Investor Presentation Q1 2012 May 2012 Forward Looking Statements - - PDF document

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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


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SLIDE 1

Q1 2012 Investor Presentation

May 2012

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SLIDE 2

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  • 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 restated or 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 (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

  • r assumptions that were applied in drawing a conclusion or making a forecast
  • r 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.

Forward Looking Statements and Non-IFRS Financial Measures

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  • 5 Bsf of installed OSB capacity
  • Assets – $1 billion
  • 2,000 employees across US, Europe and Canada
  • Listed on TSX (“NBD” and “NBD.WT”)
  • Reports in US Dollars and in accordance with IFRS

Norbord in Brief

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SLIDE 4

Attractive Investment Opportunity

Source: Company Documents (1) Peers = volume-weighted average of Louisiana-Pacific and Ainsworth

North American OSB EBITDA Margin %

  • 20%
  • 10%

0% 10% 20% 30% 40% 50% 2005 2006 2007 2008 2009 2010 2011 LTM

Norbord Peers (1)

  • Low-cost operating

platform

  • Leverage to housing

recovery

  • Well positioned for

recovery

  • Strong customer

partnerships

  • Diversification from

European operations

  • Strong financial liquidity and

comfortable debt maturities

  • Significant industry capacity

permanently and indefinitely idled

  • Superior margins versus

peers

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Norbord Assets Strategically Located

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

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Norbord a Significant Player in OSB Industry

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

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SLIDE 7
  • Pursue growth in OSB
  • Own highest-quality assets

with lowest cost position

  • Maintain a margin-focused operating

culture

  • Focus on growth customers through

best-in-class service and product development

  • Allocate capital with discipline

Norbord Strategy Well Defined

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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

OSB Prices Strong Over the Cycle

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SLIDE 9

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

Total EBITDA

NC Benchmark OSB Price 159 293 369 320 217 161 172 163 219 186 188

Strong Operating Cash Flow Through Cycle

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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Significant OSB Industry Capacity Curtailment

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Operating Mills - 15 Bsf Production in 2011 Operating Mills - unutilized capacity

OSB Industry Operated at 56% of Capacity in 2011

Mothballed Mills

Source: APA & Norbord Estimates

56% 21% 14%

Industry Capacity: 28 Bsf New Mills - never started

9%

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12 35% 35% 30%

2011

Customer Strategy Sets Norbord Apart

70% 20% 10%

New Home Construction (Pro-dealers) Repair & Remodel (Big Box) Industrial

2005 3.6 Bsf 2.9 Bsf

65% of shipments now directed away from new housing

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  • Increased productivity
  • Reduced overhead costs
  • Reduced raw material usage
  • Improved product mix

MIP gains help offset impact of industry-wide rising input costs, without capex investment:

Margin Improvement Program Gains

Low Cost Position Key to Long-Term Success $280 million in margin improvements over 10 years

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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Track Record of Disciplined Capital Allocation

  • Accretive acquisitions
  • Low cost capacity

additions

  • Divestment of non-core

assets

  • Deleverage on cyclical

upturns

  • Special dividends
  • Normal course issuer bids

Sustaining capex $15 million/yr

Capex Investment

Cordele Line 2 Greenfield: $135 million for 550 MMsf 3/8” capacity

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  • UK business less reliant on

a housing recovery

  • Diverse product offering –

OSB, MDF, PB and value added products

  • Premier customer base &

significant market shares European EBITDA

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Strong Results from European Operations

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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  • Systemic lack of

available housing in the UK

  • Pent up demand

continues to grow

  • Currency trends

favour Norbord’s UK-based manufacturing UK-Based Manufacturing Provides Competitive Advantage Norbord is the largest panel producer in the UK

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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.”

Demographics Support a US Housing Recovery

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Housing recovery is coming:

  • New home inventories lowest

in 50 years

  • Existing home inventories at

10 year lows

  • Affordability at generational

highs

  • Cheaper to own a home than

rent in most urban centres

  • Repair & renovation activity

growing

  • Plywood substitution trend

continues in new home construction

US Housing Starts

Source: Zelman & Associates

OSB Plywood OSB

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US Housing Activity Improving

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

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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-

Norbord’s Financial House Is In Order

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  • High quality assets with low cost position
  • MIP drives productivity and cost improvement
  • Benefit through bottom of cycle from geographic

diversification and strong customer partnerships

  • Leveraged to US housing market recovery
  • Favourable long-term OSB industry fundamentals
  • Financial house in order

Key Takeaways

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Norbord well positioned to deliver superior returns

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Appendices

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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

Financial Sensitivities

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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

Analyst Coverage of Norbord

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  • Norbord does not provide guidance regarding its expectations of future OSB prices. The following is a

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

Forecast OSB Pricing – NC 7/16”

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