Investor Presentation. January 2019

Similar documents
Investor Presentation. April 2019

CIBC INSTITUTIONAL INVESTOR CONFERENCE. INVESTOR PRESENTATION January 21-23, 2015 Whistler, British Columbia

RAYMOND JAMES Forest FORUM VI. INVESTOR PRESENTATION January 14, 2016 Toronto, Ontario

R E P O R T T O S H A R E H O L D E R S

NEWS RELEASE WEST FRASER TIMBER CO. LTD. ( WFT ) Monday, October 22, West Fraser Announces Third Quarter Results

West Fraser. 2nd Quarter 2016

2017 MANAGEMENT S DISCUSSION & ANALYSIS

NEWS RELEASE WEST FRASER TIMBER CO. LTD. ( WFT ) Friday, April 23, West Fraser Announces Improved Results

NEWS RELEASE WEST FRASER TIMBER CO. LTD. ( WFT ) Monday, October 22, West Fraser Announces Third Quarter Results

Canfor Corporation Canfor Pulp Products Inc. C A N F O R C O R P O R A T I O N

WEST FRASER. 3rd Quarter 2017 For the period July 1 to September 30, 2017

NEWS RELEASE WEST FRASER TIMBER CO. LTD. ( WFT ) Thursday, February 14, West Fraser Announces Fourth Quarter Results

EARNINGS PRESENTATION FEBRUARY 2019

2010 Management s Discussion & Analysis

West Fraser Timber Co. Ltd.

COMPANY UPDATE NOVEMBER 2017

CANFOR CORPORATION 2017 QUARTER THREE INTERIM REPORT

CANFOR REPORTS RESULTS FOR SECOND QUARTER OF 2018

CIBC Institutional Investor Conference

CIBC Institutional Investor Conference

WEYERHAEUSER Doyle Simons, CEO

Q For the three months ended June 30, 2010 CANFOR CORPORATION 2010 SECOND QUARTER INTERIM REPORT

Driving Profitable Growth 2017 TD Forest Products Forum September 20, 2017

CANFOR REPORTS RESULTS FOR THIRD QUARTER OF 2018

Canfor Corporation and Canfor Pulp Products Inc. Quarter 2, 2017 Financial Performance Overview. Presented by:

Q For the three months ended June 30, 2008 CANFOR CORPORATION 2008 SECOND QUARTER INTERIM REPORT

WEYERHAEUSER INVESTOR MEETINGS

WEYERHAEUSER. INVESTOR MEETINGS March 2018

Alan Nicholl Executive VP, Finance & Canfor Pulp Operations & CFO

Louisiana-Pacific Corporation

WEYERHAEUSER. Patty Bedient Executive Vice President & Chief Financial Officer

Interfor Corporation Vancouver, B.C. August 2, 2018

Interfor Corporation Vancouver, B.C. February 7, 2019

Conifex Announces 2016 Fourth Quarter and Annual Results. Reports Record Adjusted EBITDA and Net Income

Western Announces Third Quarter 2017 Results

Bank of America Merrill Lynch Paper, Packaging & Builders Conference December 10, 2015

At the same time, we re maintaining our focus on quality and customer satisfaction that we ve built our company and our reputation on.

46 CONSOLIDATED FINANCIAL STATEMENTS

Alan Nicholl Executive VP, Finance & Canfor Pulp Operations & CFO

Investor Presentation

West Fraser Timber Co. Ltd. Consolidated Financial Statements December 31, 2017 and 2016

Western Announces Second Quarter 2017 Results

Interfor Corporation Vancouver, B.C. November 2, 2017

Interfor Corporation Second Quarter Report For the three and six months ended June 30, 2018

Canfor Corporation and Canfor Pulp Products Inc. Quarter 3, 2017 Financial Performance Overview. Presented by:

RESPONSIBILITY OF MANAGEMENT

Investor Presentation. Mike Covey Chairman & Chief Executive Officer. Jerry Richards Vice President & Chief Financial Officer.

CONIFEX TIMBER INC. Conifex Announces First Quarter 2018 Results

Interfor Corporation Third Quarter Report For the three and nine months ended September 30, 2017

Conifex Announces Strong Fourth Quarter and Annual Results. Reports Two Consecutive Years of Record Adjusted EBITDA and Operating Income

Louisiana-Pacific Corporation

CANFOR REPORTS RESULTS FOR 2018 AND FOURTH QUARTER OF 2018

CANFOR PULP PRODUCTS INC. MANAGEMENT S DISCUSSION & ANALYSIS

Western Announces First Quarter 2018 Results

COMPANY UPDATE SEPTEMBER 2017

DOMTAR CORPORATION JOHN D. WILLIAMS PRESIDENT & CHIEF EXECUTIVE OFFICER. Citi Basic Materials Conference New York, November 28, 2018

Western Forest Products Inc First Quarter Report

Western Announces Second Quarter 2018 Results

Staying focused on our vision

2017 QUARTER FOUR INTERIM REPORT

MERCER INTERNATIONAL INC. TO ACQUIRE DAISHOWA-MARUBENI INTERNATIONAL LTD. ("DMI") SIGNIFICANTLY EXPANDING ITS PULP OPERATIONS

Raymond James Institutional Investors Conference March 6, 2018 Orlando, Florida

Canfor Corporation. Annual Information Form. Information in this Annual Information Form is as at February 11, 2011 unless otherwise indicated.

Responsibility of Management

WEYERHAEUSER Western Timberlands Tour. August 13-14, 2018 Eugene, OR

Third Quarter 2017 Earnings Results

CIBC World Markets Whistler Conference

FREQUENTLY ASKED QUESTIONS Ministry of Forests, Lands, Natural Resource Operations and Rural Development

WEYERHAEUSER WEYERHAEUSER 2015 ANNUAL REPORT AND FORM 10-K. FOR MORE INFORMATION, VISIT:

In this interim MD&A, all references to $ are to Canadian dollars and references to US$ are to United States dollar.

Driving Profitable Growth Mercer International Inc. Investor Update November 2017

Interfor Corporation Third Quarter Report For the three and nine months ended September 30, 2016

For Immediate Release MERCER INTERNATIONAL INC. REPORTS STRONG 2018 THIRD QUARTER RESULTS AND ANNOUNCES QUARTERLY CASH DIVIDEND OF $0.

Consolidated Statement of Operations. Per Share Information

Louisiana-Pacific Corporation

RESOLUTE FOREST PRODUCTS Q RESULTS RICHARD GARNEAU, PRESIDENT & CEO JO-ANN LONGWORTH, SVP & CFO

PRELIMINARY RESULTS - SUBJECT TO AUDIT

Stendal - Germany. 660,000 tonnes NBSK 148 MW electricity $11 MM bio-chemicals. Rosenthal - Germany. 360,000 tonnes NBSK 57 MW electricity

INVESTOR PRESENTATION Q Lennart Eberleh

Interfor Corporation Vancouver, BC November 6, 2014

CANFOR PULP PRODUCTS INC. ANNOUNCES THIRD QUARTER 2018 RESULTS AND QUARTERLY AND SPECIAL DIVIDENDS

ACADIAN TIMBER ANNUAL REPORT

CONTENTS. 2 Message to Our Shareholders. 3 Financial Highlights. 4 Operations. 6 Management s Discussion and Analysis. 8 Canfor Pulp Products Inc.

Western posts quarterly EBITDA of $44.9 million on strong operational performance supported by increased market demand

INVESTOR PRESENTATION

PRELIMINARY RESULTS - SUBJECT TO AUDIT

Driving Profitable Growth Mercer International Inc. CIBC 21st Whistler Institutional Investor Conference January 26, 2018

Investor Presentation August 2016

Western Capitalized on Strong Markets to Deliver the Highest Quarterly EBITDA in Company History

CELULOSA ARAUCO Y CONSTITUCIÓN S.A. Second Quarter 2018 Results August 21, 2018

Consolidated Statement of Operations. Per Share Information

Mr. Shields concluded: "We look forward to welcoming all Suwannee and Caddo River employees to the Conifex family."

MERCER INTERNATIONAL INC. REPORTS RECORD 2018 FOURTH QUARTER AND YEAR END RESULTS AND ANNOUNCES QUARTERLY CASH DIVIDEND OF

Celulosa Arauco y Constitución S.A. Fourth Quarter 2012 Results

International Forest Products Limited

RESOLUTE FOREST PRODUCTS Q RESULTS YVES LAFLAMME, PRESIDENT & CEO JO-ANN LONGWORTH, SVP & CFO

PRELIMINARY RESULTS - SUBJECT TO AUDIT

Third Quarter 2018 Earnings Results

RESOLUTE FOREST PRODUCTS Q RESULTS

DOMTAR CORPORATION FOURTH QUARTER 2018 EARNINGS CALL February 5, 2019

Transcription:

Investor Presentation January 2019

Forward-Looking Statements This presentation and comments associated with it contain forward-looking statements including statements relating to U.S. housing recovery, demand for lumber, the potential for constrained lumber supply, log cost inflation, lumber industry production, pulp demand and capacity, the timeline associated with countervailing and anti-dumping duty cases, earnings sensitivity and estimated annual capital expenditures. These statements are subject to the cautionary statement which introduces West Fraser s 2017 Annual Management s Discussion & Analysis which can be accessed on the Company website www.westfraser.com. 2

Market Overview

U.S. Lumber End Use and Consumption U.S. Lumber End Use 2017 Nonresidential/Mobile, 6% Industrial Production, 24% Single Family Construction, 27% Multifamily Construction, 4% Residential Improvements, 39% 35 30 25 20 15 10 5 0 U.S. Lumber Consumption (Billion ft) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Housing Construction Repair/Remodeling Industrial/Other Residential construction and renovation the key driver of lumber demand Source: FEA and WF 4

North American Lumber Consumption 80 75 72 70 60 50 64 51 39 43 43 45 48 50 53 56 58 60 62 64 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 Lumber demand growth trending at ~ 2 billion board feet per year Source: US Census Bureau, Statistics Canada, West Fraser Forecast 5

Billion Bf North American Lumber Production 80 30 70 25 60 50 20 40 15 30 20 10 10 5 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F 2019F 2020F U.S. Canada Canada West (R Axis) US South (R Axis) 0 Lumber production growth constrained in western Canada Source: US Census Bureau & Statistics Canada, West Fraser Forecast 6

Million m3 (AAC & Harvest) Billion BF (softwood lumber production) Annual Allowable Cut on the decline in British Columbia 70 British Columbia Interior 16 65 14 60 12 55 10 50 8 45 6 40 35 30 Log supply constraints will create price pressure 4 2 0 AAC (m3) Harvest (m3) Softwood Lumber Production (BBF) Pine beetle and fires impacting log supply Source: FEA 7

Regional share of North American Lumber Production 35% 30% 25% 20% 15% 10% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Canada West Canada East US South US West Western Canada supply facing reduced by log availability Source: US Census Bureau & Statistics Canada, 8

North American Lumber Supply & Demand 70 68 66 64 62 60 58 56 54 52 Imports Exports Net (Billion bf) 2005: 3.0 (2.7) 0.3 2010: 0.5 (4.8) (4.3) 2017: 1.4 (5.5) (4.1) 2020: 3.0 Billion bf Impact of Announced Capacity additions 50 2015 2016 2017 2018F 2019F 2020F Production Demand On North American Mills Production before New Capacity Demand expected to absorb supply Source: US Census Bureau & Statistics Canada, West Fraser Forecast 9

Pulp End-Use Products Chemical Pulp Mechanical Pulp Fluff, 10% Box Board, 6% Tissue, 34% Printing and Writing, 38% Specialty, 8% Tissue, 5% Other, 3% Specialty, 22% Printing and Writing, 28% Box Board, 46% Diversified end uses and markets Source: PPPC 2017 10

Market Pulp Supply and Demand BCTMP Chemical Pulp No new major capacity additions 2018 to 2020 Pulp demand projected to grow 2.2% over next 5 years Demand growth driven by tissue and packaging demand Growth will be primarily in Asia Conversions of chemical hardwood to dissolving pulp will constrain hardwood pulp supply 30,000 25,000 20,000 15,000 10,000 5,000 0 Chemical Pulp Demand (M tonnes) 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 40% 35% 30% 25% 20% China Demand % of World Demand (R axis) Growth in China demand for pulp creates favorable market dynamics Source: PPPC 11

West Fraser Overview

Integration - We Attain Value from 100% of Our Resources Sustainably managed forest lands Lumber Reforestation Plywood Remanufacturers Sawdust and shavings Chips Bark (Fuel) MDF Supply agreements (e.g. pellet plants) BCTMP Pulp NBSK Pulp Bioproducts Heat and Electricity Integrated fiber strategy to maximize the value of the log 13

Operations Diversification Strong presence in key lumber producing regions and forest product markets 14

Product & Geographic Diversification LUMBER 34 mills PANELS 7 mills PULP & PAPER 5 mills SPF 3.9 Bfbm SYP 3.2 Bfbm Total 7.1 Bfbm 2017 Revenue Mix by Business Segment Plywood: 860 MMsf3/8 MDF: 250 MMsf3/4 LVL: 2.6 MMcf Lumber Panels NBSK: 570 Mtonnes BCTMP: 690 Mtonnes Newsprint: 135 Mtonnes Pulp 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2017 Revenue Mix by Country US Canada China Other 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Diversified across multiple end uses 15

North American Lumber Capacity West Fraser Canfor Weyco West Fraser Lumber Capacity 2004 2.8 Billion feet Alberta 12% US South 11% Interfor GP Sierra Pacific Top 10 represent 48% of capacity British Columbia 77% West Fraser Lumber Capacity 2018 7.1 Billion feet Resolute Hampton Tolko US South 45% British Columbia 31% Idaho Forest 0 2000 4000 6000 8000 MMfbm Source: Public filings, Forest Economic Advisors and West Fraser estimates West Fraser has largest share of a growing market Alberta 24% 16

Financial Results Ytd Q3 2018 Ytd Q3 2017 2017 2016 5Sales 4,844 3,758 5,134 4,450 Billion Adjusted EBITDA * 1,418 819 1,160 674 in Adjusted EBITDA margin 29.3% 21.8% 22.6% 15.1% annual Earnings 781 389 596 326 sales Strong pricing resulting in significant earnings growth * Adjusted EBITDA is defined as operating earnings plus amortization, equity based compensation and export duties. 17

Capital Investment Strategy Reinvest profits to lower costs, improve efficiency through technology and improved processes Capital spending in 2017 of $336 million Cumulative capital spending of $1.6B between 2013 and 2017 New merchandiser and debarker in High Prairie, Alberta Growth through opportunistic acquisitions focused on solid wood New mill being constructed in Opelika, Alabama Prudent capital deployment 18

Significant capital reinvestment Major rebuilds of 12 sawmills Upgraded 11 planers Added 35 continuous kilns Built 6 energy and bioproducts projects Years: 2013-2017 19

Opelika, Alabama Case Study Investment Rationale Excellent timber drain Solid existing work force Proximity to markets Site infrastructure Attractive payback Low execution risk Project Highlights Increased capacity of ~ 100Mfbm Climate controlled operator environment Completed on time and on budget Improved grade & recovery Leading technology Successful modernization expected to result in a high performing mill 20

Cumulative capital allocation $3,000 $2,500 $2,000 $1,113 2015 through September 2018 $920M returned to shareholders (55% of free cash flow) Buybacks/ Dividends 33% Retained/ Other 5% Capex 40% $1,500 $2,789 $602 $137 Acquisitions 22% $1,000 $96 $500 $1.7B Reinvested in the business $824 $56 $0 Cash from operations Capex Acquisitions Debt service and leverage $235 Dividends Buybacks Other Retained cash flow Consistently deploying capital to create value Free cash flow is defined as cash flow from operations less capital expenditure 21

Share buybacks - history 20,000 15,000 Cumulative Shares repurchased (thousands of share) 15,985 10,000 5,000 0 $1,500 $1,000 $500 $0 65 2,218 3,297 7,603 7,849 2013 2014 2015 2016 2017 2018 $3 Cumulative investment in repurchases (Millions of dollars) $115 $175 $365 $382 $1,058 2013 2014 2015 2016 2017 2018 Average repurchase price: 2013 2014 2015 2016 2017 2018 To date $44.60 $51.86 $55.57 $44.06 $68.45 $83.13 $65.88 Track record of returning capital to shareholders As of December 31, 2018 22

Total liquidity and Debt/EBITDA $1,000 Total Liquidity $800 $600 $50 $400 $553 $200 $86 $444 $231 $132 $258 $553 $551 $551 $100 $400 $302 $282 $562 $556 $- Q4/2016 Q1/2017 Q2/2017 Q3/2017 Q4/2017 Q1/2018 Q2/2018 Q3/2018 Undrawn Bank Lines Cash 1.0 Debt/EBITDA 0.8 0.5 0.3 0.0 Q4/2016 Q1/2017 Q2/2017 Q3/2017 Q4/2017 Q1/2018 Q2/2018 Q3/2018 Strong Liquidity, Conservative leverage profile 23

West Fraser Total Shareholder Return TSR June 2006 to December 2018 Share Value Traded 14% 12% 10% 8% 6% 4% 2% 0% 11.8% West Fraser 10.6% 5.8% 4.5% 3.7% 5.6% Dow DAX S&P/TSX FTSE Competitor A Source: TD 4.1% 4.0% Competitor Competitor B C Cdn$ Million 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2018 2017 2016 WFT CFP IFP Proven ability to generate strong cash flow, even in difficult markets Consistent, straightforward business plan Loyal, long-term employee and management base Conservative financial management coupled with proven ability to grow strategically Strong historical shareholder returns 24

Total Shareholder Return $1,000 invested: June 2006 December 31, 2018 4,500 4,000 $4,080 3,500 $3,540 3,000 2,500 2,000 $2,040 $1,740 $1,580 $1,980 $1,670 $1,650 1,500 1,000 500 0 West Fraser Dow Dax TSX FTSE Competitor A Competitor B Competitor C Source: Toronto Dominion Bank 25

WFT Toronto Stock Exchange www.westfraser.com These materials have been prepared by Management of the Company. No regulatory authority has approved or disapproved of the contents of these materials. These materials do not constitute an offer to sell or the solicitation of an offer to buy any securities of the Company, and shall not constitute an offer, solicitation or sale of the Company s securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. Securities of the Company may not be offered or sold in the United States absent their prior registration or qualification or an applicable exemption from the applicable registration or qualification requirements. 26

APPENDIX 27

Earnings Sensitivity to Key Variables (2017) Estimated Earnings Sensitivity to Key Variables 1 (based on 2017 production - $ millions) Factor Variation Change in pre-tax earnings Lumber price US$10 (per Mfbm ) 78 Plywood price Cdn$10 (per Msf) 8 NBSK price US$10 (per tonne) 6 BCTMP price US$10 (per tonne) 8 U.S. Canadian $ exchange rate 2 US$0.01 (per Cdn $) 33 1. Each sensitivity has been calculated on the basis that all other variables remain constant and assumes year end foreign exchange rates. 2. Excludes exchange impact of translation of U.S. dollar - denominated debt and other monetary items. Reflects the amount of the initial US$0.01 change; additional changes are substantially, but not exactly, linear. 28