Canfor Corporation · TSX:CFP
Canfor — CIBC Forest Products Tour (October 2013)
35 slides from Canfor's conference presentation, Oct 9, 2013
Slide 1: CIBC Forest Products Tour
CIBC Forest Products Tour Canfor Southern Pine, Camden Sawmill October 9, 2013 C A N F O R C O R P O R A T I O N
Slide 2: Agenda
Agenda 1. Welcome and Introductions Pat Elliott (Vice President and Treasurer) 2. Corporate Overview and Market Outlook Pat Elliott 3. Canfor Southern Pine Overview Doug Warstler (President, Canfor Southern Pine) 4. Canfor Southern Pine Fiber Dave Dodge (Vice President, CSP Procurement) 5. Canfor So
Slide 3: Corporate Overview and Market Outlook
Corporate Overview and Market Outlook Pat Elliott C A N F O R C O R P O R A T I O N Page 3
Slide 4: Who We Are
Who We Are • 2nd largest global producer of softwood lumber • 50.2% owner of Canfor Pulp Products Inc. • Builder of market demand in the world’s fastest‐growing economies • Company with a strong reputation for quality, customer service and excellence in logistics support • Supplier of products the w
Slide 5: Operations and Fibre
Green Fibre Operations and Fibre • Strong, sustainable fibre supply Customer Fibre • Fibre base supports our customer Strategy Supply focused strategy • Well capitalized mills in regions minimally impacted by mountain pine beetle, and US South • Acquisition of Tembec tenure strengthens fibre securit
Slide 6: Sales Regions
Sales Regions Canfor is aggressively building demand in the world’s fastest growing economies, while maintaining our commitment to our valued customers. • North America: US market continues to be our largest, representing 45% of SPF sales, 95% of SYP sales; Market demand and pricing are improving; C
Slide 7: Demand on North American Mills (BBF)
Demand on North American Mills (BBF) Home Construction Repair and Remodel Industrial Other Canada Net Exports 70 60 1 BBF increase in 50 outbound shipments net of 3 BBF of inbound shipments 40 30 25% increase in R&R 20 10 Increase in housing starts from 0.95 to 1.85 0 2012 2016 Source: FEA C A N F O
Slide 8: North American Production Growth Potential
North American Production Growth Potential 2013 Forecast Production (BBF) Theoretical Incremental Capacity (BBF) 25 Ability to achieve increment will Theoretical capacity of 71BBF be materially challenged by fibre assumes 100% run rate. In last peak constraints in BC and Quebec cycle (2004-05), maxi
Slide 9: North American Capacity and Demand
North American Capacity and Demand Housing Starts - millions (right axis) Capacity(BBF) Demand (BBF) 90 2.5 80 2.0 70 1.5 84% Operating Rate 60 1.0 50 63% Operating Rate 0.5 40 30 0.0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013F 2014F Source: FEA, US Census, Company Da
Slide 10: CAD Price/Operating Rate (1992-2012)
CAD Price/Operating Rate (1992-2012) $600 Years with operating rates ≥ 84%, 2x4 price averaged CAD$415 $500 $400 Current Price– C$325 Operating Rate – 79% $300 $200 60% 65% 70% 75% 80% 85% 90% 95% Operating Rate Source: Company Data C A N F O R C O R P O R A T I O N Page 10
Slide 11: Canfor Southern Pine Overview
Canfor Southern Pine Overview Doug Warstler C A N F O R C O R P O R A T I O N Page 11
Slide 12: Canfor Southern Pine – Building a Company
Canfor Southern Pine – Building a Company SYP Whitewood Lumber SYP Treated Lumber * **** Canfor Southern Pine is headquartered in Myrtle Beach, SC SYP Fingerjoint Lumber 1957 1983 1988 1992 1999 2006 2007 2013 The Wall, Sledge, New South built a The company A molding and New South Canfor acquired Ne
Slide 13: Canfor Southern Pine Product Segments
Canfor Southern Pine Product Segments • SYP Value Add Lumber Clear MSR/DSS DI‐65 #1 5/4x6 Premium & Std #2 Prime Value Add Construction Industrial • SYP Construction Lumber #2 Finger Joint #2 and Stud • SYP Industrial Lumber #3 #4 6’ trim #2, #4/Btr 4’ & 2’ block C A N F O R
Slide 14: Canfor Southern Pine Customer Channels
Canfor Southern Pine Customer Channels Source: Company Data C A N F O R C O R P O R A T I O N Page 14
Slide 15: US Treated Lumber Market by End Use
US Treated Lumber Market by End Use Source: Osmose, Inc. C A N F O R C O R P O R A T I O N Page 15
Slide 16: Expanding Southern Pine into Export Markets
Expanding Southern Pine into Export Markets Middle East China South Korea India Taiwan Thailand Philippines Malaysia Clear Face DSS # 2 Prime #2 #3 Thailand Thailand India India India China China Korea Korea Malaysia Malaysia Thailand Middle East Middle East India C A N F O R C O R P O R A T I O N P
Slide 17: SYP Margin Trends 2005 - 2018
SYP Margin Trends 2005 - 2018 $237 $290 $283 $268 $235 $223 $167 $269 $118 $179 $117 $105 $158 $126 Note: Excludes Conversion Costs Source: Random Lengths Publications C A N F O R C O R P O R A T I O N Page 17
Slide 18: Scotch Gulf Acquisition
Scotch Gulf Acquisition Entered into a three-year step acquisition plan with Scotch & Gulf Lumber LLC in August 2013 All facilities located in Alabama Three sawmills One treating facility Strong management team Largest lumber manufacturer in the state of Alabama Heavily weighted value add p
Slide 19: Canfor Southern Pine – Building Market Share
Canfor Southern Pine – Building Market Share Top 5 U.S. SYP Producers 2013 2016 Projected 1 Weyerhaeuser Weyerhaeuser 2 Georgia-Pacific Georgia-Pacific 3 West Fraser West Fraser 4 Gilman Canfor Southern Pine 5 Canfor Southern Pine Gilman Total Canfor Production 12% 17-20% 2012 Southern Pine Producti
Slide 20: Canfor Southern Pine Fiber
Canfor Southern Pine Fiber Dave Dodge C A N F O R C O R P O R A T I O N Page 20
Slide 21: Southern Pine Landscape
Southern Pine Landscape 80-90% privately owned • Family or individual landowners - 60% • Corporate owners - 40% • TIMO, REIT 10-20% public ownership • State and federal forests Southern Pine Forest • 50% plantation • Primarily grown for commercial timber production • Increasingly large component of
Slide 22: Timber Resource
Timber Resource Excess sawtimber volume and growth • Growth to Drain • 1.1 - 1.5 in all Canfor Regions 15 year projections • Continued positive growth C A N F O R C O R P O R A T I O N Page 22
Slide 23: Canfor Southern Pine Sawmills
Canfor Southern Pine Sawmills SYP Sawtimber density by county 2011 FIA data (avg. yr.. 2009) C A N F O R C O R P O R A T I O N Page 23
Slide 24: Sawmills – NC/SC Region
Canfor Southern Pine Sawmills – NC/SC Region SYP Sawmills, >60MMBF Annual Production SYP Sawtimber density by county 2011 FIA data (avg. yr.. 2009) CSP Sawmill SYP Sawmill C A N F O R C O R P O R A T I O N Page 24
Slide 25: Sawmills – Scotch Gulf Region
Canfor Southern Pine Sawmills – Scotch Gulf Region SYP Sawmills, >60MMBF Annual Production SYP Sawtimber density by county 2011 FIA data (avg. yr.. 2009) CSP Sawmill SYP Sawmill C A N F O R C O R P O R A T I O N Page 25
Slide 26: Log Quality Program
Canfor Log Quality Program Quality Logs = Quality Lumber • Currently have two Log Quality Foresters on staff • Inspect every load for quality at scales • Randomly select loads for more detailed inspection • Results communicated immediately to the harvesting contractor • Log Quality Forester availabl
Slide 27: Sustainable Forestry Initiative (SFI)
Sustainable Forestry Initiative (SFI) SFI involves the practice of sound land stewardship to meet the needs of the present without compromising the ability of future generations to meet their own needs. • Canfor Southern Pine is a certified participant in the SFI program at all our mills • 20% of ou
Slide 28: Canfor Southern Pine Operations
Canfor Southern Pine Operations Keith McGregor C A N F O R C O R P O R A T I O N Page 28
Slide 29: Safety Comes First at Canfor
Safety Comes First at Canfor Canfor Southern Pine takes pride in being an industry leader in safety 2011 Industry Average, All U.S. 2011 Industry Average, South Carolina Source: Company Data and U.S. Bureau of Labor Statistics C A N F O R C O R P O R A T I O N Page 29
Slide 30: Canfor Southern Pine Capital Program
Canfor Southern Pine Capital Program Over $60 million invested in CSP operations since Canfor acquisition in 2006 Recent major capital expenditures include: 2010/2011 – Planermill GradExpert Optimizers at all mills 2011/2012 – Conway Edger and Residue System Project 2011/2012 – Marion Fingerjo
Slide 31: Canfor Southern Pine Capital Program
Canfor Southern Pine Capital Program Current major capital expenditures include: 2012/2013 Conway Continuous Dry Kiln – New 210’ USNR Kiln – Start-up as steam-fired – Convert to direct-fired in 2014 2013 Darlington Two-Shift Expansion / Upgrade – New 170’ USNR Direct-fired Continuous Dry Kiln –
Slide 32: Canfor Southern Pine Reman Facility
Canfor Southern Pine Reman Facility Marion, SC Finger Joint SYP – Heat Rated Adhesive – Vertical Use Only Primed 1” S4S Fascia – 1x4 to 1x12 #2 Euro Spruce – All 16’ lengths 2x4 F/J #2 & stud 2x6 F/J #2 & stud T & G Decking W-SPF – 2x6-12’ & 16’ Premium C A N F O R C O R P O R A T I O N Pa
Slide 33: Canfor Southern Pine Wood Preserving
Canfor Southern Pine Wood Preserving Camden, SC and Conway, SC 160 MMfbm Capacity GatorGuard MCA – MicroPro by Osmose – SCS Certified EPP (environmental preferable product) – NAHB Green Approved – Building Code Compliant ICC ESR-2240 Delivered by New South Express C A N F O R C O R P O R A T
Slide 34: New South Express
New South Express Primary Functions Licensed Operating Region – CSP outbound finished lumber – Carolinas, Virginia & Georgia – By-product hauling for CSP mills – 2013 est. fleet miles – 6.5 million – Inbound freight to treating plants Safety and Technology – Backhauls – for hire – NPTC Safety
Slide 35: Questions?
Questions? C A N F O R C O R P O R A T I O N Page 35