Q Earnings Presentation. July 29, 2014

Transcription

1 Q Earnings Presentation July 29, 2014

2 Forward-Looking Statements and Non-IFRS Financial Information All financial references are expressed in US$ unless otherwise noted. Financial numbers prior to 2010 were prepared in accordance with CGAAP, while numbers from 2010 onward have been prepared in accordance with IFRS. This presentation contains forward-looking statements and estimates. 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 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 Q Financial and Operational Highlights OSB prices remained stable, as industry capacity is gradually absorbed EBITDA of $33 million - up $6 million from Q YTD NA sales volume up 10% year-over-year YTD EU sales volume up 3% year-over-year Best-ever quarterly EU panel production YTD MIP gains of $6 million Received APA s 2013 Safest Company Award Declared CAD $0.60/share dividend payable September 21 (record date September 1) 3

4 US Housing Starts 1,050, , , , , Jun-14 SAAR (1) 2014F June YTD data: housing starts up 6% yr/yr; building permits up 5% (1) Based on US housing economist forecasts Source: US Department of Commerce, except where otherwise noted 4

5 $/Msf-7/16 North American Benchmark OSB Prices North Central South East 150 Q Q Q Q Q Spread SE vs. NC Source: Random Lengths 5

6 European Indicative OSB Prices (1) /m Q Q Q Q Q (1) European indicative average OSB price represents the gross delivered price to the largest Continental market 6

7 Financial Summary (US $ millions, except per share information, unless otherwise noted) Q2 Q1 Q2 YTD YTD Sales $ 311 $ 303 $ 365 $ 614 $ 730 EBITDA North America Europe Unallocated (3) (3) (2) (6) (7) Total Earnings EPS, basic EPS, diluted

8 EBITDA Variance EBITDA variance (US $ millions) Q Q YTD 2014 vs. vs. vs. Q Q YTD 2013 EBITDA current period $ 33 $ 33 $ 60 EBITDA comparative period Variance 6 (69) (153) Mill nets (1) (2) (80) (171) Volume (2) Key input prices (3) 1 (4) (7) Key input usage (3) Mill profit share and bonus Maintenance and other (4) (1) - 1 Total 6 (69) (153) 1)The mill nets variance represents the change in realized pricing across all products. Mill nets are calculated as sales (net of outbound freight costs) divided by shipment volume. 2)The volume variance represents the impact of shipment volume changes across all products. 3)The key inputs include fibre, resin, wax and energy. 4)The maintenance and other category covers all remaining variances including labour and benefits, and the impact of foreign exchange. 8

9 Liquidity and Capital Resources (US $ millions, except per share information, unless otherwise noted) Q2 Q1 Q2 YTD YTD Cash provided by (used for) operating activities $ 20 $ (26) $ 101 $ (6) $ 146 Cash provided by (used for) operating activities per share 0.37 (0.49) 1.91 (0.11) 3.00 Operating working capital Investment in property, plant and equipment

10 Balance Sheet (US $ millions) Bank Covenant Jun Dec Jun Long-term debt, principal value $ 440 $ 440 $ 440 Less: Cash and cash equivalents (83) (193) (220) Net debt Add: Letters of credit Net debt for financial covenant purposes Tangible net worth min Net debt to capitalization, book basis max. 65% 44% 34% 30% Liquidity of $425 million = $83 million in cash + $342 million in unused credit lines 10

11 Appendices 11

12 Annual Average NC Price US$ per Msf 7/16" OSB Prices Strong Over the Cycle Historical North Central Benchmark OSB Price year average Q Q Q Q Average Source: Random Lengths 12

13 Forecast OSB Pricing North Central 7/16 Norbord does not provide guidance regarding its expectations of future OSB prices. The following is a sample of price forecasts by analysts as at July 23, It is not exhaustive. Annual Average North Central Benchmark OSB Price US$ per Msf 7/ CIBC Dundee Capital Markets Raymond James RBC Capital Markets Salman Partners Scotia Capital TD Securities Vertical Research Partners Average $229 $267 $305 13

14 Additional OSB Capacity Restarting to Meet Additional Demand North American OSB Installed Capacity: 38 Mills in Operation 8 Mills Indefinitely Curtailed 6 Mills (Re)started in 2013 Norbord Mill Source: Company Documents and Other Public Filings 14

15 Financial Sensitivities Exposure Change EBITDA Impact (1) ($ millions) North American OSB $10 per Msf 7/16 + $36 European OSB 10 per m 3 + $7 Canadian dollar (2) $0.01 per Cdn$ < $1 Pound sterling 0.01 per < $1 (1) Assumes operation at full capacity levels Direct exposures only; before the impact of any cash flow currency hedges Tax operating loss carry-forwards (gross) as at Dec. 31, 2013 US $71 million, Canada C$49 million, Belgium 30 million (2) Excluding dividends on common shares 15