning young stands to co
Slide 9: Our Asset Value-Generation Strategy is Working
Our Asset Value-Generation Strategy is Working The value of Keweenaw’s assets on a per acre basis has risen steadily over time 9
Slide 10: The Board is Committed to Improving Shareholder Value
The Board is Committed to Improving Shareholder Value While the current stock price is not reflective of the value of Keweenaw’s assets, the Company is focused on addressing this disparity Focused on improving the quality and volume of timber through active forest management Acquiring productive
Slide 11: Addressing the TSR Critique
Addressing the TSR Critique As evidenced through the 5-year TSR, Keweenaw is a long-term investment and our long-term shareholders have reaped the benefits Keweenaw Land Association – Total and Relative Returns* Keweenaw currently has a value gap due to its small scale, limited liquidity of its
Slide 12: Keweenaw's Strategic Initiatives Through the Years
Keweenaw’s Strategic Initiatives Through the Years The Company continues to execute on its strategic plan to generate shareholder value by adding productive timberland assets, improving timber quality and optimizing returns through efficient management. The success of these initiatives is evident:
Slide 13: 2017 Strategic Review
2017 Strategic Review Keweenaw is deeply committed to strategic initiatives designed to increase cash flows and better position the Company for future financial success In 2017 the Company engaged Stifel, Nicolaus & Company, Inc. (Stifel), a highly-qualified investment bank, to explore the possibi
Slide 14: Principal Business Segments: 2017 Performance Highlights
Principal Business Segments: 2017 Performance Highlights Keweenaw Land Association, Limited
Slide 15: Efficient Use of Existing Assets: Log Yard Expansion and Logging Company
Efficient Use of Existing Assets: Log Yard Expansion and Logging Company Provided an additional source of revenue which enhanced Keweenaw’s bottom line Generating inventory and handling fees of $200,000 annually Logging company harvested approximately 10% of the annual timber harvest, primaril
Slide 16: Real Estate: Timberland Acquisitions
Real Estate: Timberland Acquisitions Keweenaw made two acquisitions of investment grade timberlands in 2017 as part of our strategic plan of adding productive timberland within our operating region A total of 17,300 acres were added during the year, which will be accretive to harvest levels and
Slide 17: Minerals: Highland Copper Project
Minerals: Highland Copper Project In late 2017, Highland began a feasibility study on the Copperwood project with the intent of making final determinations for project funding of mine construction Based on their public comments, this study is expected to be completed by mid-2018 with constructio
Slide 18: Financial Overview
Financial Overview Keweenaw Land Association, Limited
Slide 19: Financial Overview – Comparison to Peers
Financial Overview – Comparison to Peers Profitability Margin before Interest (EBIT/Revenue) 2013 to 2017 40.00% Higher costs directly related to Cornwall’s 30.00% involvement has driven profitability lower 20.00% 10.00% 0.00% 2013 2014 2015 2016 2017 Debt to Enterprise Value -10.00% 2013 to 2017 -2
Slide 20: Financial Overview
Financial Overview 2017 was a record year for timber harvest levels, which increased HARVEST VOLUME CD EQ from company lands to 91,892 cd-eq compared to 82,141 cd-eq in 30% 26% 35% 100,000 2016, a 12% increase 29% 27% 30% o Current timber harvest levels total four times those of 25 years ago 80,00
Slide 21: Financial Overview
Financial Overview Keweenaw’s performance shows that the Company’s strategy is gaining momentum. In Q4 2017, the Company sold logs totaling $3,375,908 – a 7% increase in timber sales compared to the same period in 2016 2017 was a record year for timber harvest levels from Company lands So far
Slide 22: Why Cornwall's Directors are Not the Right Choice
Why Cornwall’s Directors are Not the Right Choice Keweenaw Land Association, Limited
Slide 23: Cornwall Capital: History with Keweenaw
Cornwall Capital: History with Keweenaw In 2016, the Company reached a settlement that added Cornwall designee Jan Loeb to the Board, joining Jamie Mai of Cornwall, who was already a board member. o These directors have been fully engaged in and aware of the strategic decisions made at the Company
Slide 24: Cornwall Capital: Already Represented on the Board
Cornwall Capital: Already Represented on the Board Loeb and Mai have been fully engaged in, and aware of, the strategic decision-making at the Company in the past year. They have not been shut out, except in conversations related to the proxy contest. Cornwall didn’t engage in their own due dilige
Slide 25: Cornwall Capital: Already Fairly Represented
Cornwall Capital: Already Fairly Represented Cornwall Capital’s two current Board members – Jamie Mai and Jan Loeb – are an appropriate representation in line with Cornwall’s 26% stake Current Board Cornwall's Stake Representation Cornwall’s Goal: Control 26% 25% 63% 38% 74% 75% Cornwall's Stake Rem
Slide 26: Cornwall Capital: The Real Reason Behind Higher Board Expenses
Cornwall Capital: The Real Reason Behind Higher Board Expenses Cornwall Capital claims Keweenaw’s Board expenses are excessive, but in reality, these expenses are due to Cornwall actions Board of Directors expense before and after Cornwall × Prior to Cornwall’s representatives $600,000 joining the B
Slide 27: Case in Point: The Real Reason Behind Higher Board Expenses
Case in Point: The Real Reason Behind Higher Board Expenses Cornwall had requested to expense a roundtrip charter flight from Chicago, IL to Ironwood, MI for a Board meeting, as well as other “elite” travel expenses Cornwall’s full proxy solicitation expenses will also likely be charged to the C
Slide 28: Cornwall Capital: No Plan for the Business
Cornwall Capital: No Plan for the Business Cornwall Capital wants control of Keweenaw’s Board, but has offered no plan for how they would run the Company × Cornwall’s current Board representatives and nominees do not have a clear understanding of Keweenaw’s business, so how can they have control of
Slide 29: Cornwall Capital: No Relevant Timber Experience
Cornwall Capital: No Relevant Timber Experience While Cornwall’s nominees may know financial engineering, they do not have a working knowledge of the timber business – and how it is valued – compared to the current Board × Cornwall’s nominees do not have the industry knowledge and expertise necessar
Slide 30: Cornwall Capital: A Faulty Appraisal
Cornwall Capital: A Faulty Appraisal In 2014, Cornwall engaged a consultant to do an appraisal on Keweenaw property to determine timber and timberland values without the knowledge of Keweenaw. The resulting appraisal contained numerous flawed assumptions which resulted in faulty analysis by Cornwall
Slide 31: Cornwall Capital: Not-So-Independent Director Nominees
Cornwall Capital: Not-So-Independent Director Nominees Jamie Mai Steve Winch Founder Chairman of the Board since 2014 Nominated to KEWL Board in 2016 Jan Loeb Board Member (1997 – 2014) Ian Haft Smart Skins LLC Sources: https://www.linkedin.com/in/ianhaft/, https://www.linkedin.com/in/steve-winch-29
Slide 32: Cornwall's Nominees' Skills are Duplicative
Cornwall’s Nominees’ Skills are Duplicative Board Members Deep Forestry Financial, Audit, & ESG / Policy C-Suite / Board Real Estate Operations Current Board & Nominees and / or Timber Accounting Investment Level Expertise in Experience Experience Member Expertise Background Experience relevant indu
Slide 33: The Right Leadership and Board
The Right Leadership and Board Keweenaw Land Association, Limited
Slide 34: The Right Board is in Place
The Right Board is in Place Keweenaw’s current Board is comprised of a broad and diverse background of timber industry experience including manufacturing, international forestry, real estate and ESG experience. • Former CEO and has been with the Company for over 30 years • Possesses deep knowledge o
Slide 35: The Right Board and the Right Strategy are in Place
The Right Board and the Right Strategy are in Place Over the past 5 years, Keweenaw has: Improved underlying timberland economics o Added over 23,000 acres of productive timberland o Increased standing inventory by 9% to nearly 4 million cd eq o Improved sawtimber mix resulting in higher log sales
Slide 36: The Choice is Clear
The Choice is Clear Keweenaw’s Board and management are confident in the Company’s strategy and are driving long-term value creation The Board has extensive experience across relevant industries along with decades of Director and Executive experience, which will help the leadership team successf
Slide 37: Contact Information
Contact Information Shareholders If you have any questions, or need assistance voting your GREEN proxy card, please contact: 1212 Avenue of the Americas, 24th Floor New York, NY 10036 Telephone for Banks, Brokers, and International Shareholders: +1 212-297-0720 Shareholders may call toll-free (from
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