Western Forest Products Inc. · TSX:WEF
Western Forest Products — Investor Presentation (May 2017)
23 slides from Western Forest Products's investor presentation, May 2017
Slide 1: Investor Presentation May 2017
INVESTOR PRESENTATION May 2017 z 0 0
Slide 2: Forward Looking Statements and Non-GAAP Financial Measures
Forward Looking Statements and Non-GAAP Financial Measures All financial references are expressed in C$ unless otherwise noted. This presentation contains forward looking statements and estimates. Actual company results could differ materially from a conclusion, forecast or projection in the f
Slide 3: Western Forest Products: Company Overview
Western Forest Products: Company Overview 5th largest Canadian lumber producing company Operating on the coast of British Columbia, serving global markets — Largest Crown timber tenure holder in Coastal B.C. — Largest Cedar lumber manufacturer in North America — Timber resource unaffected by Mou
Slide 4: A Compelling Pure-Play, Solid Wood Products Investment
A Compelling Pure-Play, Solid Wood Products Investment -Margin-focused business strategy. -Superior timber asset base and secure fibre supply. -High-value, diverse products serving global markets. -Strong financial position with attractive cash flow profile. -Business of scale with a liqui
Slide 5: Margin-Focused, Log and Specialty Lumber Company
Western Forest Products: Margin-Focused, Log and Specialty Lumber Company Revenue from 2010 – Q1 2017 LTM LTM1 revenue of $1.2 billion and EBITDA of $147 million. Targeted Products to Selected Customers of Scale. Revenue by Product1 Revenue by Market Area1 Revenue by Currency1 (1) Last twelve mo
Slide 6: Western Forest Products: A Margin-Focused Business
Western Forest Products: A Margin-Focused Business Hemlock / Balsam Western Red Douglas Yellow Diverse and Unique Species Mix Cedar Spruce Fir Cedar Diverse and Unique Species Mix Hemlock / Balsam Yellow Cedar Annual Allowable Log Cut (AAC) for Logs Purchases1 ~ 6.1 million m3 ~ 1.7 million m3 ~66%
Slide 7: Log Strategy: Directing Volume to Highest Margin Opportunity
Log Strategy: Directing Volume to Highest Margin Opportunity Primary Target Log End Market Description Geographies % Value1 % Volume1 All five species of Western’s sawlogs consumed by Canada internal manufacturing operations. WFP Sawmills Internal log supply supplemented by open market purchas
Slide 8: Western's Scale Creates Unique Marketing Opportunity
Western’s Scale Creates Unique Marketing Opportunity Log Supply Marketing Strategy Manufacturing Strategy Sales Strategy 24”+ 20 - 30” 16 - 22” 11 - 18” 5 – 11” Log Cutting Patterns WFP Product Narrow Wide Squares Timbers Grade & Group Dimension Dimension Appearance WFP Marketing Commodity Commodity
Slide 9: Diversified Lumber Product Offering Allows Western to Profitably Serve Multiple Markets
Diversified Lumber Product Offering Allows Western to Profitably Serve Multiple Markets Throughout the Cycle Primary Target Lumber Segment Description Geographies Example Products % Value1 % Volume1 Consumer-orientated U.S. Western Red products. Canada Naturally durable. Cedar Ideal for ou
Slide 10: Specialty Products Reduce EBITDA Volatility
Specialty Products Reduce EBITDA Volatility 79% of Western’s lumber revenue is WFP Lumber Sales/mfbm vs. Lumber Price1,3 generated from non-commodity products. Specialty lumber sells at a significant premium to commodity lumber. Specialty products provide more stable margins. EBITDA Margins2,3
Slide 11: Seasonality Can Impact EBITDA Margins
Seasonality Can Impact EBITDA Margins Harvest Volume and Log Inventory (1) Weather (Snow Pack, Heat) and daylight can impact harvest volumes and costs. Inventory levels can fluctuate through the year, impacting working capital. Seasonal market demand can impact Average Lumber Production (1) lu
Slide 12: Western's Business to Benefit from Global Supply/Demand Factors
Western’s Business to Benefit from Global Supply/Demand Factors Highly Attractive Underlying Supply/Demand Dynamics 1 Housing market and repair and remodel activity recovering U.S. Economic from trough levels. and Housing Transition from supply driven to demand driven market Market Recovery expe
Slide 13: New Supply/Demand Dynamics Will Positively Impact Lumber Pricing
New Supply/Demand Dynamics Will Positively Impact Lumber Pricing Reduced supply from traditional sources combined with increased demand from U.S. and Asian markets is expected to benefit lumber prices. Housing Starts (North American and Lumber Export Equivalent) vs. Western SPF Lumber Pricing Sour
Slide 14: Competitive Strengths
Competitive Strengths 1. A sustainable, diverse Timber Base providing a unique range of products. 2. Customer of choice for other coastal log producers due to competitive advantages of scale, financial strength and proximity. 3. Flexible manufacturing platform that can target a variety of global mar
Slide 15: Capital to Contribute Significantly to EBITDA
Capital to Contribute Significantly to EBITDA $125 million of strategic Investments 2012 2015 capital projects are 2017 Total ($millions) - 2014 - 2016 focused on: – Reducing costs Approved $58.9 $38.8 $4.2 $101.9 – Increasing efficiency – Improving product flexibility Future - - $23.1 $23.1 – Gro
Slide 16: Softwood Lumber Dispute Timeline
Softwood Lumber Dispute Timeline (1) In the event of a negative determination by the DOC, the case ends (2) A final determination of critical circumstances will also be rendered around this time by the ITC The timeline reflects the expected alignment of the CVD and ADD cases (i.e. the final CVD and
Slide 17: Appendix
WFP Appendix WESTERN FOREST PRODUCTS INC.
Slide 18: Non-Core Assets
Non-Core Assets Asset Asset Description Description Northern Lands cover approximately 15,000 hectares of freehold Private property located on northern Vancouver Island Timberlands Southern 24 fee simple properties HBU Lands Range in size from 2 to 255 hectares Orca Quarry JV between Polaris
Slide 19: Demand Drivers: U.S. Economic and Housing Market Recovery
1 Demand Drivers: U.S. Economic and Housing Market Recovery U.S. Housing Starts U.S. Repair & Remodel Expenditures Poised to increase shipments to the U.S. as demand and pricing recover. Source: Forest Economic Advisors (March 2017) 18
Slide 20: Demand Drivers: China Growth Has Changed Global Wood Products Demand Dynamics
2 Demand Drivers: China Growth Has Changed Global Wood Products Demand Dynamics A deficit of domestic fibre will require China to rely on imports. Rising wealth/urbanization trends expected to increase demand for structural and higher grade lumber: – 300 million Chinese people (roughly equivalen
Slide 21: Demand Drivers: U.S. Supply Exit From Japan Will Create Market Opportunity
3 Demand Drivers: U.S. Supply Exit From Japan Will Create Market Opportunity Japan continues to be a major source of demand for wood products and lumber from North America: – In recent years, suppliers in the U.S. West have increased export activities to Japan due to a lack of domestic demand in t
Slide 22: Supply Drivers: Canadian Fibre Supply Reduction
4 Supply Drivers: Canadian Fibre Supply Reduction B.C. Interior AAC Quebec AAC Mountain Pine Beetle epidemic and lower AAC in B.C. and Eastern Canada are expected to have significant negative impact on North American lumber capacity. Source: Forest Economic Advisors (April 2017) 21
Slide 23: Investor Relations Contacts
These materials have been prepared by Management of the Company. No regulatory authority has approved or disapproved of the contents of these materials. These materials do not constitute an offer to sell or the solicitation of an offer to buy any securities of the Company and shall not constitute an
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