West Fraser Timber Co. Ltd. · TSX:WFG
West Fraser Timber — Q2 2020 Earnings Presentation
13 slides from West Fraser Timber's earnings presentation, July 2020
Slide 1: Q2 Earnings Presentation
Q2 Earnings Presentation July 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: Consolidated Financial Results
3 Consolidated Financial Results $ Millions $ Millions Adjusted EBITDA Q2-20 Q1-20 Q2-20 Q1-20 Lumber $ 156 $ 106 Sales $ 1,276 $ 1,195 Panels 20 8 Cost and Expenses 1,193 1,182 Pulp & Paper 10 11 Operating earnings 83 13 Corporate/Other (2) 2 Finance Expense (13) (16) Total $ 184 $ 127 Other 9 12 A
Slide 4: Q2 EBITDA Reconciliations
4 Q2 EBITDA Reconciliations $ millions Consolidated EBITDA Reconciliation Lumber EBITDA Reconciliation Improved pricing and costs over Q1
Slide 5: Q2-20 versus Q1-20
Q2-20 versus Q1-20 5 $ millions unless Q2 2020 Q1 2020 Change otherwise indicated Lumber Production (MMfbm) 1,424 1,501 (77) Temporary curtailments offset by increased productivity Lumber Shipments (MMfbm) 1,591 1,426 165 Catch up from Q1 delays, increased export shipments Adjusted EBITDA $184 $127
Slide 6: Liquidity
6 Liquidity Available liquidity improved to $800 million Cash consists of cash and short-term investments less cheques issued in excess of funds on deposit.
Slide 7: Demand conditions
Demand conditions 7 Leading indicator of Remodeling Activity U.S. Housing Starts (not seasonally adjusted) $B 4 Qtr Moving Improvements and Repairs 140 $340 8.0% 120 $330 7.0% 4 Qtr Moving rate of Change $320 6.0% 100 $310 M Starts 80 5.0% Seasonally adjusted: $300 60 4.0% 2018: 1,250 $290 40 2019:
Slide 8: U.S. Housing Situation
U.S. Housing Situation 8 Supply of new U.S. housing (1968-2019) 2,500 1982 is the only year before 2008 with fewer units than 1.2 million units 2,000 A deficit in housing has accumulated over the last 10+ years 1,500 Millions 1,000 500 0 1959 1964 1969 1974 1979 1984 1989 1994 1999 2004 2009 2014 20
Slide 9: Favourable Demographics
9 Favourable Demographics US Population by Age (at July 1, 2020) 5,000 4,500 29-30 year-olds are the largest age groups in 2020 4,000 3,500 3,000 MILLIONS 2,500 2,000 1,500 1,000 500 - 1 6 11 16 21 26 31 36 41 46 51 56 61 66 71 76 81 86 91 96 Source: FEA and https://www.census.gov/data/tables/time-s
Slide 10: Supply conditions
Supply conditions 10 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 North America BC US South US West Coast East of Rockies Source: FEA R-axis North America Offshore Imports 500 450
Slide 11: McDavid, Florida Update
11 McDavid, Florida Update Project Cost: $23 million USD Project Scope: Replace the existing primary breakdown line with new technology capable of operating 50% faster than the previous system with a reduced headcount and improved recovery and grade mix. Project Timeline: The project was commissione
Slide 12: McDavid, Florida
12 McDavid, Florida Production (mfbm / hour) 63% increase - Achieved targeted production per hour - Continuing to improve recovery - Premium grade improved 64%, 2&btr % continues to rise Manufacturing Costs ($/mfbm) 19% decrease - Per Unit Costs continue to decline with improved production - Startup
Slide 13: Summary
13 Summary Q2 2020 Recap Balance of Year Focus ✓ Lumber and panel markets came ✓ Continue to operationalize the back faster than expected benefits of prior year capital ✓ Supply chain inventory position ✓ Preserve and manage liquidity taking time to rebuild conservatively ✓ Liquidity substantially ✓