Slide 1: Company Update August 2020
COMPANY UPDATE AUGUST 2020
Slide 2: Forward-Looking Information & Non-GAAP Measures
FORWARD-LOOKING INFORMATION & NON-GAAP MEASURES Forward-Looking Information: This presentation contains forward-looking information about Interfor Corporation (the “Company”), including its business outlook, objectives, plans, strategic priorities and other information that is not historical fact. A
Slide 3: Company Overview
: ~~. | y | | | een | \ COMPANY OVERVIEW
Slide 4: Operating Regions
OPERATING REGIONS BC COAST 140 MMBF (4%) • 1 mill • Hem-Fir, Douglas-Fir • Specialty • Woodlands logging business BC INTERIOR 750 MMBF (25%) • 3 mills • Douglas-Fir, Hem-Fir, SPF, Cedar • Dimension US NORTHWEST 640 MMBF (21%) • 4 mills • Hem-Fir, Douglas-Fir, Ponderosa Pine, Lodgepole Pine US SOUTH
Slide 5: Industry Landscape
INDUSTRY LANDSCAPE NORTH AMERICAN LUMBER PRODUCTION BY COMPANY – 2019 (BBF/YEAR) 6.0 5.0 4.0 3.0 2.0 1.0 - Source: International Wood Markets/FEA Canada Wood Markets Monthly March 2020 5
Slide 6: Key Products & Markets
KEY PRODUCTS & MARKETS LUMBER SALES BY SPECIES (1) LUMBER SALES BY MARKET (1) Spruce-Pine-Fir USA Hem-Fir 80% 9% 9% Doug Fir/ Southern Larch Yellow Pine 26% 44% Lodge Pole/ Canada Ponderosa Pine Cedar Japan 8% 4% 8% 6% Other China/Tw/HK 2% 3% (1) By Value for YTD through Q2-2020 6
Slide 7: Lumber Markets
INTERFOR INTERFOI NX) S ts ; INTERFOR INTERFOF oN INTERFOR INTERFOR R INTERFOR INTERFOR INTERFOR ————— —$———_—__ —{—— Sez et _LUMBER MARKETS
Slide 8: Lumber Prices
LUMBER PRICES 2017-2020 NORTH AMERICAN BENCHMARK LUMBER PRICES (US$/MBF) $650 $625 $600 $575 $550 $525 $500 $475 $450 $425 $400 $375 $350 SYP Composite $325 Hem-Fir Stud #2 2x4 $300 WSPF Composite $275 Source: Random Lengths (includes prices up to July 31, 2020) 8
Slide 9: Lumber Demand
LUMBER DEMAND NORTH AMERICAN LUMBER DEMAND BY END-USE (BBF) 80 Domestic Residential Repair & Remodel Domestic Industrial/Commercial 70 Domestic Residential New Home Construction Offshore Exports 60 50 40 30 20 10 - 2005 2007 2009 2011 2013 2015 2017 2019 Source: Forest Economic Advisors (FEA) 9
Slide 10: Lumber Demand: Key Drivers
LUMBER DEMAND: KEY DRIVERS US HOUSING STARTS AGE OF US HOUSING STOCK (MILLIONS SEASONALLY ADJUSTED) (MEDIAN AGE IN YEARS) 1.7 41 1.6 Single-Family Multi-Family 1.5 39 1.4 1.3 37 1.2 1.1 35 1.0 0.9 33 0.8 0.7 0.6 31 0.5 0.4 29 0.3 0.2 27 0.1 - 25 Jan Apr Oct Jan Apr Oct Jan Apr Oct Jan Apr Oct Jan Ap
Slide 11: Lumber Supply
LUMBER SUPPLY NORTH AMERICAN LUMBER PRODUCTION BY REGION (BBF) Y/Y Variance Region 2017 2018 2019 '18 vs. '17 '19 vs. '18 South 18.3 18.8 19.3 3% 3% West 13.9 14.4 14.3 4% -1% Other 1.6 1.6 1.7 3% 1% USA 33.8 34.9 35.3 3% 1% BC 13.0 12.4 9.8 -4% -20% Rest of Canada 15.4 14.9 14.6 -3% -2% Canada 28.3
Slide 12: Softwood Lumber Dispute
SOFTWOOD LUMBER DISPUTE • Interfor’s Canadian operations’ shipments to the U.S. represent approx. 14% of company- wide lumber shipments. • Approx. 70% of Interfor’s lumber production is US-based. • Significant differences in accounting treatment for duties between publicly traded companies; limits r
Slide 13: Operations Overview
OPERATIONS OVERVIEW
Slide 14: Business Comparisons
BUSINESS COMPARISONS BC INTERIOR US SOUTH DIMENSION MILLS DIMENSION MILLS • 3 dimension mills in BC southern • 9 dimension mills in Georgia, interior South Carolina and Arkansas • Modern/low cost operations • Low cost wood baskets • Good fiber supply/limited exposure • Strong geographic fit with fut
Slide 15: Regional Log Cost Trends
REGIONAL LOG COST TRENDS $120 BC INTERIOR (C$/M3) $110 $100 $90 $80 $70 $60 $50 2013 2014 2015 2016 2017 2018 2019 2020 $700 US NORTHWEST (US$/MFBM) $650 $600 $550 $500 $450 $400 2013 2014 2015 2016 2017 2018 2019 2020 $50 $48 US SOUTH (US$/TON) $46 $44 $42 $40 $38 $36 $34 $32 $30 2013 2014 2015 201
Slide 16: BC Interior Dimension Mills
BC INTERIOR DIMENSION MILLS
Slide 17: BC Interior: Interfor Overview
BC INTERIOR: INTERFOR OVERVIEW Mountain Pine Beetle Cumulative Percentage of Merchantable Forest Volume Killed Since 1999 Very High (>45%) High (31-45%) Moderate (16-30%) Low (<16%) None (0%) Adams Lake Castlegar Grand Forks Source: BC Ministry of Forests 17
Slide 18: BC Interior: Interfor Case Study
BC INTERIOR: INTERFOR CASE STUDY ADAMS LAKE GRAND FORKS CASTLEGAR MILL REBUILD 2008-09 MILL REBUILD 2012 MILL REBUILD 2015 Adams Lake Significantly repositioned the assets STRONG RETURN ON INVESTMENT TOP DECILE/QUARTILE EBITDA MARGINS FOR THE BC INTERIOR 18
Slide 19: US South Dimension Mills
De = en ~ “ > ~ ne : SS Se eee a oe
Slide 20: US South: Overview
US SOUTH: OVERVIEW Little Rock Atlanta Georgetown Monticello Eatonton Thomaston Swainsboro Perry Meldrim Preston Baxley 1.5 BILLION FEET OF LUMBER CAPACITY ACROSS 3 STATES • Largest lumber producer in Georgia • 50% of Interfor’s capacity is in the South 20
Slide 21: US South: Investment Program
US SOUTH: INVESTMENT PROGRAM • MULTI-YEAR DISCRETIONARY CAPEX INVESTMENT PROGRAM: • Mill rebuilds, machine center upgrades, debottlenecking and optimization projects for existing assets PHASE I: Two projects totaling US$70 MM: • Meldrim, GA and Monticello, AR; and • Completed in 2019. PHASE II: Thre
Slide 22: Financial Review
FINANCIAL REVIEW
Slide 23: Historical Results Snapshot
HISTORICAL RESULTS SNAPSHOT BENCHMARK LUMBER PRICES (US$/MBF) PRODUCTION VOLUMES (MMBF) 700 $550 WSPF Composite (US$/Mbf) 600 $500 SYP Composite (US$/Mbf) 500 $450 400 $400 300 $350 200 $300 100 0 $250 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Slide 24: Capital Spending Profile
CAPITAL SPENDING PROFILE ANNUAL CAPITAL EXPENDITURES (C$MM) $220 US SOUTH PHASE I & II & OTHER STRATEGIC $200 Capital Expenditures - Discretionary PROJECTS MILL UPGRADES Capital Expenditures - Maintenance (Includes Woodlands Roads) $180 Depreciation, Depletion & Amortization $160 $140 CASTLEGAR, BC
Slide 25: Capital Structure
CAPITAL STRUCTURE CAPITAL STRUCTURE DEBT MATURITY SCHEDULE AS OF JUN 30, 2020 AS OF JUN 30, 2020 (C$MM) Cash ($MM) $170 $140 Prudential Notes (4.08%) Debt ($MM) $409 $120 Net Debt ($MM) $239 $100 Book Equity ($MM) $869 $80 Invested Capital ($MM) $1,109 $60 NET DEBT/INVESTED CAPITAL (%) 22% $40 Total
Slide 26: Return on Invested Capital
RETURN ON INVESTED CAPITAL ADJ. EBITDA RETURN ON INVESTED CAPITAL (%/YEAR) 30% 28% 28% 25% 23% 23% 20% Average 18% 19% 15% 15% 10% 9% 6% 5% 0% 2013 2014 2015 2016 2017 2018 2019 2020 YTD‐Q2 Annualized Adj. EBITDA/Average Net Debt + Book Equity 26
Slide 27: Contact Information
: ~~. | y | | | een | \ CONTACT INFORMATION
Slide 28: Investor Contacts
INVESTOR CONTACTS IAN FILLINGER MIKE MACKAY President & CEO VP, Corporate Development & Strategy 604-689-6807 604-689-6846 ian.fillinger@interfor.com mike.mackay@interfor.com 28
Slide 29: Analyst Coverage
ANALYST COVERAGE BMO CAPITAL MARKETS Mark Wilde (212) 883-5102 mark.wilde@bmo.com CIBC CAPITAL MARKETS Hamir Patel (604) 331-3047 hamir.patel@cibc.com EQUITY RESEARCH Kevin Mason (604) 886-5741 kmason@equityresearchassociates.com ASSOCIATES RAYMOND JAMES Daryl Swetlishoff (604) 659-8246 daryl.swetli