Slide 1: Company Overview
COMPANY OVERVIEW September 2015
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 MMbf • 9 mills • Southern Yellow Pine • Dimension US Northwest – 650 MMbf • 4 mills • Hem-Fir, Douglas-Fir,
Slide 6: Balanced Profile Across the Regions
BALANCED PROFILE ACROSS THE REGIONS BC Coast BC Interior, 10% 24% US Southeast BC 23% Southern Interior 33% US Northwest 22% US Pacific Northwest US South 29% BC Coast 44% 15% Capacity - 3.0 Bbf 6
Slide 7: Production Growth
PRODUCTION GROWTH MMbf Quarterly Lumber Production 2010 - 2015 700 650 600 550 500 450 400 350 300 250 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2010 2011 2012 2013 2014 2015 7
Slide 8: 4th Largest Lumber Producer
4th LARGEST LUMBER PRODUCER Bbf North American Lumber Production by Company 6.0 5.0 4.0 3.0 2.0 1.0 - Source: Wood Markets Monthly – March 2015 (1) Annualized Q2-2015 production. 8
Slide 9: Capital Spending Profile
CAPITAL SPENDING PROFILE $mm’s $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 2008 2009 2010 2011 2012 2013 2014 1H 2015 Depreciation, Depletion & Amortization(1) Capital Expenditures(2,3) (1) Includes depreciation of plant & equipment and depletion & amortization of logging roads, timbers and other. (
Slide 10: State of the Art Operations
STATE OF THE ART OPERATIONS Adams Lake, BC Grand Forks, BC Castlegar, BC Port Angeles, Washington Swainsboro, Georgia Thomaston, Georgia 10
Slide 11: Diverse Lumber Mix
DIVERSE LUMBER MIX By Species1 By Dimensions1 By Grades1 (1) By value for 1H-2015. (2) Japan squares, cedar siding/decking/fascia and other export dimensions. 11 (3) Machine Stress Rated (“MSR”), J-Grade, Elite, Reserve, etc.
Slide 12: Customers
CUSTOMERS 1H 2015 Lumber Sales by Value China/Tw/HK Other 6% 4% Japan Canada 11% 8% USA 71% 12
Slide 13: Capital Structure
CAPITAL STRUCTURE • Interfor is focused on maintaining a prudent capital structure. • At June 30, 2015, Interfor had available liquidity of $121 mm under its credit facilities. Jun. 30, C$ millions 2015 Net Debt $431 Book Equity $704 Invested Capital $1,135 Net Debt / Invested Capital 38% 13
Slide 14: Debt Profile
DEBT PROFILE $mm Debt Maturity Schedule – As of June 30, 2015 $500 $450 $400 $350 $300 $250 Bank Lines $200 $150 Senior Secured Notes $100 (Avg. interest rate of 4.17%) $50 $0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 14
Slide 15: Key Initiatives
KEY INITIATIVES • Castlegar Mill Upgrade • $50 million investment to update aged infrastructure and outdated technology. • Project is on time and on budget, with construction completion expected in Q4 2015 and ramp-up to full operations in Q1 2016. • Tacoma Mill Exit • Acquired the mill as part of a
Slide 16: Industry Information
INDUSTRY INFORMATION A INTERFOR Building Value... 16
Slide 17: US Housing Starts
US HOUSING STARTS Millions 2.4 2.2 2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6 Housing Starts Pent-Up Demand 0.4 Underlying Demand 0.2 0.0 Source: FEA Q2-2015 Forecast; Published July 2015 17
Slide 18: Demand on North American Mills
DEMAND ON NORTH AMERICAN MILLS BBF 85 80 75 70 65 60 55 50 45 40 35 30 25 US Canada Net Exports 20 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Source: FEA Q2-2015 Forecast; Published July 2015 18
Slide 19: Impact of Mountain Pine Beetle (MPB)
IMPACT OF MOUNTAIN PINE BEETLE (MPB) Million m3 1,600 1,400 1,200 1,000 800 >12 yrs 600 9-12 yrs 400 <8 yrs 200 Live 0 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Source: FEA Q2-2015 Forecast; Published July 2015 19
Slide 20: MPB – Area Affected
MPB – AREA AFFECTED • Interfor’s southern BC Interior wood baskets are less exposed to the MPB than BC’s central and northern interior regions; the Coast is not exposed. Interfor AAC1 MMm3 Central and Northern BC 0.0 50 – 75% Pine Adams Lake in Southern BC 0.7 28 – 30% Pine Castlegar & Grand Forks i
Slide 21: Favourable Log Supply in US South
FAVOURABLE LOG SUPPLY IN US SOUTH Growth & Drain, BBF Int’l ¼” Inventory, BBF Int’l ¼” 50 300 45 290 Sawtimber Inventory 40 280 35 270 30 260 Growth Drain 25 250 20 240 15 230 Growth 10 Drain 220 5 Inventory 210 0 200 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Source: FEA Q2-2015 Forecas
Slide 22: US South Sawtimber Prices
US SOUTH SAWTIMBER PRICES US$/Ton (Nominal $’s) $60 $50 $40 $30 $20 $10 $- 2002 2004 2006 2008 2010 2012 2014 Source: FEA Q2-2015 Forecast; Published July 2015 22
Slide 23: 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