West Fraser Timber Co. Ltd. · TSX:WFG
West Fraser Timber — Shareholder Meeting (April 2018)
30 slides from West Fraser Timber's shareholder meeting presentation, Apr 19, 2018
Slide 1: Annual General Meeting
ANNUAL GENERAL MEETING April 19, 2018 Quesnel, B.C.
Slide 2: Financial Results
Financial Results 2017 2016 2004 5.13 Sales 5,134 4,450 2,400 Billion Adjusted EBITDA 1,112 674 622 in sales Earnings 596 326 212 2
Slide 3: Lumber Financial Results
Lumber Financial Results Benchmark Lumber Prices 450 400 34 350 300 250 Lumber 2013 2014 2015 2016 2017 SPF #2 & Better 2x4 (per Mfbm) SYP #2 West 2x4 (per Mfbm) mills 2017 2016 2004 Production (MMfbm) SPF 3,809 3,796 2,470 SYP 2,424 2,139 302 Sales 3,671 3,145 1,475 Adjusted EBITDA 836 508 517 3
Slide 4: U.S. Housing Starts
U.S. Housing Starts Thousands 2,200 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F 2019F 2020F Total Single Multi Underlying Demand Expect that the recovery has room to continue Source: US Census Bureau, FEA Forecast 01-18
Slide 5: North American Lumber Consumption
North American Lumber Consumption 80 75 72 70 64 64 62 60 60 58 56 53 51 50 50 48 45 43 43 40 30 20 10 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F 2019F 2020F US Consumption Canadian Consumption Demand for lumber expected to grow by 2B board feet per year Source: US Cens
Slide 6: North American Lumber Production
North American Lumber Production 80 25 70 20 60 50 15 Billion Bf 40 10 30 20 5 10 0 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F 2019F 2020F U.S. Canada Canada West (R Axis) Canada East (R Axis) US West (R Axis) US South (R Axis) US South only significant growth region So
Slide 7: North American Lumber Supply & Demand
North American Lumber Supply & Demand 72 Imports 2005: 3.0 billion bf 70 Imports 2010: 0.5 billion bf 68 Imports 2017: 1.4 billion bf 66 2020: 4.2 billion bf 64 Billion bf 62 60 58 56 54 52 2015 2016 2017 2018F 2019F 2020F Production Demand On North American Mills Potentially growing gap in lumber s
Slide 8: Panels Financial Results
Panels Financial Results Benchmark Plywood Prices 525 475 425 7 375 2013 2014 2015 2016 2017 Plywood Production (MMsf 3/8” basis) mills 2017 2016 2004 Plywood Production 838 826 249 (MMsf 3/8” basis) MDF Production 191 160 285 (MMsf 3/4” basis) LVL Production (Mcf) 2,676 2,215 - Sales 600 529 284 Ad
Slide 9: Pulp & Paper Financial Results
Pulp & Paper Financial Results Benchmark Pulp Prices 1275 1075 875 5 675 475 2013 2014 2015 2016 2017 NBSK – U.S. (per tonne) NBSK – China (per tonne) mills Newsprint (per tonne) 2017 2016 2004 Production (Mtonnes) NBSK 498 527 - BCTMP 674 665 522 Newsprint 122 128 135 Sales 988 887 641 Adjusted EBI
Slide 10: Achieving Our Potential
Achieving Our Potential Our objective: Low-cost, high margin producer in each of our product lines, diversified across geographic regions #1 We’re prepared for the future. We’ve invested in: Lumber • Growing footprint of our operations Producer North America • Modernized mills and upgraded technolog
Slide 11: Gilman Acquisition
Gilman Acquisition #1 • Welcomed 900 new employees US South Lumber • 6 mills, finger-joint plant and a regional Producer office • Now 22 facilities and 2 offices strong in the US South 11
Slide 12: West Fraser 2017: 50+ locations
West Fraser 2017 50+ locations 12
Slide 13: Increased Capacity
Increased Capacity 2017 Lumber Capacity (7.2 billion feet) 2004 Lumber Capacity (2.76 billion feet) 7.2 U.S. 13% Alberta U.S. 43% BC 34% billion 12% board feet BC Alberta 75% 23% BC Alberta U.S. 2017 Revenue Mix: Lumber Panels Pulp 0% 20% 40% 60% 80% 100% 13
Slide 14: North American Lumber Capacity
North American Lumber Capacity 8,000 7,000 6,000 SPF SYP Other 5,000 4,000 3,000 2,000 1,000 0 14
Slide 15: Achieving Our Potential
Achieving Our Potential Our objective: Low-cost, high margin producer in each of our product lines, diversified across geographic regions #1 We’re prepared for the future. We’ve invested in: Lumber • Growing footprint of our operations Producer North America • Modernized mills and upgraded technolog
Slide 16: Capital Spending
Capital Spending $ Millions 400 $1.6 300 Billion 200 in capital 100 0 2013 2014 2015 2016 2017 Capital Expenditure 16
Slide 17: Modernizing our Operations
Modernizing our Operations 61 Major Major rebuilds of 11 Upgraded 13 planers projects sawmills since 2012 Added 33 continuous Built 6 energy and kilns bioproducts projects 17
Slide 18: Achieving Our Potential
Achieving Our Potential Our objective: Low-cost, high margin producer in each of our product lines, diversified across geographic regions #1 We’re prepared for the future. We’ve invested in: Lumber • Growing footprint of our operations Producer North America • Modernized mills and upgraded technolog
Slide 19: Safety
Safety 19
Slide 20: Safety
Safety It’s up to each of us to achieve our goal, to eliminate serious incidents and injuries • Safety excellence is operational excellence 12% • High performance is achieved by working safely and productively, not choosing one over the other serious injuries 2017 • Serious injuries down 12% in 2017
Slide 21: Achieving Our Potential
Achieving Our Potential Our objective: Low-cost, high margin producer in each of our product lines, diversified across geographic regions #1 We’re prepared for the future. We’ve invested in: Lumber • Growing footprint of our operations Producer North America • Modernized mills and upgraded technolog
Slide 22: Our People
Our People Promote within • We are committed to supporting employee’s development – Internal courses and skills training – Partnerships with educational organizations 22
Slide 23: Recognition
re West Fraser Recognition S7_—~ Employers THE CAREER DIRECTORY CANADA'S BEST EMPLOYERS FOR RECENT GRADUATES PN Waterstone MOST ADMIRED 23
Slide 24: Part of our Communities
Part of our Communities $3.2 Million in donations Hinton’s West Fraser Guild and the Williams Lake West Fraser Aquatic 2015-2017 Centre and Sam Ketcham Pool, Maplesville High Homecoming, West Fraser Centre arena in Quesnel 24
Slide 25: Part of our Communities
Part of our Communities 500+ Organizations received donations in Edmonton Habitat for Humanity, Leola AR 2017 Millin’ and Grillin’ at Timberfest, architecture students visiting Mansfield AR, West Fraser Outdoor Discovery Park near Sundre, AB 25
Slide 26: Total Shareholder Return (Annual)
Total Shareholder Return (Annual) 2005 - 2017 12% 10.40% 10% 7.30% 8% 6.30% 6.30% 5.50% 6% 4% 2% 0% West Fraser TSX Competitor A Competitor B Competitor C 26 Source: Toronto Dominion Bank
Slide 27: Total Shareholder Return (Annual)
Total Shareholder Return (Annual) $1,000 invested: 2005 - 2017 4,000 $3,640 3,500 3,000 $2,510 2,500 $2,230 $2,200 $2,000 2,000 1,500 1,000 500 0 West Fraser TSX Competitor A Competitor B Competitor C 27 Source: Toronto Dominion Bank
Slide 28: Challenges
Challenges • Timber base in Western Canada • Softwood lumber dispute • Transportation • Operational excellence 28
Slide 29: Investing to Compete in BC
Investing to Compete in BC In British Columbia, we’ve invested in our facilities so we’re prepared to compete: Planers 16 • Williams Lake Sawmill planer project, 2013 • Fraser Lake Sawmills planer, 2017 • Pacific Inland Resources planer upgrade, (in construction) Sawmill rebuilds Major • Chetwynd Fo
Slide 30: ES West Fraser
ES West Fraser
West Fraser Timber — Shareholder Meeting (April 2018) on 6ix