West Fraser Timber Co. Ltd. · TSX:WFG
West Fraser Timber — Investor Presentation (September 2020)
22 slides from West Fraser Timber's investor presentation, September 2020
Slide 1: Investor Presentation
Investor Presentation September 2020
Slide 2: Forward-looking statements and non-IFRS measures
2 General: This presentation and comments associated with it contains . historical information, descriptions of current circumstances and Accordingly, readers should exercise caution in relying upon forward- statements about potential future developments and anticipated financial looking- statements
Slide 3: West Fraser Overview
West Fraser Overview
Slide 4: We Attain Value from 100% of Our Resources
We Attain Value from 100% of Our Resources 4 Sustainably managed forest lands Plywood & LVL Lumber Reforestation Sawdust & shavings Chips Bark (fuel) MDF Supply agreements BCTMP Pulp NBSK Pulp Bioproducts Heat & (e.g. pellet plants) Electricity Integrated fiber strategy to maximize the value of the
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 Panels Pulp & Paper 33 mills 7 mills 5 mills SPF 3.5 Bfbm Plywood: 860 MMsf3/8” NBSK: 570 Mtonnes SYP 3.2 Bfbm MDF: 250 MMsf3/4” BCTMP: 690 Mtonnes Total 6.7 Bfbm LVL: 2.6 MMcf Newsprint: 135 Mtonnes 2019 Revenue Mix by Business Segment Lumber Panels Pul
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 $ Millions Adjusted EBITDA Q2-20 Q1-20 Q2-20 Q1-20 Sales $1,276 $ 1,195 Lumber $156 $ 106 Cost and Expenses 1,193 1,182 Panels $20 8 Operating earnings 83 13 Pulp & Paper $10 11 Finance Expense (13) (16) Corporate/Other (2) 2 Other (3) 12 Earnings before Tax 67 $ 9
Slide 11: Capital Investment
Capital Investment 11 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 12: Liquidity
12 Liquidity Available liquidity Scheduled maturities $1,000 $900 $800 $800 $700 $600 $600 $500 $400 $400 $300 $200 $200 $100 $0 $0 2017 2018 2019 Q119 Q419 Q120 Q220 2020 2021 2022 2023 2024 Bank lines Cash Term loan Notes Revolvers Financial Covenants 60% • Substantial cash cushion will provide li
Slide 13: Balanced Capital allocation
Balanced Capital allocation 13 Debt, 4% Dividends & Buybacks, 35% Capital Consistently deploying Expenditure, capital to create value 45% Acquisitions, 16%
Slide 14: West Fraser Total Shareholder Return
West Fraser Total Shareholder Return 14 TSR June 2006 to August 31, 2020 14% Cdn$ Million Share Value Traded Source: TD 10,000 12% 10.8% 10.9% 8,000 10% 8% 6,000 6.6% 6.2% 6.2% 6% 5.4% 4,000 3.8% 4% 3.0% 2,000 2% 0 0% 2019 2018 2017 West S&P DAX S&P/TSX FTSE Competitor Competitor Competitor Fraser A
Slide 15: Market Overview
Market Overview
Slide 16: North America Lumber End Use and Consumption
North America Lumber End Use and Consumption 16 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 17: Demand conditions
Demand conditions 17 Leading indicator of Remodeling Activity U.S. Housing Starts (Not Seasonally adjusted) $340 8.0% $B 4 Qtr Moving Improvements and Repairs 160 140 $330 7.0% 4 Qtr Moving rate of Change 120 $320 6.0% $310 M Starts 100 5.0% 80 $300 Seasonally adjusted: 4.0% 60 $290 2018: 1,250 3.0%
Slide 18: Supply conditions
Supply conditions 18 Billion board feet Lumber Shipments 35 (six month ended June 30) Down 7% 30 25 Up 2% 20 Down 20% Up 6% 15 Down 34% 10 5 0 BC Canada US South US Total NA 2018 2019 2020 Source: WWPA North America Offshore Imports 600 2018: 1,562 500 2019: 1,508 2020: 942 Ytd 400 MMfbm 300 200 100
Slide 19: BC Interior Log Supply Conditions
BC Interior Log Supply Conditions 19 65 14 BC Interior SPF Purchase Log Cost $110 Billion BF (softwood lumber production) 60 12 Million m3 (AAC and Harvest) $100 55 10 50 8 $90 45 6 $/M3 $80 40 4 35 2 $70 30 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 $60 AAC M3 Harvest M3 $50 2014 2015
Slide 20: West Fraser Timber Co. Ltd.
West Fraser Timber Co. Ltd. 20 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 21: Appendix
re] West Fraser - i; “PARPENDIX /
Slide 22: Earnings Sensitivity to Key Variables
Earnings Sensitivity to Key Variables 22 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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