Slide 1: Company Update May 2017
COMPANY UPDATE MAY 2017 A INTERFOR Building Value...
Slide 2: Forward-Looking Information
FORWARD-LOOKING INFORMATION This presentation contains information and statements that are forward- looking in nature, including, but not limited to, statements containing the words “will”, “is expected”, “forecast”, “annualized”, “target” and similar expressions. Such statements involve known and u
Slide 3: Interfor's Four Regions
INTERFOR’S FOUR REGIONS BC Coast rn s eee eeeeeenaeees : : 320 MMbf (11%) BC Interior i - 2 mills 9, - Cedar, Hem-Fir, : paver taal (25%) Douglas-Fir - Douglas-Fir, Hem-Fir, - Specialty SPF, Cedar ceevecoeeencesececvscoes - Dimension : US Northwest : 635 MMbf (20%) > -4 mills - Hem-Fir, Douglas-Fir,
Slide 4: 4th Largest Lumber Producer
4th LARGEST LUMBER PRODUCER Bbf North American Lumber Production by Company – 2016 6.0 5.0 4.0 3.0 2.0 1.0 - - Capacity Source: Wood Markets Monthly March 2017 4
Slide 5: Interfor Strategic Plan
INTERFOR STRATEGIC PLAN Growth by Acquisition Building Value Operational Excellence 5
Slide 6: Lumber Markets
sae, Se SANTERFOR inteneoe & A INTERFOR Building Value...
Slide 7: Interfor's Diverse Lumber Mix
INTERFOR’S DIVERSE LUMBER MIX Cedar Lumber Sales By Species 1 Hem-Fir Spruce-Pine-Fir 10% Western Dimension 9% Doug Fir/ Larch Southern 29% Yellow Pine 35% Southern Yellow Pine Lodge Pole Pine Lodge Pole/ Ponderosa Pine 4% Cedar 13% (1) By value for FY2016 7
Slide 8: North American Driven Business
NORTH AMERICAN DRIVEN BUSINESS Lumber Sales By Market 1 Canada 7% China/Tw/HK 4% USA Other 75% 5% Japan 9% (1) By value for FY2016 8
Slide 9: Benchmark Lumber Price Trends
BENCHMARK LUMBER PRICE TRENDS US/Mbf $475 2014 2015 2016 Q1 Q2 (1) 2017 2017 $450 $425 $400 $375 $350 $325 $300 $275 SYP Composite WSPF Composite $250 $400 $357 $382 $416 $437 $350 $279 $294 $339 $386 $225 Source: Random Lengths 9 (1) Includes prices up to May 5, 2017
Slide 10: Key Market Drivers
KEY MARKET DRIVERS 2016(1) 2017E(1) 2018E(1) US Housing Starts - Total (mm) 1.18 1.28 1.38 Change +9% +7% US Housing Starts - Single Family (mm) 0.78 0.86 0.94 Change +10% +9% NA Lumber Consumption (Bft) 54.2 56.6 58.9 Change +4% +4% NA Offshore Exports (Bft) 6.5 6.3 6.1 Change -4% -3% NA Offshore I
Slide 11: Operations Overview
A INTERFOR Building Value.. 11
Slide 12: Business Comparisons
BUSINESS COMPARISONS BC Interior Dimension Mills • 3 dimension mills in BC southern interior • Modern/low cost operations • Good fiber supply/limited exposure to pine beetle US South Dimension Mills • 9 dimension mills in Georgia, S. Carolina and Arkansas • Low cost wood baskets • Strong geographic
Slide 13: BC Interior Dimension Mills
BC INTERIOR DIMENSION MILLS A INTERFOR Building Value...
Slide 14: BC Interior Overview
BC INTERIOR OVERVIEW Mountain Pine Beetle Cumulative Percentage of Merchantable Forest Volume Killed Since 1999 Adams Lake Very High (>45%) High (31-45%) Moderate (16-30%) Castlegar Low (<16%) None (0%) Grand Forks Source: BC Ministry of Forests 14
Slide 15: BC Interior Modernization
BC INTERIOR MODERNIZATION 2008-09 2012 2015 Adams Lake, BC Grand Forks, BC Castlegar, BC • 3 MODERN MILLS IN GOOD FIBER BASKETS • RE-INVESTMENTS ARE COMPLETE • SIGNIFICANTLY REPOSITIONED THE ASSETS • STRONG CASH FLOW AND ROI • TOP DECILE/QUARTILE EBITDA MARGINS FOR THE BC INTERIOR 15
Slide 16: US South Dimension Mills
ai +P s _.US soutH DIMENSION MILLS A INTERFOR Building Value..
Slide 17: US South Overview
US SOUTH OVERVIEW • 1.3 Billion feet of lumber capacity across 3 States • Largest lumber producer in Georgia • 44% of Interfor’s capacity is in the South 17
Slide 18: US South: Started Up in 2013
US SOUTH: STARTED UP IN 2013 Phase 1 Phase 2 Phase 3 • 5 Acquisitions • Build Team / • Mill Improvements / Infrastructure Optimization 2013-15 2016-17 C$35 million Annual EBITDA Impact (1) 45% Captured By Q1-17 (1) Based on flat lumber prices and FX versus Q1-2016 18
Slide 19: Mill Improvements/Optimization
MILL IMPROVEMENTS/OPTIMIZATION Mill Reliability/Performance Product Mix Optimization BEFORE AFTER Modest Capex Kilns Autograding Optimization 19
Slide 20: Logistics – Right Log to Right Mill
LOGISTICS – RIGHT LOG TO RIGHT MILL Each circle is a 50 mile radius. 20
Slide 21: Financial Review
FINANCIAL REVIEW
Slide 22: Historical Financial Results
HISTORICAL FINANCIAL RESULTS Benchmark Lumber Prices ($/Mbf) Production Volumes (Mmbf) $450 800 672 700 639 618 618 637 628 607 640 $400 582 567 578 568 600 $350 495 500 447 470 418 390 $300 400 300 $250 WSPF Composite (US$/Mbf) 200 $200 WSPF Composite (C$/Mbf) 100 SYP Composite (US$/Mbf) $150 0 Q1
Slide 23: Capital Spending Profile
CAPITAL SPENDING PROFILE $mm $140 $120 $100 $80 $60 $40 $20 $0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E Depreciation, Depletion & Amortization(1) Capital Expenditures(2,3) (1) Includes depreciation of plant & equipment and depletion & amortization of logging roads, timbers and other. (2) I
Slide 24: Free Cash Flow Considerations
FREE CASH FLOW CONSIDERATIONS C$mm LTM Adjusted EBITDA (as of 3/31/17) $227 • Significant additional production volume and margin uplift opportunities in the US South. Less: Annualized Cash Interest Expense $(14) • Weighted average interest rate < 4%. 2017E Maintenance Capex $(55) • 2017E total cape
Slide 25: Capital Structure
CAPITAL STRUCTURE Capital Structure Debt Maturity Schedule (C$mm) As of Mar 31, 2017 As of Mar 31, 2017 Net Debt (C$mm) $307 $200 $180 Book Equity (C$mm) $805 $160 $140 Invested Capital (C$mm) $1,112 $120 Drawings Prudential Notes (4.17%) $100 on Bank Lines Net Debt / Invested Capital 28% $80 $60 $4