Q1 2012 Investor Presentation
May 2012
Investor Presentation Q1 2012 May 2012 Forward Looking Statements - - PDF document
Investor Presentation Q1 2012 May 2012 Forward Looking Statements and Non-IFRS Financial Measures All financial references are expressed in US$ unless otherwise noted. Financial numbers prior to 2010 were prepared in accordance with
May 2012
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while numbers from 2010 onward have been restated or prepared in accordance with IFRS.
projection in the forward-looking information.
making a forecast or projection as reflected in the forward-looking information.
annual MD&A, and on Norbord’s website (www.norbord.com) 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
be presented. Definitions and reconciliation of terms can be found in the Company’s annual and quarterly MD&A.
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Source: Company Documents (1) Peers = volume-weighted average of Louisiana-Pacific and Ainsworth
North American OSB EBITDA Margin %
0% 10% 20% 30% 40% 50% 2005 2006 2007 2008 2009 2010 2011 LTM
Norbord Peers (1)
platform
recovery
recovery
partnerships
European operations
comfortable debt maturities
permanently and indefinitely idled
peers
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Benefits geographic diversification through European footprint proximity to markets proximity to low-cost fibre Panel Capacity by Region
US 61% Europe 27% Canada 12%
6 Bsf 5
Tolko 5% Huber 7% Ainsworth 10% Weyer- haeuser 14% Norbord 16% Georgia- Pacific 17% Louisiana- Pacific 20% Other 11%
North American OSB European OSB
Source: Company Documents - Installed Capacity
Smartply 6% Kronospan 38% Kronoswiss 21% Norbord 13% Sonae 13% Egger 9%
Industry Capacity 28 Bsf Industry Capacity 5 Bsf 6
with lowest cost position
culture
best-in-class service and product development
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50 100 150 200 250 300 350 400
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
US$ per Msf 7/16"
Q1 157 217 261 132 163 175 423 364 285 145 137 154 212 198 203 Q2 195 291 240 190 159 215 443 297 238 156 179 146 295 173 Q3 287 301 171 180 159 381 351 303 181 177 201 178 180 184 Q4 178 230 155 140 156 401 264 317 166 165 170 172 191 190 Average 204 260 207 160 159 293 369 320 217 161 172 163 219 186
Source: Random Lengths
14 year Average
North Central Benchmark OSB Prices
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89 631 495 247 42 107 45 52 (60) 365 (100) 100 200 300 400 500 600 700 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 LTM Average $196 million
NC Benchmark OSB Price 159 293 369 320 217 161 172 163 219 186 188
Norbord Sensitivity to North American OSB Price Changes: +$10/Msf 7/16” = +$36 million EBITDA (at full capacity)
US $ Millions
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15 Mills Permanently Shut/Converted 36 Mills in Operation
Source: Company Documents
17 Mills Indefinitely Curtailed North American OSB Installed Capacity:
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Operating Mills - 15 Bsf Production in 2011 Operating Mills - unutilized capacity
Mothballed Mills
Source: APA & Norbord Estimates
56% 21% 14%
Industry Capacity: 28 Bsf New Mills - never started
9%
12 35% 35% 30%
2011
70% 20% 10%
New Home Construction (Pro-dealers) Repair & Remodel (Big Box) Industrial
2005 3.6 Bsf 2.9 Bsf
MIP gains help offset impact of industry-wide rising input costs, without capex investment:
Margin Improvement Program Gains
31 35 37 28 56 9 14 29 16 25 10 20 30 40 50 60
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
(US $ Millions)
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Sustaining capex $15 million/yr
Capex Investment
Cordele Line 2 Greenfield: $135 million for 550 MMsf 3/8” capacity
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a housing recovery
OSB, MDF, PB and value added products
significant market shares European EBITDA
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Norbord’s European operations provide greater sales and earnings diversification than other North American competitors
21 29 58 32 35 81 4 17 36 44 44 20 40 60 80 100 2 2 2 3 2 4 2 5 2 6 2 7 2 8 2 9 2 1 2 1 1 L T M
US $ Millions
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0.0 0.5 1.0 1.5 2.0 2.5 1959 1969 1979 1989 1999 2009
Millions
2015F
US Housing Starts
50-year Average
Sources: US Census & APA - The Engineered Wood Association & Harvard Joint Center for Housing Studies
Housing starts sustainable at 1.5 million per year: “Demographic forces will lift household growth over the coming decade regardless of whether immigration is suppressed or the echo boomers delay forming independent households.”
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Housing recovery is coming:
in 50 years
10 year lows
highs
rent in most urban centres
growing
continues in new home construction
US Housing Starts
Source: Zelman & Associates
OSB Plywood OSB
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1,800 1,354 905 554 587 609 765 945 1,125 250 500 750 1,000 1,250 1,500 1,750 2,000 2006 2007 2008 2009 2010 2011 2012F2013F 2014F Actual & Forecast 000’s
200 270 240
50 100 150 200 250 300 2010 2011 2012 2013 2014 2015 2016 2017 Principal Value - US $ millions
7.25% Bonds Revolving Bank Lines (Undrawn) 7.95% Bonds
Manageable Debt Maturities (1) Strong Liquidity
US$ millions
Q1-2012 Cash 60 Bank Lines 267 Liquidity (2) 327
(1) In addition, the Company has an $85 million 1 year evergreen A/R securitization program. (2) Excludes a $120M standby loan commitment from Brookfield, which can be used to repay the 2012 bonds if needed.
Stable Credit Ratings DBRS BB(low) Moody’s Ba3 S&P BB-
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(1) Assumes operation at full capacity levels (2) Tax operating loss carry-forwards as at Dec. 31, 2011 – US $172 million, Canada C$76 million, Belgium €37 million
Exposure Change EBITDA Impact (1) (2) ($ millions) North American OSB $10 per Msf 7/16” + $36 European OSB €10 per m3 + $7 Canadian dollar $0.01 per Cdn$ + $1 Pound sterling £0.01 per € + $2
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Analyst Analyst Name Contact BMO Capital Markets Stephen Atkinson (514) 286-7309 stephen.atkinson@bmo.com Credit Suisse Andrew Kuske (416) 352-4561 andrew.kuske@credit-suisse.com Desjardins Securities Pierre Lacroix (514) 281-4231 pierre.lacroix@vmd.desjardins.com John Tumazos Very Independent Research John Tumazos (732) 444-1083 john@veryindependentresearch.com Raymond James Daryl Swetlishoff (604) 659-8246 daryl.swetlishoff@raymondjames.ca RBC Capital Markets Paul Quinn (604) 257-7048 paul.c.quinn@rbccm.com Salman Partners Mike Richmond (604) 622-5563 mrichmond@salmanpartners.com Scotia Capital Benoit Laprade (514) 287-3627 benoit.laprade@scotiabank.com TD Securities Sean Steuart (416) 308-3399 sean.steuart@tdsecurities.com Vertical Research Partners James Armstrong (212) 256-6157 ja@verticalresearchpartners.com
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sample of price forecasts by analysts as at May 16, 2012. It is not exhaustive. US$ per Msf 7/16” 2012 NC OSB Price BMO Capital Markets 188 Credit Suisse 220 Desjardins Securities 215 JTVIR 195 Raymond James 190 RBC Capital Markets 200 Salman Partners 195 Scotia Capital 201 TD Securities 197 Vertical Research Partners 208 Average $201
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