Bank of America Merrill Lynch Leveraged Finance Conference December 5, 2018

Transcription

1 Bank of America Merrill Lynch Leveraged Finance Conference December 5, 2018

2 Notices Forward-Looking Statements & Non-IFRS Financial Information All financial references are expressed in US$ unless otherwise noted. This presentation contains forward-looking statements and estimates. Such statements and estimates are based on assumptions as to the future and on management s current expectations and are, naturally, subject to risks and uncertainties. Actual company results could differ materially from a conclusion, forecast or projection in the forward-looking information. Certain material factors or assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information. Additional information can be found in the Company s annual information form, annual and quarterly MD&A, and on Norbord s website ( about the material factors that could cause actual results to differ materially from the conclusion, forecast or projection in the forward-looking information, and the material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information. During the course of this presentation, certain non-ifrs financial information will be presented. Definitions and reconciliation of terms can be found in the Company s annual and quarterly MD&A. 2

3 Company Overview Norbord Snapshot Leading manufacturer of wood-based panel products Largest global producer of Oriented Strand Board (OSB) Stated OSB capacity of 8.4 Bsf-3/8 (1) Stated panel capacity (including particleboard & MDF) of 9.4 Bsf-3/8 (1) Approximately 2,750 employees at 17 plants across the US, Canada and Europe Listed on the NYSE and TSX ( OSB ) Report in US dollars and in accordance with IFRS Q3/18 LTM sales of $2.5 billion Panel Capacity by Region (1) North America Europe Oriented Strand Board (OSB) Particleboard Medium Density Fiberboard (MDF) Furniture (1) Based on stated annual capacity as of December 31,

4 Capacity (Bsf-3/8") Industry Overview Favourable Long-term OSB Industry Fundamentals North American OSB Demand and Capacity % % 80% 70% 60% 50% 40% Effective Demand / Capacity 30% Effective Capacity Mothballed Capacity Effective Demand / Capacity Source: Forest Economic Advisors, LLC (FEA) 4

5 Industry Overview North American Capacity Restarts Needed to Meet Growing Demand LP s Dawson Creek, BC mill converting to siding by middle of Q Norbord s Chambord, QC mill only remaining idled mill (in Bsf-3/8 ) Production Restarts New 1.2 =27% =13% North American OSB Installed Capacity: 37 Mills in Operation 7 Mills (Re)started in 2012/13 3 Mills Restarted in 2017/18 2 Greenfield Mills started in Idled Mill Norbord Mill Note: Excludes OSB siding production and capacity. Source: APA, company documents and other public filings 5

6 Annual Average NC Price US$ per Msf 7/16" Industry Overview Attractive North American OSB Price OSB prices are tied to demand for building products, which is influenced by the general economy, demographics and the need for housing $400 North Central Benchmark OSB Price $350 $300 $ year average: $249 $200 $150 $ Q Q Q Q Average Source: Random Lengths 6

7 Business Strategy Significant OSB Substitution Opportunity in Industrial End Uses 2017 North American Panel Consumption Industrial New Home Repair & Remodel 17% 21% 50% 38% ~21 Bsf-3/8 16 Bsf-3/8 8 Bsf-3/8 33% 79% 62% OSB Plywood MDF & PB Furniture EWP Commercial Roofing Engineered Packaging Norbord is a leading supplier to current industrial end uses Source: APA The Engineered Wood Association, FEA, RISI, US Forest Products Annual Market Review and Prospects (USDA FS), US International Trade Commission, Norbord estimates 7

8 Industry Overview Europe: Strong Demand Growth OSB Share of Structural Panels European OSB Demand (million m 3 ) 75% North America 8% F CAGR 50% Europe 25% 0% Source: Forest Economic Advisors, LLC (FEA), European Panel Federation (EPF) and Norbord estimates Source: Eurostat, UN Comtrade Database, Destatis and Norbord estimates 8

9 Business Strategy Inverness Mill Expansion Supports Increasing European Customer Demand - New continuous press line started up in Q4/ Original two press lines demolished during Q2/ Installation of new finishing end will be complete in Q4/2018 9

10 Business Strategy Disciplined Capital Allocation Three main priorities: Capex Investment (US$ millions) Re-invest in the business Optimize capital structure Return cash to shareholders 2018 capex forecast of $200 million Includes investments to prepare Chambord, Quebec mill for restart (when warranted by customer demand) and expand capacity at Grande Prairie, Alberta and Huguley, Alabama mills capex budget of $150 million Minimum Maintenance $25 million (1) (1) 2015 onwards reflects Norbord following completion of merger with Ainsworth. Pre 2015 reflects Norbord excluding Ainsworth. 10

11 Financial Overview Leverage Metrics Significantly Improved Adjusted EBITDA vs Net Debt Quarterly Adj. EBITDA (in US$ millions) Net Debt to LTM Adj. EBITDA $300 $275 $250 $225 $200 $175 $150 $125 $100 $75 $50 $25 $0 11.0x 0.4x Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q x 9x 6x 3x 0x 11

12 Financial Overview Track Record of Value Creation 15 Year Average ROCE % (1) 25% 24% 20% 15% 10% 5% 0% Norbord Peer1 Peer2 Peer3 Peer4 Peer5 Peer6 Peer7 Peer8 Source: Capital IQ $200M Debt permanently repaid >$1B Capital invested >$1B Dividends paid out (1) Return on capital employed (ROCE) is a measure of financial performance focusing on cash generation and the effective use of capital. ROCE is calculated as Adjusted EBITDA divided by average capital employed (operating working capital, PP&E, goodwill, intangibles, timberlands & licences). 12

13 Norbord Inc. Suite 600 One Toronto Street Toronto, Ontario, M5C 2W4 Canada Tel: