Slide 1: Investor Presentation November 2023
INVESTOR PRESENTATION NOVEMBER 2023
Slide 2: Forward-Looking Information & Non-GAAP Measures
FORWARD-LOOKING INFORMATION & NON-GAAP MEASURES Forward-Looking Information: This presentation contains forward-looking information about Interfor Corporation’s (“Interfor” or the “Company”) business outlook, objectives, plans, strategic priorities and other information that is not historical fact.
Slide 3: Interfor Investment Highlights
INTERFOR INVESTMENT HIGHLIGHTS Pure-play North American lumber producer of scale • Top three softwood lumber producer in North America, with 32 strategically located facilities • High exposure to US South, Eastern Canada and Atlantic Canada with attractive log costs Compelling lumber market fundamen
Slide 4: Investor Value Proposition
INVESTOR VALUE PROPOSITION Attractive Earnings Through the Cycle Consistently Growing Volumes $500 $450 ADJUSTED EBITDA MARGIN PER UNIT ($C/MBF) 4,000 LUMBER PRODUCTION VOLUMES (MMBF) $400 3,500 $350 3,000 $300 2,500 $250 2,000 $200 1,500 $150 10-year avg = $133/MBF $100 1,000 $50 500 $- - Increasin
Slide 5: Pure-Play North American Lumber Producer
PURE-PLAY NORTH AMERICAN LUMBER PRODUCER
Slide 6: Pure-Play Lumber Producer
PURE-PLAY LUMBER PRODUCER Interfor is a North American focused, pure-play softwood lumber producer INTERFOR 2022 REVENUES BY SOURCE Softwood Lumber (85%) Other Wood Products (4%) Dimensional lumber primarily for Primarily I-joists - engineered wood structural members framing/structural applications,
Slide 7: Lumber Species & Markets
LUMBER SPECIES & MARKETS Diverse lumber species mix; high leverage to key US market INTERFOR INTERFOR LUMBER SALES BY SPECIES (1) LUMBER SALES BY MARKET (1) USA 84% Spruce-Pine-Fir (SPF) 32% Southern Yellow Pine Hem-Fir 45% 4% Japan Doug Fir/ <1% Larch 18% Other Cedar China/Tw/HK Canada <1% 1% 1.2%
Slide 8: Lumber Industry Landscape
LUMBER INDUSTRY LANDSCAPE Interfor is a top three producer in North America and the only publicly traded pure-play lumber producer of scale NORTH AMERICAN LUMBER PRODUCTION BY COMPANY – 2022 (BBF) (1) 7.0 6.0 5.0 4.0 3.0 2.0 1.0 - Source: International Wood Markets/FEA Canada Wood Markets Monthly Ma
Slide 9: Interfor Operations
INTERFOR OPERATIONS EASTERN CANADA 985 MMBF (19%) • 4 stud mills; 3 dimension mills; 1 I-Joist BC INTERIOR facility; 1 remanufacturing facility 750 MMBF (14%) • Spruce – Pine – Fir (SPF) • 3 dimension mills; 1 remanufacturing • Efficient, well-run, well-maintained facility (Sumas, WA) • Douglas-Fir,
Slide 10: Compelling Lumber Market Fundamentals
COMPELLING LUMBER MARKET FUNDAMENTALS
Slide 11: Lumber Prices
LUMBER PRICES Recent prices finding support with ongoing volatility expected near-term NORTH AMERICAN BENCHMARK LUMBER PRICES (US$/MBF) $2,000 $1,800 Southern Yellow Pine $1,600 US Northwest Hem-Fir Western SPF $1,400 Eastern SPF $1,200 $1,000 $800 $600 $400 $200 Source: Random Lengths (includes pri
Slide 12: Lumber Demand
LUMBER DEMAND Diversified end-use demand drivers across R&R, industrial and housing NORTH AMERICAN LUMBER DEMAND KEY DEMAND DRIVERS BY END-USE Repair & Remodel (R&R) Repair & • Housing stock > 40 years old on 38% Remodel average • Strong household balance sheets New Home • Strong fundamentals, despi
Slide 13: Lumber Demand: Key Drivers
LUMBER DEMAND: KEY DRIVERS Underlying housing fundamentals remain favourable, despite near-term volatility US HOUSING STARTS AGE OF US HOUSING STOCK (MILLIONS SEASONALLY ADJUSTED) (MEDIAN AGE IN YEARS) 1.9 43 Single-Family Multi-Family 1.8 1.7 41 1.6 1.5 50-year avg = 1.45 MM 39 1.4 1.3 37 1.2 1.1 1
Slide 14: Lumber Supply
LUMBER SUPPLY Measured supply growth in the US South, offset by ongoing declines in BC US SOUTH Measured growth (five-year CAGR of only 3%), NORTH AMERICAN LUMBER PRODUCTION (BBF) limited by labour availability and long equipment (1) lead times 2019 2020 2021 2022 2023 US WEST & CANADA (NON-BC) US -
Slide 15: Lumber Supply: BC Interior
LUMBER SUPPLY: BC INTERIOR Declining BC industry log supply, but Interfor well-positioned in southern BC Mountain Pine Beetle BC INTERIOR ALLOWABLE Cumulative Percentage 70.0 ANNUAL CUT (MM M3) of Merchantable Forest Volume Killed Since 23% reduction from 2010 to 1999 60.0 2023; additional 18% reduc
Slide 16: Lumber Supply: European Imports
LUMBER SUPPLY: EUROPEAN IMPORTS European imports surged in late 2022/early 2023, but have since declined notably 800 US LUMBER IMPORTS FROM DAMAGED TIMBER IN CENTRAL 140 EUROPE (‘000 M3) EUROPE (MM M3) 700 120 100 Amount of damaged timber peaked in 2020 600 80 60 500 40 20 400 0 2017 2018 2019 2020
Slide 17: Softwood Lumber Dispute
SOFTWOOD LUMBER DISPUTE Limited exposure to duties with 60% of lumber capacity based in the US U.S. COUNTERVAILING & INTERFOR SOFTWOOD LUMBER ANTI-DUMPING CASH DEPOSIT RATES DUTIES HIGHLIGHTS APPLICABLE TO INTERFOR (1) 21% 20.23% US$540 MM 17.91% Duties on Deposit 18% Duties paid by Interfor and hel
Slide 18: Top-Tier Margins & Returns on Capital
TOP-TIER MARGINS & RETURNS ON CAPITAL
Slide 19: Industry Leading Operating Margins
INDUSTRY LEADING OPERATING MARGINS Focus on operational excellence reflected in superior margin performance LUMBER SEGMENT ADJ. EBITDA MARGINS – 2020 TO 2022 (C$/MBF) (1) $350 $300 $250 $200 $150 $100 $50 $- Interfor Peer #1 Peer #2 Peer #3 (1) Peers include Canfor North America, Weyerhaeuser and We
Slide 20: Interfor Regional Operating Margins
INTERFOR REGIONAL OPERATING MARGINS Consistent margins across regions over time, but achieved via different routes INTERFOR CASH MARGIN (AVG. OF 2016-2022) (C$/MBF) Mill Net Selling Price Net Log Costs Conversion Costs MARGIN (1) (2) BC Interior US Northwest US South Eastern Canada (1) Eastern Canad
Slide 21: Focus on Return on Capital
FOCUS ON RETURN ON CAPITAL Disciplined and balanced capital deployment is having an impact; improvement in relative performance vs. peers in recent years EBIT RETURN ON CAPITAL EMPLOYED (%) (1) (2010-2019 AVERAGE) (2020-2023 AVERAGE) (2) 14% 30% 12% 25% 10% 20% 8% 15% 6% 10% 4% 2% 5% 0% 0% Interfor
Slide 22: Growth-Focused Strategy
GROWTH-FOCUSED STRATEGY
Slide 23: Growth & Diversification Strategy
GROWTH & DIVERSIFICATION STRATEGY Long-standing strategy of growth and geographic lumber diversification (1) 2001 2012 2021 2023 19% 14% 4% 19% 17% 45% 39% 42% 57% 83% 20% 19% 7% 15% 0.8 BBF 1.7 BBF 3.9 BBF 5.2 BBF BC Interior US Northwest Eastern Canada BC Coast US Southeast Atlantic Canada (1) Cha
Slide 24: Internal Growth: Multi-Year Capex Plan
INTERNAL GROWTH: MULTI-YEAR CAPEX PLAN Mill rebuilds, machine center upgrades, debottlenecking & optimization projects Molalla, Oregon Eatonton, Georgia Continuous Kilns Thomaston, Georgia Adams Lake, British Columbia 24
Slide 25: Internal Growth: Capex Spending Profile
INTERNAL GROWTH: CAPEX SPENDING PROFILE Strategic investments resulting in a well-capitalized, high-margin sawmill portfolio HISTORICAL CAPITAL EXPENDITURES & OUTLOOK ($MM) $320 Capital Expenditures - Discretionary $300 Capital Expenditures - Maintenance (Includes Woodlands Roads) $280 Depreciation,
Slide 26: Balanced Capital Allocation & Optimized Capital Structure
BALANCED CAPITAL ALLOCATION & OPTIMIZED CAPITAL STRUCTURE
Slide 27: Balanced Capital Allocation
BALANCED CAPITAL ALLOCATION Capital deployed in a disciplined and balanced manner to maximize returns CAPITAL DEPLOYMENT SUMMARY – 2020 TO 2023 ($MM) (1) $553 $101 ~C$2.3 B Reinvested $3,000 $12 $91 $2,500 $2,402 $2,000 $753 $1,500 Cash Inflows $1,000 ~C$636 MM Returned Cash Outflows $500 $1,563 $-
Slide 28: Optimized & Low-Cost Capital Structure
OPTIMIZED & LOW-COST CAPITAL STRUCTURE Efficient, flexible and low-cost capital structure. Combination of long-term, laddered maturity, fixed-rate debt and flexible variable-rate revolving facility CAPITAL STRUCTURE SENIOR SECURED NOTES AS OF SEPTEMBER 30, 2023 ($MM) MATURITY SCHEDULE AS OF SEPTEMBE
Slide 29: Conservative Leverage Maintained
CONSERVATIVE LEVERAGE MAINTAINED Conservative leverage maintained to provide flexibility through all markets. Near-term leverage expected to benefit from income tax refunds and net proceeds from disposition of Coastal BC forest tenures HISTORICAL NET DEBT – TO – INVESTED CAPITAL RATIO (%) (1) 50% Le
Slide 30: Positive ESG & Carbon Story
POSITIVE ESG & CARBON STORY
Slide 31: Building Value Sustainably
BUILDING VALUE SUSTAINABLY Respecting Nature. Building Sustainably. A Sustainability Strategy to Match our Growth Ambition. Long-standing strategy of Commitment to growing in a Dedicated ESG leader and purposeful growth and way that makes the world a renewed sustainability geographic lumber better p
Slide 32: Climate - Actions
CLIMATE - ACTIONS Interfor recognizes the global significance of climate change and our role in tackling this important issue by reducing our own environmental impacts and advancing sustainable wood products as part of the climate solution. KEY CLIMATE ACTIONS GHG Reductions: Target to reduce our Sc
Slide 33: Climate – Opportunities
CLIMATE – OPPORTUNITIES CO2 Building with wood is part of the natural climate solution. Sustainable forest management, including the production of timber, fiber and energy, has been recognized by the United Nation’s International Panel on Climate Change as the largest sustained climate-mitigation be
Slide 34: People – Diversity & Development
PEOPLE – DIVERSITY & DEVELOPMENT Interfor builds value for employees by providing a career where they contribute, grow and prosper. We value diversity and inclusivity and We have a culture of promoting from we have set targets to increase within and investing in our people. diversity in our leadersh
Slide 35: People – Partnerships & Communities
PEOPLE – PARTNERSHIPS & COMMUNITIES INDIGENOUS PARTNERSHIPS LOCAL COMMUNITIES • We respect the deep connection Indigenous • More than $1.2 million in donations annually. Peoples have to the land and work with them • Announced a formal partnership with to develop strong relationships and are Habitat
Slide 36: Safety
SAFETY Interfor demonstrates industry-leading safety performance and continuously strives to foster a strong safety culture. INTERFOR MEDICAL INCIDENT RATE Medical Incident Rate represents the rate of recordable incidents per 100 employees working full time in a year. • Over the past 10 years we’ve
Slide 37: Contact Information & Resources
CONTACT INFORMATION & RESOURCES
Slide 38: Analyst Coverage
ANALYST COVERAGE BMO CAPITAL MARKETS Ketan Mamtora (212) 883-5102 ketan.mamtora@research.bmo.com CIBC CAPITAL MARKETS Hamir Patel (604) 331-3047 hamir.patel@cibc.com EQUITY RESEARCH Kevin Mason (604) 886-5741 kmason@equityresearchassociates.com ASSOCIATES RAYMOND JAMES Daryl Swetlishoff (604) 659-82
Slide 39: Contacts & Resources
CONTACTS & RESOURCES RICK POZZEBON MIKE MACKAY EVP & Chief Financial Officer VP, Corporate Development & Treasury 604-689-6804 604-689-6846 richard.pozzebon@interfor.com mike.mackay@interfor.com BRYAN FAST ADDITIONAL RESOURCES Director, Corporate Development & Investor Relations 604-451-2823 bryan.f