ANNU ANNUAL AL GENERAL GENERAL MEETING MEETING April 19, 2018 Quesnel, B.C.
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
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
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 4 Source: US Census Bureau, FEA Forecast 01-18
North American Lumber Consumption 80 75 72 70 64 64 62 60 58 60 56 53 51 50 48 50 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 5 Source: US Census Bureau, Statistics Canada, West Fraser Forecast
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 6 Source: US Census Bureau & Statistics Canada, West Fraser Forecast
North American Lumber Supply & Demand 72 Imports 2005: 3.0 billion bf 70 Imports 2010: 0.5 billion bf Imports 2017: 1.4 billion bf 68 2020: 4.2 billion bf 66 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 supply 7 Source: US Census Bureau & Statistics Canada, West Fraser Forecast
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 Adjusted EBITDA 113 89 74 8
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 EBITDA 172 79 45 9
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 Lumber invested in: • Growing footprint of our operations Producer • Modernized mills and upgraded North America technology • Safety • Employee development 10
Gilman Acquisition #1 • Welcomed 900 new employees US South • 6 mills, finger-joint Lumber plant and a regional Producer office • Now 22 facilities and 2 offices strong in the US South 11
West Fraser 2017 50+ locations 12
Increased Capacity 2017 Lumber Capacity (7.2 billion feet) 2004 Lumber Capacity (2.76 billion feet) 7.2 BC U.S. U.S. 34% 13% 43% Alberta 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
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
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 Lumber invested in: • Growing footprint of our operations Producer • Modernized mills and upgraded North America technology • Safety • Employee development 15
Capital Spending $ Millions 400 $1.6 300 Billion 200 in capital 100 0 2013 2014 2015 2016 2017 Capital Expenditure 16
Modernizing our Operations 61 Major Major rebuilds of 11 Upgraded 13 planers projects sawmills since 2012 Built 6 energy and Added 33 continuous bioproducts projects kilns 17
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 Lumber invested in: • Growing footprint of our operations Producer • Modernized mills and upgraded North America technology • Safety • Employee development 18
Safety 19
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 – This is on top of a 25% reduction in serious injuries between 2015 and 2016 • Our medical incident rate is down 16% vs. 2016 • Recordable Incidents and Loss Time Accidents (LTA's) reduced by 30% 20
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 Lumber invested in: • Growing footprint of our operations Producer • Modernized mills and upgraded North America technology • Safety • Employee development 21
Our People Promote within • We are committed to supporting employee’s development – Internal courses and skills training – Partnerships with educational organizations 22
Recognition 23
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
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
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
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
Challenges • Timber base in Western Canada • Softwood lumber dispute • Transportation • Operational excellence 28
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 Forest Industries sawmill expansion and planer upgrades, capital 2013 • 100 Mile Lumber sawmill upgrade, 2015 projects Continuous Kilns • Pacific Inland Resources continuous kilns, 2014 and 2018 since 2011 • Chetwynd Forest Industries continuous kiln, 2017 • Quesnel Sawmill continuous kilns, 2017 and 2018 Energy & Bioproducts • Cariboo Pulp (50%) Turbogenerator, 2011 • Quesnel River Pulp low consistency refiner, 2014 and Single stage refining 2018 • Chetwynd Forest Industries organic rankin cycle (ORC), 2015 • Fraser Lake Sawmills organic rankin cycle (ORC), 2015 29
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