Slide 1: Investor Presentation August 2021
INVESTOR PRESENTATION AUGUST 2021
Slide 2: Forward-Looking Information & Non-GAAP Measures
FORWARD-LOOKING INFORMATION & NON-GAAP MEASURES Forward-Looking Information: This release 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. A sta
Slide 3: Interfor Investment Highlights
INTERFOR INVESTMENT HIGHLIGHTS Pure-play North American lumber producer • Fourth largest lumber producer in North America, with 21 strategically located sawmills • High exposure to US South region with attractive log costs Compelling lumber market fundamentals • Robust demand across all end-use segm
Slide 4: Financial & Operating Snapshot
FINANCIAL & OPERATING SNAPSHOT BENCHMARK LUMBER PRICES (US$/MBF) PRODUCTION VOLUMES (MMBF) $1,450 750 WSPF Composite (US$/Mbf) 700 $1,250 SYP Composite (US$/Mbf) 650 $1,050 600 $850 550 $650 500 $450 450 $250 400 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q3
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 the only publicly traded pure-play lumber producer of scale REVENUES BY BUSINESS SEGMENT (1) PEER #1 PEER #2 PEER #3 PEER #4 PEER #5 LUMBER PULP / PAPER ENGINEERED WOOD / PANELS TIMBERLANDS OTHER (1) Based on public filings for 2020; peers include West Fraser, C
Slide 7: Industry Landscape
INDUSTRY LANDSCAPE Interfor is the fourth largest lumber producer in North America NORTH AMERICAN LUMBER PRODUCTION BY COMPANY – 2020 (BBF) 7.0 6.0 5.0 4.0 3.0 2.0 1.0 - Source: International Wood Markets/FEA Canada Wood Markets Monthly March 2021; Interfor proforma WestRock and Georgia-Pacific acqu
Slide 8: Interfor Operating Regions
INTERFOR OPERATING REGIONS 57% of Interfor’s production capacity is in the US South BC INTERIOR 750 MMBF (19%) • 3 dimension mills • Douglas-Fir, Hem-Fir, SPF, Cedar • Efficient, modern, low-cost, well- capitalized dfdffffffffffffffffffffff dfdfd BC COAST 140 MMBF (4%) • 1 specialty/high-value mill
Slide 9: Regional Log Cost Trends
REGIONAL LOG COST TRENDS The US South has the most attractive and stable log costs in North America BC INTERIOR US NORTHWEST US SOUTH (INDEXED VS. 2013) (INDEXED VS. 2013) (INDEXED VS. 2013) 180% 180% 180% 160% 160% 160% 140% 140% 140% 120% 120% 120% 100% 100% 100% 80% 80% 80% 60% 60% 60% 40% 40% 40
Slide 10: Key Products & Markets
KEY PRODUCTS & MARKETS Diverse lumber species and end-use mix; high leverage to key US market LUMBER SALES BY SPECIES (1) LUMBER SALES BY MARKET (1) USA Spruce-Pine-Fir 91% 10% Hem-Fir 9% Southern Yellow Pine 46% Doug Fir/ Larch 32% Canada Japan 6% Cedar 1% Other China/Tw/HK 3% 1% 1% (1) By Value fo
Slide 11: Compelling Lumber Market Fundamentals
COMPELLING LUMBER MARKET FUNDAMENTALS
Slide 12: Lumber Prices
LUMBER PRICES Prices resetting following recent robust demand pull-through, as expected; finding support at historically attractive levels NORTH AMERICAN BENCHMARK LUMBER PRICES (US$/MBF) $1,800 $1,600 SYP Composite $1,400 Hem-Fir Stud #2 2x4 $1,200 WSPF Composite $1,000 $800 $600 $400 $200 Source:
Slide 13: Lumber Demand
LUMBER DEMAND Relatively stable R&R & industrial demand, with upside leverage to housing NORTH AMERICAN LUMBER DEMAND BY END-USE (BBF) 80 Domestic Residential Repair & Remodel (R&R) 70 Domestic Industrial/Commercial Domestic Residential New Home Construction Offshore Exports 60 50 40 30 20 10 - 2005
Slide 14: Lumber Demand: Key Drivers
LUMBER DEMAND: KEY DRIVERS Single-family US housing starts in 2021 are the highest since 2006 US HOUSING STARTS AGE OF US HOUSING STOCK (MILLIONS SEASONALLY ADJUSTED) (MEDIAN AGE IN YEARS) 1.7 Single-Family Multi-Family 43 1.6 1.5 41 1.4 1.3 39 1.2 37 1.1 1.0 35 0.9 0.8 33 0.7 0.6 31 0.5 0.4 29 0.3
Slide 15: Lumber Supply
LUMBER SUPPLY Measured supply growth in the US South, offset by ongoing declines in BC NORTH AMERICAN LUMBER PRODUCTION (BBF) (1) Region 2018 2019 2020 2021 US SOUTH Measured growth (three year CAGR of 3%), limited by labour availability South 18.8 19.4 20.8 20.8 and long equipment lead times West 1
Slide 16: Lumber Supply: BC Interior
LUMBER SUPPLY: BC INTERIOR Declining log supply across BC, but Interfor well-positioned in southern BC Mountain Pine Beetle Cumulative Percentage of Merchantable Forest Volume Killed Since 1999 Very High (>45%) High (31-45%) Moderate (16-30%) Low (<16%) None (0%) Adams Lake Castlegar Grand Forks Sou
Slide 17: Softwood Lumber Dispute
SOFTWOOD LUMBER DISPUTE Minimal exposure to duties with 77% of lumber capacity based in the US U.S. COUNTERVAILING & INTERFOR SOFTWOOD LUMBER ANTI-DUMPING CASH DEPOSIT RATES DUTIES HIGHLIGHTS COMPANY 2017-20 (1) 2020-21 (2) 2021-22 (3) US$158 MM West Fraser 23.56% 8.97% 11.38% Duties on Deposit Canf
Slide 18: Growth-Focused Strategy
GROWTH-FOCUSED STRATEGY
Slide 19: Interfor Growth Strategy
INTERFOR GROWTH STRATEGY Long-standing strategy of growth and geographic lumber diversification 2001 2012 2021 19% 17% 39% 4% 42% 57% 83% 20% 19% 0.8 BBF 1.7 BBF 3.9 BBF Note: Charts reflect production capacity. 19
Slide 20: Interfor Growth Strategy
INTERFOR GROWTH STRATEGY Interfor's strategy has been consistent over time and across regions Acquisitions have focused on assets with future potential Efforts post-acquisition are then focused on operational integration and the establishment of best practices, followed by capital investments US NOR
Slide 21: Multi-Year Strategic Capex Plan
MULTI-YEAR STRATEGIC CAPEX PLAN Multi-year strategic capex plan underway, primarily focused in the US South 2018 2019 2020 2021 2022 2023 2024 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O
Slide 22: Multi-Year Strategic Capex Plan
MULTI-YEAR STRATEGIC CAPEX PLAN Mill rebuilds, machine center upgrades, debottlenecking & optimization projects Eatonton, Georgia Monticello, Arkansas Canter Lines Continuous Kilns Molalla, Oregon Adams Lake, British Columbia 22
Slide 23: Capital Spending Profile
CAPITAL SPENDING PROFILE Strategic investments resulting in a well-capitalized, low-cost sawmill portfolio HISTORICAL CAPITAL EXPENDITURES & OUTLOOK ($MM) $250 Capital Expenditures - Discretionary $225 Capital Expenditures - Maintenance (Includes Woodlands Roads) Depreciation, Depletion & Amortizati
Slide 24: Top Tier Lumber Margins & Returns
TOP TIER LUMBER MARGINS & RETURNS
Slide 25: Top Tier Lumber Margins
TOP TIER LUMBER MARGINS Consistent top tier margin performance across all market conditions $1,075 LUMBER SEGMENT ADJ. EBITDA MARGINS ($/MBF) (1) $975 $875 $775 PEER GROUP HIGH/LOW RANGE $675 $575 $475 $375 $275 $175 $75 $(25) $(125) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2019 2020 2021 (1) Based on public f
Slide 26: Top Tier Return on Capital
TOP TIER RETURN ON CAPITAL Strategic capex plan and other capital deployment are having an impact EBIT RETURN ON CAPITAL EMPLOYED (%) 110% = 96% 90% Peer #1 = 88% 70% Peer #2 = 71% 50% 30% 10% ‐10% 2016 2017 2018 2019 2020 2021 YTD (1) Based on public filings; peers include West Fraser and Canfor 26
Slide 27: Balanced Capital Allocation with Significant Financial Flexibility
BALANCED CAPITAL ALLOCATION WITH SIGNIFICANT FINANCIAL FLEXIBILITY
Slide 28: Balanced Capital Allocation
BALANCED CAPITAL ALLOCATION Disciplined, multi-faceted approach to capital allocation depending on the circumstances HISTORICAL CAPITAL DEPLOYMENT ($MM) (1) $900 $800 $700 $600 $500 $400 $300 $200 $100 $‐ 2012 2013 2014 2015 2016 2017 2018 2019 2020 YTD 2021 Capex M&A Share Buy‐Backs Special Dividen
Slide 29: Recent Capital Allocation
RECENT CAPITAL ALLOCATION Balanced approach to recent capital deployment initiatives Internal Growth External Growth Multi-year strategic capital Disciplined lumber-focused M&A; program; total capex spend of Acquisition from WestRock in Q1- approx. $175 MM in 2021 and $200- 2021 & acquisition from G
Slide 30: WestRock Acquisition
WESTROCK ACQUISITION Logical tuck-in acquisition with operational and capital investment upside • Acquisition of WestRock’s sawmill in APPROX. LOG PROCUREMENT AREAS Summerville, South Carolina closed on March 12, 2021. • Cash consideration of US$59 MM, included log and lumber inventories. • Mill pro
Slide 31: Georgia-Pacific Acquisition
GEORGIA-PACIFIC ACQUISITION 23% increase to Interfor’s capacity at an attractive valuation • Acquisition of four high-quality US sawmills from Georgia-Pacific, closed on July 9, 2021 • Cash purchase price of US$372 MM, including working capital • Highly complementary to existing operations: • Region
Slide 32: Capital Structure
CAPITAL STRUCTURE Significant financial flexibility to consider a variety of capital deployment options CAPITAL STRUCTURE DEBT MATURITY SCHEDULE AS OF JUNE 30, 2021 ($MM) AS OF JUNE 30, 2021 ($MM) Cash $856 $140 $120 Prudential Notes (4.08%) Debt $365 $100 Net Debt (Cash) $(491) $80 Book Equity $1,5
Slide 33: Positive ESG & Carbon Story
POSITIVE ESG & CARBON STORY
Slide 34: Enhancing the Natural Carbon Cycle
ENHANCING THE NATURAL CARBON CYCLE Responsible forest management increases long-term carbon storage CO2 CO2 Growing Forest CO2 CO2 CO2 Seedling Mature Forest Decaying / Vulnerable Forest Releases stored carbon CO2 CO2 Comprehensive Replanting Responsible Harvesting in 2020 Interfor planted 11.8 Enab
Slide 35: Sustainable Manufacturing
SUSTAINABLE MANUFACTURING Lumber produced by Interfor stores 4x the carbon emitted in all phases of its production 86% of Interfor sites with kilns use renewable biomass energy for drying lumber 3.7 MM tonnes of CO2 stored in lumber sold by Interfor in 2020 vs. ~400,000 tonnes of CO2e avoided annual
Slide 36: Lumber: Low-Carbon Building Material
LUMBER: LOW-CARBON BUILDING MATERIAL Lumber is a climate-friendly building product vs. other alternatives Compared to the use of: CO2 CO2 Steel Emits 18.0kg CO2* CO2 1m2 of a building constructed using wood wall studs Stores net 16.7kg CO2* Concrete Emits 27.5kg CO2* * Carbon stored minus production
Slide 37: Responsibility at the Heart of the Company
RESPONSIBILITY AT THE HEART OF THE COMPANY Integrating ESG standards throughout our business ENVIRONMENT SOCIAL GOVERNANCE Climate: Safety: ESG Oversight: • We contribute meaningfully to the global effort to • We embrace world-leading safety standards and • 91% of directors are independent; combat c
Slide 38: Contact Information
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Slide 39: Investor Contacts
INVESTOR CONTACTS RICK POZZEBON MIKE MACKAY SVP & Chief Financial Officer VP, Corporate Development & Strategy 604-689-6804 604-689-6846 richard.pozzebon@interfor.com mike.mackay@interfor.com 39
Slide 40: Analyst Coverage
ANALYST COVERAGE BMO CAPITAL MARKETS Mark Wilde (212) 883-5102 mark.wilde@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) 659-8246 daryl.swetli