Slide 1: Company Overview
COMPANY OVERVIEW May 2015 A INTERFOR Building Value..
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS Information contained herein constitutes forward-looking statements. Forward-looking statements, which include all statements that are not historical facts, are subject to certain risks and uncertainties that could cause actual results to differ materially from those antic
Slide 3: The Interfor Way
THE INTERFOR WAY We conduct ourselves with honesty and integrity. We respect, value and engage our employees. We embrace world-leading safety and environmental standards. We are strategic, fact-based and proactive. We strive for excellence in everything we do. We are responsible for our own success.
Slide 4: Interfor Strategic Plan
INTERFOR STRATEGIC PLAN Growth by Building Value Operational Acquisition Excellence 4
Slide 5: Interfor's Four Regions
INTERFOR’S FOUR REGIONS BC Coast - 320 MMbf • 2 mills • Cedar, Hem-Fir, Douglas-Fir • Specialty BC Interior – 720 MMbf • 3 mills • Douglas Fir, Hem-Fir, SPF, Cedar • Dimension US South – 1,310 MMbf1 • 9 mills • Southern Yellow Pine • Dimension US Northwest – 890 MMbf • 5 mills & 1 finger-joint plant
Slide 6: Balanced Profile Across the Regions
BALANCED PROFILE ACROSS THE REGIONS • Approximately 2/3 of Interfor’s production capacity is in the US BC Coast 10% BC Interior 22% US Southeast BC 23% Southern Interior 33% US South US Northwest 40% 28% US Pacific Northwest 29% BC Coast 15% Capacity - 3.2 Bbf1 Notes: (1) Pro forma for Monticello ac
Slide 7: Production Growth
PRODUCTION GROWTH Quarterly Lumber Production 2010 - 2015 MMbf 750 700 Pro Forma Simpson1 650 and Monticello 600 550 500 450 400 350 300 250 200 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2010 2011 2012 2013 2014 2015 Notes: (1) Simpson transaction closed on March 1, 2015, theref
Slide 8: 4th Largest Lumber Producer
4th LARGEST LUMBER PRODUCER NA Lumber Production by Company 5.0 4.0 Pro Forma Simpson Production and Monticello Bbf 3.0 2.0 1.0 0.0 Source: Wood Markets monthly – March 2015 8
Slide 9: Capital Spending Profile
CAPITAL SPENDING PROFILE • Interfor has continually reinvested in its assets throughout the cycle • Current focus is on high-return projects $100.0 $90.0 $80.0 $70.0 $60.0 $ mm's $50.0 $40.0 $30.0 $20.0 $10.0 $0.0 2008 2009 2010 2011 2012 2013 2014 Q1 2015 Depreciation, Depletion & Amortization(1) C
Slide 10: State of the Art Operations
STATE OF THE ART OPERATIONS • Interfor has invested over $350 million in various strategic capital projects over the past several years, with additional projects now underway. Adams Lake, BC Grand Forks, BC Port Angeles, Washington Tacoma, Washington Swainsboro, Georgia Thomaston, Georgia 10
Slide 11: Diverse Lumber Mix
DIVERSE LUMBER MIX By Species1 Lodge Pole/ By Dimensions1 By Grades1 Ponderosa #3/ Utility/ Pine Studs #4/ Economy 4% Other (2) 15% Cedar Grade Doug Fir/Larch 22% 10% 14% 29% Specialty Grade(3) 35% Boards / Industrials Southern 6% Yellow Pine Hem‐Fir Dimension 32% 12% Narrows Dimension 41% #2/ Stand
Slide 12: Customers
CUSTOMERS • A large percentage of Interfor’s volume is currently sold into the US Pro Forma 2014(1) - Volumes C hina/Tw/ Euro & ME C anada HK 0.5% 8% 11% Japan 5% USA 76% Notes: (1) Interfor 2014 adjusted to include a full year of shipments resulting from the Tolleson and Simpson acquisitions. 12
Slide 13: Interfor's Capital Structure
INTERFOR’S CAPITAL STRUCTURE • Interfor is focused on maintaining a prudent capital structure Mar. 31, Dec. 31, C$ millions 2015 2014 Net debt $370 $203 Book Equity $730 $636 Invested capital $1,100 $839 Net debt / invested capital 34% 24% 13
Slide 14: Interfor's Debt Profile
INTERFOR’S DEBT PROFILE • As of March 31, 2015, available liquidity exceeded $170 mm. Debt Amortization Schedule (As of March 31, 2015, C$ mm’s) $160 $140 Drawings and L/C’s on credit lines $120 $100 Senior Secured Notes (avg. interest rate of 4.17%) $80 $60 $40 $20 $0 2014 2015 2016 2017 2018 2019
Slide 15: Key Takeaways
KEY TAKEAWAYS • Pure play in lumber. • Track record of growth over the last several years. • Acquisitions • Strategic capital investments • Balanced geographic base and diverse product offering. • Conservative balance sheet with additional financial capacity for future growth. • Business upside: • I
Slide 16: Appendix
APPENDIX A INTERFOR Building Value..
Slide 17: Monticello Acquisition
MONTICELLO ACQUISITION A INTERFOR Building Value.. 17
Slide 18: Monticello Mill - Deal Summary
MONTICELLO MILL - DEAL SUMMARY • Key transaction terms: (i) US$29.255 mm, plus (ii) spending reimbursement for three ongoing capital projects (primarily a continuous kiln project), plus (iii) closing log and lumber inventory • Near-term upside from: • Production increase from 75 MMbf to >100 MMbf (n
Slide 19: Transaction Background
TRANSACTION BACKGROUND • The Monticello, Arkansas mill is owned by The Price Companies, who operate chip mills across the US South and Maine. • The Monticello sawmill is Price’s only lumber operation. The sawmill is separate and standalone from the chip business. • The Southern Arkansas region is an
Slide 20: Monticello Mill Overview
MONTICELLO MILL OVERVIEW Good mill infrastructure Strong regional log supply Updated optimization controls Recent/ongoing capital projects to enhance operations 20
Slide 21: Industry Information
INDUSTRY INFORMATION A INTERFOR Building Value.. 21
Slide 22: US Housing Starts
US HOUSING STARTS Millions (SAAR) 2.4 2.2 2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6 Housing Starts 0.4 Underlying Demand Pent‐Up Demand 0.2 0.0 Source: FEA– May 2015 22
Slide 23: North American Lumber Consumption
NORTH AMERICAN LUMBER CONSUMPTION Bbf 80 87% 86% 70 85% 84% 60 83% 82% 50 81% 80% 40 79% 30 78% US Canada US Share (R) 77% 20 76% 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 Source: FEA– May 2015 23
Slide 24: China Markets – Wood Frame Construction
CHINA MARKETS – WOOD FRAME CONSTRUCTION Wood truss re-roofing Suburban villas (east and north China) (east, north, n-east, s-west) Low cost rural housing (south-west) Resort homes (north) 24
Slide 25: China Markets – Sectors Under Development
CHINA MARKETS – SECTORS UNDER DEVELOPMENT Public buildings Apartment infill walls / partition walls Multi-story residential Mixed-use hybrid 25
Slide 26: China Markets – Use of BC Wood
CHINA MARKETS – USE OF BC WOOD House framed with SPF lumber SPF used for furniture frames Cedar used as siding Cedar used as siding and for outdoor structures and for outdoor structures 26
Slide 27: Impact of Mountain Pine Beetle (MPB)
IMPACT OF MOUNTAIN PINE BEETLE (MPB) Million m3 1,600 1,400 1,200 1,000 800 >12 yrs 600 9-12 yrs 400 <8 yrs Live 200 0 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Source: FEA– April 2015 27
Slide 28: MPB – Area Affected
MPB – AREA AFFECTED • Interfor’s southern BC Interior wood baskets are less exposed to the MPB than BC’s central and northern interior regions; the Coast is not exposed. Interfor AAC1 MMm3 Central and Northern BC 0.0 50 – 75% Pine Adams Lake in Southern BC 0.7 28 – 30% Pine Castlegar & Grand Forks i
Slide 29: Favourable Log Supply in US South
FAVOURABLE LOG SUPPLY IN US SOUTH Growth & Drain, Bbf Int’1 ¼” Inventory, Bbf Int’l ¼” 50 300 45 290 Sawtimber 40 Inventory 280 35 270 30 260 Growth Drain 25 250 20 240 15 230 Growth 10 Drain 220 5 Inventory 210 0 200 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Source: FEA– April 2015 29
Slide 30: US South Sawtimber Prices
US SOUTH SAWTIMBER PRICES US$/Ton (Nominal $’s) $60.0 $50.0 $40.0 $30.0 $20.0 $10.0 $0.0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: FEA– December 2014 30
Slide 31: Regional Production vs Peak (Bbf)
REGIONAL PRODUCTION VS PEAK (Bbf) BC lumber Production Eastern Canada Lumber Production 16 9 14 8 12 7 Quebec Ontario Quebec Peak Ontario Peak 6 10 5 8 4 6 Inland Coast Coast Peak Inland Peak 3 4 2 2 1 0 0 00 02 04 06 08 10 12 14 16 18 20 00 02 04 06 08 10 12 14 16 18 20 US West lumber Production US