West Fraser Timber Co. Ltd. · TSX:WFG
West Fraser Timber — FY2018 Earnings Presentation
12 slides from West Fraser Timber's earnings presentation, February 2019
Slide 1: Earnings Presentation February 2019
EARNINGS PRESENTATION FEBRUARY 2019 1
Slide 2: General and Forward-looking Statements
General: This presentation and comments associated with it contains historical information, descriptions of current circumstances and statements about potential future developments and anticipated financial results. Readers are cautioned that this presentation is qualified in its entirety by referen
Slide 3: Demand conditions
Demand conditions Monthly Housing Starts Annual Leading indicator of Remodeling Activity 160 $340 8.0% $B 4 Qtr Moving Improvements and Repairs 140 7.0% $330 4 Qtr Moving rate of Change 120 6.0% $320 Repair and 100 renovation growth 5.0% $310 continues 80 4.0% $300 3.0% 60 2017: 1,203 $290 2.0% 40 2
Slide 4: Supply conditions
Supply conditions Billion fbm Lumber Supply Western Canada Curtailments MMfbm 60 300 Up 1.6% 50 250 40 200 Up 4.4% Mix of 30 temporary Down 1.8% 150 and 20 permanent Down 3.4% 100 10 50 0 BC Canada US Total NA 0 2018Q4 2019 Q1 2017 2018 Source: Western Wood Products Association, management estimates
Slide 5: Market volatility - Lumber
Market volatility - Lumber MMfbm WFT Shipments to Production differential Oversupply 100 50 0 -50 -100 -150 -200 Undersupply -250 Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 SPF SYP Difficult for quick production response, supply disruptions drive volatility 5
Slide 6: Lumber – key metrics
Lumber – key metrics Q418 Q318 Q3- Q4 Lumber production (MMfbm) 1,559 1,642 (83) • Log availability, wet weather, curtailments, maintenance, -5.1% capital commissioning Lumber shipments (MMfbm) 1,569 1,749 (180) • Shipments fall more into line with production for Q418 -10.3% after surge in Q2, Q3 to
Slide 7: Q4 Lumber Earnings Reconciliation
Q4 Lumber Earnings Reconciliation Price and product differentials key driver, seasonal volume impact 7
Slide 8: Year in Review
Year in Review 2018 2017 Change Lumber shipments (MMfbm) 6,582 6,101 481 • Increase largely from carryover of Gilman acquisition and 7.9% recovery from 2017 fire season Pulp shipments (Mtonnes) 1,138 1,167 (29) • Improvements at Slave Lake and Cariboo, maintenance -2% and downtime at Quesnel River p
Slide 9: Balanced Capital allocation
Balanced Capital allocation $3,000 Debt, Other & Retained, -2% 2015 through 2018 Buybacks & Dividends, 38% Capital $2,500 Expenditure , 43% $1,199 $2,000 Acquisitions, 21% $1.1B returned to $1,500 shareholders $2,801 $602 $100 $1,000 $110 $500 $1.8B Reinvested in the $942 business $42 $0 $90 Cash fr
Slide 10: Liquidity
Liquidity Available liquidity $900 Scheduled maturities $800 $600 $700 $500 $600 $400 $500 $400 $300 $300 $200 $200 $100 $100 $0 $0 2019 2020 2021 2022 2023 2024 2016 2017 2018 Term loan Notes Revolver Bank lines Cash Ample financial flexibility 10
Slide 11: Share repurchases
Share repurchases Cumulative investment in repurchases (millions of dollars) $1,500 $1,056 $1,087 $1,000 $500 $364 $381 $115 $174 $3 $0 2013 2014 2015 2016 2017 2018 2019 As of February 8, 2019 Average repurchase price: 2013 2014 2015 2016 2017 2018 2019 To date $44.60 $51.86 $55.57 $44.06 $68.45 $8
Slide 12: Summary
Summary Supply shocks from transportation and ✓ Lumber supply and demand weather contributed to volatile lumber fundamentals remain sound, industry price and earnings throughout 2018 curtailments will affect 2019 supply picture Another significant wildfire season in BC further compromises long term