Interfor Corporation · TSX:IFP
Interfor — Corporate Update (November 2015)
32 slides from Interfor's corporate update, November 2015
Slide 1: Company Update November 2015
COMPANY UPDATE NOVEMBER 2015
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 PPO TSUU wee ecccccncce 3 rT i : 320 MMbf (11%) BC Interior : - 2 mills ; 745 MMbf (25% - Cedar, Hem-Fir, : eg mills” ake Douglas-Fir : - Douglas-Fir, Hem-Fir, ; = Specialty : SPF, Cedar Seiweweebeeseeveseeeeeecee comm ¢ - Dimension : US Northwest : US South _ 650 MM
Slide 4: 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 Q3-2015 production. 4
Slide 5: Interfor Strategic Plan
INTERFOR STRATEGIC PLAN Growth by Acquisition Building Value Operational Excellence 5
Slide 6: Lumber Markets
RAYMOND JAMES U.S. SOUTH CONFERENCE - PERRY SAWMILL TOUR LUMBER MARKETSSeptember 30, 2015
Slide 7: Interfor's Diverse Lumber Mix
INTERFOR’S DIVERSE LUMBER MIX Lumber Sales By Species1 Spruce-Pine-Fir Hem-Fir 10% 10% Doug Fir/Larch 30% Southern Yellow Pine 35% Cedar Lodge Pole/ 11% Ponderosa Pine 4% (1) By value for YTD Q3-2015 7
Slide 8: Products Sold Around the World
PRODUCTS SOLD AROUND THE WORLD YTD Q3-2015 Lumber Sales China/Tw/HK Other 5% 4% Canada Japan 7% 9% USA 75% 8
Slide 9: Benchmark Lumber Price Trends
BENCHMARK LUMBER PRICE TRENDS WEEKLY LUMBER PRICES US$/Mbf 2015 2013 2014 Q1 Q2 Q3 Q4 (1) SYP $413 SYP $418 SYP $413 SYP $383 SYP $331 SYP $377 $475 SPF $356 SPF $349 SPF $308 SPF $270 SPF $269 SPF $259 $425 $375 $325 $275 SYP (East) #2&Btr 2x4 SPF #2&Btr 2x4 $225 Source: Random Lengths 9 (1) Includ
Slide 10: Key Market Drivers
KEY MARKET DRIVERS 2014(1) 2015E(1) 2016E(1) 2017E(1) US Housing Starts (mm) 1.0 1.1 1.3 1.5 Change +13% +17% +12% NA Lumber Consumption (Bft) 48.8 51.3 55.0 58.4 Change +5% +7% +6% NA Offshore Exports (Bft) 7.6 7.2 6.7 6.3 Change -6% -6% -6% NA Offshore Imports (Bft) 0.6 0.7 0.9 1.3 Change +26% +24
Slide 11: Operations Overview
—T ZZ — - : == = : - | = “ et - ; : ere f E —— $ = == =—| | = — —— a LT ~ — ———_— e 2 - = = oF . a ee ; 12 — _. = > _— __ a = Sey = = ~ i mn ¢ Paw is aL ij : Baw i) Y at ase ( 1 ee == = = . " a ' t = = —— \ came 6 ‘ ad 3s a" a = =F FF j S= as mae, 2 = = | os = a — 7 es = — | ~™ - — OPERATIC 9 . @ IN
Slide 12: Business Comparisons
BUSINESS COMPARISONS Current Run Rate Annual Production (mmfbm) US South Dimension Mills • 9 dimension mills in Georgia, S. Carolina and Arkansas 1,100 • Low cost wood baskets • Strong geographic fit/significant operational upside BC Interior Dimension Mills • 3 dimension mills in BC southern interi
Slide 13: US South Dimension Mills
US SOUTH DIMENSION MILLS a INTERFOR Building Value..
Slide 14: US South Overview
US SOUTH OVERVIEW • Invested over US$400 million since March 2013 • 5 acquisitions • 1,100 employees • 9 mills • 1.3 Billion feet of lumber capacity across 3 States • Largest lumber producer in Georgia • 43% of Interfor’s capacity is in the South 14
Slide 15: US South: Started Up in 2013
US SOUTH: STARTED UP IN 2013 ACQUIRED ASSETS...NOW REPOSITIONING A BUSINESS Phase 1 Phase 2 Phase 3 • Acquire Assets • Build Team/Infrastructure • Mill Improvements • Mill Improvements • Optimization • Targeted Capex • Modest Capex 2013-15 2015-17
Slide 16: Logistics – Right Log to Right Mill
LOGISTICS – RIGHT LOG TO RIGHT MILL Log Size Super Large Mill Pulpwood Chip-n-Saw Sawtimber Sawtimber Preston 35% 35% 30% Thomaston 20% 40% 40% Note: Each circle is a 50 mile radius. Eatonton 80% 20% Perry 25% 60% 15% Swainsboro 5% 95% Baxley 25% 60% 15% Meldrim 15% 60% 25% Georgetown 60% 40% 16
Slide 17: BC Interior Dimension Mills
BC INTERIOR DIMENSION MILLS @ INTERFOR Building Value..
Slide 18: BC Interior Overview
BC INTERIOR OVERVIEW Adams Lake 375 mmfbm Capacity. Castlegar 210 mmfbm Capacity. Grand Forks 160 mmfbm Capacity. 18
Slide 19: BC Interior Modernization
BC INTERIOR MODERNIZATION 2008-09 2012 October 2015 Start-up Adams Lake, BC Grand Forks, BC Castlegar, BC • 3 MODERN MILLS IN GOOD FIBER BASKETS • RE-INVESTMENTS ARE COMPLETE • CONTRUCTION: ON-TIME AND ON BUDGET 19
Slide 20: Castlegar Project – Before/After
CASTLEGAR PROJECT – BEFORE/AFTER Canter Headrig 20
Slide 21: BC Interior Modernization – Impact
BC INTERIOR MODERNIZATION – IMPACT 2007 2015 (1) Change Primary Breakdown Lines 8 5 -38% Annual Production, MMbf 549 700 +27% Lumber Recovery, bf/m3 279 307 +10% Hourly Headcount, FTE 602 406 -33% (1) Adams Lake & Grand Forks – YTD Q3-2015 annualized; Castlegar – Mill Upgrade Proforma. 21
Slide 22: Financial Review
FINANCIAL REVIEW
Slide 23: Capital Spending Profile
CAPITAL SPENDING PROFILE $mm’s $120 $100 $80 $60 $40 $20 $0 2008 2009 2010 2011 2012 2013 2014 YTD Q3- 2015E 2016E 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 24: Capital Structure
CAPITAL STRUCTURE • Interfor has a prudent capital structure. • At Sept. 30, 2015 - Available liquidity of $103 mm. Debt Maturity Schedule $500 As of Sept. 30, 2015 $450 $400 $350 $300 Available Liquidity $mm $250 $200 Drawings on Bank Lines $150 Prudential Notes (4.17%) $100 $50 $0 2015 2016 2017 2
Slide 25: Key Business Priorities
KEY BUSINESS PRIORITIES • Inventory and equipment sale completed in Q4 1. Tacoma Monetization • Real estate auction entering final phase • Target net proceeds > cost • Construction on time and on budget 2. Castlegar Ramp-up • Operational ramp-up is ahead of schedule • Target EBITDA impact(1) of >$10
Slide 26: Industry Information
INDUSTRY INFORMATION @ INTERFOR Building Value.. 26
Slide 27: US Housing Starts
US HOUSING STARTS Millions 2.4 2.2 2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6 Housing Starts Pent-Up Demand 0.4 Underlying Demand 0.2 0.0 Source: FEA Q3-2015 Forecast; Published October 2015 27
Slide 28: Demand on North American Mills
DEMAND ON NORTH AMERICAN MILLS BBF 85 80 75 70 65 60 55 50 45 40 35 30 25 US Canada Net Exports 20 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Source: FEA Q3-2015 Forecast; Published October 2015 28
Slide 29: MPB – Area Affected
MPB – AREA AFFECTED • Interfor’s southern BC Interior wood baskets are less exposed to the MPB than BC’s central and northern interior regions; the Coast is not exposed. Interfor AAC1 MMm3 Central and Northern BC 0.0 50 – 75% Pine Adams Lake in Southern BC 0.7 28 – 30% Pine Castlegar & Grand Forks i
Slide 30: Favourable Log Supply in US South
FAVOURABLE LOG SUPPLY IN US SOUTH Growth & Drain, BBF Int’l ¼” Inventory, BBF Int’l ¼” 50 300 45 290 Sawtimber Inventory 40 280 35 270 30 260 Growth Drain 25 250 20 240 15 230 Growth 10 Drain 220 5 Inventory 210 0 200 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Source: FEA Q3-2015 Forecas
Slide 31: US South Sawtimber Prices
US SOUTH SAWTIMBER PRICES US$/Ton (Nominal $’s) $60 $50 $40 $30 $20 $10 $- 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: FEA Q3-2015 Forecast; Published October 2015 31
Slide 32: 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