West Fraser Timber Co. Ltd. · TSX:WFG
West Fraser Timber — Investor Presentation (November 2020)
24 slides from West Fraser Timber's investor presentation, November 2020
Slide 1: Investor Presentation
Investor Presentation November 2020
Slide 2: Forward-looking statements and non-IFRS measures
2 General: This presentation and comments associated with it contains Accordingly, readers should exercise caution in relying upon forward- historical information, descriptions of current circumstances and looking- statements and WFT undertakes no obligation to publicly statements about potential fu
Slide 3: West Fraser Overview
West Fraser Overview
Slide 4: 2019 ESG Report
4 2019 ESG Report Full 2019 ESG Report SASB, GRI & TCFD disclosures westfraser.com/ESG-Report ESG Report Highlights http://bit.ly/WF-ESG-2019 Attractive ESG attributes, significantly upgraded reporting
Slide 5: Benefits of Wood | Reducing GHGs
Benefits of Wood | Reducing GHGs 5 West Fraser’s Actions: • Carbon stored in products: 9.4 million tonnes of CO2e (2019) • 75% of energy renewable • 69% from biomass • Reduced absolute GHGs 5% (vs. baseline 2005) • GHG emissions intensity reduced 9% since 2005 in solid wood manufacturing • GHGs redu
Slide 6: Sustainable Forestry, Renewable Resource
Sustainable Forestry, Renewable Resource 6 West Fraser is well-positioned to successfully transition to a lower-carbon global economy. ESG reporting & SASB disclosures: Westfraser.com/ESG-report
Slide 7: Product & Geographic Diversification
Product & Geographic Diversification 7 Lumber - 33 mills Panels - 7 mills Pulp and Paper - 5 mills NBSK: 570 Mtonnes SPF 3.5 Bfbm Plywood: 860 MMsf3/8” BCTMP: 690 Mtonnes SYP 3.2 Bfbm MDF: 250 MMsf3/4” Newsprint: 135 Mtonnes Total 6.7 Bfbm LVL: 2.6 MMcf Energy 870 GWhrs 2019 Revenue Mix by Business
Slide 8: Operations Diversification
Operations Diversification 8 Strategically located close to key timber regions and product markets
Slide 9: West Fraser Evolving Lumber Capacity
West Fraser Evolving Lumber Capacity 9 Capacity 2004 2.8 Billion feet Capacity 2020E 6.7 Billion feet US South 11% British Columbia 27% Alberta 12% US South 47% British Columbia 77% Alberta 26% 4.0 3.1 3.2 3.2 Capacity BBF 3.0 2.4 2.5 2.4 2.5 2.3 2.2 1.6 1.6 1.7 1.7 1.8 1.7 2.0 1.0 0.0 2015 2016 201
Slide 10: Consolidated Financial Results
Consolidated Financial Results 10 CAD$ Millions CAD$ Millions Adjusted EBITDA Q3-20 Q2-20 Q3-20 Q2-20 Lumber $ 552 $ 156 Sales $ 1,690 $ 1,276 Panels 51 20 Costs and Expenses 1,203 1,193 Pulp & Paper 5 10 Operating earnings 487 83 Corporate/Other (3) (2) Finance Expense (11) (13) Total $ 605 $ 184 O
Slide 11: Lumber EBITDA Margin (net of duties)
11 Lumber EBITDA Margin (net of duties) 3 of last 4 years > 20% 25% Actual 20% 10 year average 15% Trend 10% Strategic Pillars: • Strategically position capacity in low cost 5% jurisdictions, accessible to end markets • Modernize operations and leverage capital investment for efficiency • Manage ris
Slide 12: Capital Investment
Capital Investment 12 Capital Expenditure vs Amortization $500 200% Grade $400 150% Capacity / Recovery $300 Production 100% $200 50% $100 Modernization $0 0% initiatives 2015 2016 2017 2018 2019 Capital Depreciation Percent 2019 Segment Capital Expenditure 2019 Capital Expenditure by type $39 $9 $2
Slide 13: Liquidity
13 Liquidity Available liquidity Scheduled maturities $1,500 $900 $800 $700 $1,000 $600 $500 $400 $500 $300 $200 $100 $0 $0 2017 2018 2019 Q119 Q419 Q120 Q220 Q320 2020 2021 2022 2023 2024 Bank lines Cash Term loan Notes Revolvers Debt to capitalization 60% 40% 20% 0% 2017 2018 2019 Q219 Q419 Q120 Q
Slide 14: Balanced Capital allocation
Balanced Capital allocation 14 Debt service, 4% Net Cash, 6% Dividends & Buybacks, 32% Capital Consistently deploying Expenditure, capital to create value 43% Acquisitions, 15%
Slide 15: Total Shareholder Return
Total Shareholder Return 15 Annualized Total Shareholder return from January 1, 2006 to October 23, 20201 9.0% 7.8% 8.0% 7.2% 7.0% 6.1% 6.0% 5.0% 4.0% 2.9% 3.0% 1.9% 2.0% 1.0% 0.0% -1.0% -0.3% West Fraser TSX Lumber 1 OSB 1 Lumber 2 OSB 2 Source: Capital IQ, Bloomberg Total Shareholder Return compri
Slide 16: Market Overview
Market Overview
Slide 17: North America Lumber End Use and Consumption
North America Lumber End Use and Consumption 17 North America Lumber End Use 2019 Non-residential Other 6% New Residential Residential improvements 30% and industrial demand Industrial 26% are lower volatility demand drivers Residential Improvements 38% North America Lumber Consumption 35 30 25 Bill
Slide 18: Demand conditions
Demand conditions 18 U.S. Housing Starts (not seasonally adjusted) Leading indicator of Remodeling Activity $B 4 Qtr Moving Improvements and Repairs 160 $340 8.0% 140 $330 7.0% 120 4 Qtr Moving rate of Change $320 6.0% M Starts 100 $310 80 5.0% Seasonally adjusted: $300 60 2018: 1,250 4.0% $290 40 2
Slide 19: Supply conditions
Supply conditions 19 North America Lumber Supply (Production) 20 6 5 15 Billion Board Feet Billion Board Feet 4 10 3 2 5 1 0 0 Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20E North America BC US South US Other Q3 NA production 300Mmfbm lower than Q118 R-axis Source: FEA, managemen
Slide 20: Prices trending higher
Prices trending higher 20 $/Mfbm SPF 2x4 Benchmark History $1,000 $948 $800 $629 $600 $403 $400 $312 $200 $245 $153 $- 2006 2008 2010 2012 2014 2016 2018 2020 SPF 2x4 W Cycle Trough Cycle Peak Linear (SPF 2x4 W) $/Mfbm SYP 2x4 Benchmark History $1,000 $892 $800 $589 $600 $483 $400 $301 $332 $200 $22
Slide 21: BC Interior Log Supply Conditions
BC Interior Log Supply Conditions 21 BC Interior SPF Purchase Log Cost 65 14 $110 Billion BF (softwood lumber production) 60 12 $100 Million m3 (AAC and Harvest) 55 10 $90 50 8 $/M3 45 6 $80 40 4 $70 35 2 $60 30 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 AAC M3 $50 2014 2015 2016 2017
Slide 22: West Fraser Timber Co. Ltd.
West Fraser Timber Co. Ltd. 22 These materials have been prepared by Management of the Company. No regulatory authority has approved or disapproved of the contents of these materials. These materials do not constitute an offer to sell or the solicitation of an offer to buy any securities of the Comp
Slide 23: Appendix
re] West Fraser - i; “PARPENDIX /
Slide 24: Earnings Sensitivity to Key Variables
Earnings Sensitivity to Key Variables 24 Estimated Earnings Sensitivity to Key Variables1 (2019) (based on 2019 production - $ millions) Factor Variation Change in pre-tax earnings Lumber price US$10 (per Mfbm) 78 Plywood price Cdn$10 (per Msf) 8 NBSK price US$10 (per tonne) 6 BCTMP price US$10 (per
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