West Fraser Timber Co. Ltd. · TSX:WFG
West Fraser Timber — Q4 2019 Earnings Presentation
14 slides from West Fraser Timber's earnings presentation, Feb 11, 2020
Slide 1: Q4 Earnings Presentation
Q4 Earnings Presentation February 2020
Slide 2: Forward-looking statements and non-IFRS measures
2 General: This presentation and comments associated with it contains Accordingly, readers should exercise caution in relying upon forward- historical information, descriptions of current circumstances and looking- statements and WFT undertakes no obligation to publicly statements about potential fu
Slide 3: Demand conditions
Demand conditions 3 Leading indicator of Remodeling Activity U.S. Housing Starts (not seasonally adjusted) $B 4 Qtr Moving Improvements and Repairs 140 $340 8.0% 120 $330 7.0% 4 Qtr Moving rate of Change $320 6.0% 100 $310 M Starts 80 5.0% Seasonally adjusted: $300 60 4.0% 2017: 1,203 $290 40 2018:
Slide 4: Supply conditions
Supply conditions 4 Billion fbm Lumber Supply North America Curtailments Impact MMfbm 80 (Annualized) Down 5% 3,500 60 3,000 Mix of Flat 2,500 temporary 40 Down 11% Up 2% and 2,000 permanent 20 Down 21% 1,500 0 1,000 BC Canada US US Total NA 500 South 0 Ytd 11-18 Ytd 11-19 2018 2019 Source: WWPA, SF
Slide 5: British Columbia Supply Chain Volatility
British Columbia Supply Chain Volatility 5 3.6 600 Oversupply from shipment of backlogs Shipments > Production 3.4 550 3.2 500 Working Capital Liquidation from Billion Board Feet Curtailments US $ / Mfbm (Shipments > 3 Production) 450 Undersupply from transportation delays Production > Shipments 2.8
Slide 6: Consolidated Financial Results
Consolidated Financial Results 6 $ Millions Adjusted EBITDA Q4-19 Q3-19 Q4-19 Q3-19 Lumber $ 69 $ 39 Sales $ 1,129 $ 1,190 Panels 13 13 Cost and Expenses 1,152 1,245 Restructure/Impairment 8 (1) Pulp & Paper (1) 3 Operating earnings (31) (54) Corporate/Other (1) - Finance Expense (13) (12) Total $ 8
Slide 7: Q4 Consolidated Adjusted EBITDA Reconciliation
Q4 Consolidated Adjusted EBITDA Reconciliation 7 Diligent management of fibre costs improves profitability
Slide 8: Q4 Lumber Adjusted EBITDA Reconciliation
Q4 Lumber Adjusted EBITDA Reconciliation 8 Improved pricing, lower fibre costs
Slide 9: Q4-19 versus Q3-19
Q4-19 versus Q3-19 9 $ millions unless Q4 2019 Q3 2019 Change otherwise indicated Variable operating schedules in BC, Chasm closure Lumber Production (MMfbm) 1,423 1,493 (70) impact, 100 Mile House shift elimination, partially offset by increases in Alberta Less inventory draw down in Q4 than in Q3
Slide 10: Liquidity
10 Liquidity Available liquidity Scheduled maturities $900 $900 $800 $800 $700 $700 $600 $600 $500 $500 $400 $400 $300 $300 $200 $200 $100 $100 $0 $0 2017 2018 2019 Q3-19 Q4-19 2020 2021 2022 2023 2024 Bank lines Cash Term loan Notes Revolver Ample financial flexibility Cash consists of cash and sho
Slide 11: 2020 Outlook
2020 Outlook 11 2020 2019 Changes Carryover impacts from permanent curtailments SPF Production (MMfbm) 3,250 3,211 largely offset recapture from temporary curtailments, additional productivity SYP Production (MMfbm) 3,000 2,703 Executing on investments NBSK Production (M tonnes) 490 460 Targeting im
Slide 12: Opelika, Alabama Update
Opelika, Alabama Update 12 Production - Continuing to ramp up to targeted productivity - Trend continues to improve in early 2020 - Steady improvement in product mix and recovery 2017 2019 Fourth Quarter 2019 Production per Hour (mfbm) Manufacturing Costs - Per unit costs continue to decline with im
Slide 13: Dudley, Georgia Sawmill Modernization
Dudley, Georgia Sawmill Modernization 13 • Complete turn-key modernization at existing site (sawmill, kilns, planer) • Increase site capacity by 150 MFBM • Access additional local fibre supply • Improved recovery and grade • Reduced headcount and operating costs • Improved safety and working conditi
Slide 14: Summary
Summary 14 2019 Recap 2020 Outlook ✕ Challenging market conditions ✓ Economic fundamentals appear across all commodities constructive ✕ Difficult decisions on BC ✓ BC fiber costs starting to footprint executed moderate ✓ Significant capital projects ✓ Lower duty rates to take effect in brought to co