Presentation April 2018 Forward-Looking Statements This - - PowerPoint PPT Presentation

RBC Capital Markets Investor Presentation

April 2018

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This presentation and comments associated with it contain forward-looking statements including statements relating to U.S. housing recovery, the potential for constrained lumber supply, 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.

Forward-Looking Statements

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West Fraser Then and Now

THEN THEN NO NOW

From humble beginnings to North America’s largest lumber producer

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Wood is Good

Source: reTHINK Wood

Wood is an ideal building ma

• od is an ideal building mater

terial ial

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Lumbe ber Ply lywood

• d

Reman anuf ufact actur urer ers Sawdust ust and shaving vings Chip ips Bark k (Fuel el) BCTMP Pulp lp MDF NBSK Pulp lp Supply y agreem emen ents s (e.g. e.g. pelle llet pla lants) nts) Heat and Ele lect ctrici icity

Integration - We Attain Value from 100% of Our Resources

Sustainably managed forest lands Reforestation Bio ioprod

• duct

ucts

Integrated fiber strategy to maximize the value of the log

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• In the last 3 years we’ve planted more than

182 million trees

• West Fraser manages 7 million hectares
• f certified sustainably managed forests
• We’ve planted more than 1.7 billion

trees since 1955

• We plant approximately two trees for every

tree we harvest, 60+ million/year

• Planted in a line, 1.7 billion trees would

circle the earth 89 times

Sustainable Forest Management

Continuously renewing the resource

Market Overview

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Lumber V Appeals and Timeline

Post cash deposits at final AR1 rates

AD Administrative Review 1 1/19-6/20 AD Period of Review 1 6/30/17-11/30/18 CVD Period of Review 1 1/1/17-12/31/17 DOC CVD and AD FDs & Orders (Dec, 2017) NAFTA Appeals (Dec, 2017) WTO Appeals (Dec, 2017)

Post cash deposits at final AD & CVD rates

2017 2018 2019 2020

CVD Administrative Review 1 1/19-6/20

Preliminary Deposit Rate Final Deposit Rate Current Expense Rate CVD 24.12% 17.99% 17.99% AD 6.76% 5.57% 0.88% Total 30.88% 23.56% 18.87%

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U.S. Lumber End Use

U.S. Lumber End Use 2017

Source: FEA and WF

Single Family Construction, 26% Multifamily Construction, 3% Residential Improvements, 41% Industrial Production, 24% Nonresidential/ Mobile, 6%

Residential construction and renovation the key driver of lumber demand

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U.S. Existing Home Sales Continue to Improve

Existing home sales continue to improve albeit with low inventories

Source: National Association of Realtors

2,200 3,200 4,200 5,200 6,200 7,200 8,200 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18

Existing House Sales Annualized (000) 2.0 4.0 6.0 8.0 10.0 12.0 14.0 1,400 1,900 2,400 2,900 3,400 3,900 4,400

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18

000's units

U.S. Existing Housing Inventory Seasonally Adjusted

Existing House Inventory Months supply

Months Supply

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U.S. Housing Starts

Source: U.S. Census Bureau, FEA Forecast 01-18

Expect that the recovery has room to continue

200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2,200

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F 2019F 2020F

Thousands

Total Single Multi Underlying Demand

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Source: US Census Bureau, Statistics Canada, West Fraser Forecast

Demand for lumber expected to grow by 2 billion board feet per year

75 72 64 51 39 43 43 45 48 50 53 56 58 60 62 64

10 20 30 40 50 60 70 80

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018F 2019F 2020F

US Consumption Canadian Consumption

North American Lumber Consumption

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North American Lumber Production

Billion Bf

Source: US Census Bureau & Statistics Canada, West Fraser Forecast

US South expected to contribute most of growth in supply

5 10 15 20 25 10 20 30 40 50 60 70 80

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)

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North American Lumber Supply & Demand

Source: US Census Bureau & Statistics Canada, West Fraser Forecast

52 54 56 58 60 62 64 66 68 70 72 2015 2016 2017 2018F 2019F 2020F Production Demand On North American Mills Billion bf

Imports 2005: 3.0 billion board feet Imports 2010: 0.5 billion board feet Imports 2017: 1.4 billion board feet

2020: 4.2 billion bf

Potentially growing gap in lumber supply

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North American Lumber Capacity

West Fraser has largest share of a growing market

Source: Company reports, FEA, Timbermart South Top 5 Operators West Fraser Capacity # of Mills # of Mills Capacity % of Capacity Capacity # Mills % of Capacity 1997 17.4 430 64 5.6 33%

• 2017

18.5 230 66 9.0 47% 3.0 21 16.7% Changing landscape of US South Sawmilling

1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 SPF SYP Other

Estimated Lumber Capacity (Mmfbm)

Source: Public filings, Forest Economic Advisors and West Fraser estimates

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China Imports of Logs and Lumber (M M3)

Source: General Administration of Customs of The People’s Republic of China

Demand from China continues to grow

10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Lumber Logs

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North American Offshore Lumber Exports

Billion Bf

Source: US Census Bureau & Statistics Canada

Export volume leveling off

2.7 3.0 3.2 3.2 3.5 4.8 6.5 6.5 6.9 6.3 5.9 5.5 5.5

1 2 3 4 5 6 7 8 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Offshore Exports US Offshore Exports Canada Total

West Fraser Overview

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Our Strategy

Operational Excellence Geographic Diversification Product Diversification Integration

Straightforward strategy for success in all market conditions

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Operational Excellence

Straightforward, consistent business model Internal and external benchmarking Continuous reinvestment Cost control and efficiency Managing to ensure a committed workforce

Focused on continuous improvement in all aspects of the business

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Operations diversified by geography

B.C. 34% Alberta 23% U.S. 43%

Lumber Capacity Strong presence in key lumber producing regions

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LUMBER

34 mills

PANELS

7 mills

PULP & PAPER

5 mills SPF 4.1 Bfbm SYP 3.1 Bfbm Total 7.2 Bfbm Plywood: 850 MMsf3/8” MDF: 250 MMsf3/4” LVL: 3.2 MMcf NBSK: 570 Mtonnes BCTMP: 680 Mtonnes Newsprint: 135 Mtonnes

Product Diversification

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2017 Revenue Mix: Lumber Pulp Panels

Diversified across multiple end uses

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Pulp End-Use Products

Chemical Pulp Mechanical Pulp Multiple end uses and markets

Tissue, 34% Printing and Writing, 28% Specialty, 22% Fluff, 10% Box Board, 6% Box Board, 46% Printing and Writing, 38% Specialty, 8% Tissue, 5% Other, 3%

Source: PPPC 2016

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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

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• Reinvest profits to lower

costs, improve efficiency through technology and improved processes

• Capital spending in 2017 of

$336 million

• Estimated 2018 spending of

$300-$350 million

• Growth through opportunistic

acquisitions focused on solid wood

Capital Strategy

Prudent capital deployment

New merchandiser and debarker in High Prairie, Alberta New mill being constructed in Opelika, Alabama

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$1.6B in capital projects

Major rebuilds of 10 sawmills Upgraded 8 planers Built 6 energy and bioproducts projects Added 30 continuous kilns

Years: 2013-2017

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3 year cumulative capital allocation

Cons Consist istently ently deploying capit deploying capital al to cr to create eate value value

$1,892 $216 $829 $602 $73 $267 $69 $26

$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 Cash from

• perations

Capex Acquisitions Debt service and leverage Dividends Buybacks Other Retained cash flow

$1.4B Reinvested in the business $340M retuned to shareholders

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West Fraser Total Shareholder Return

TSR June 2006 to Dec 2017 Share Value Traded

Source: TD 14.2% 11.1% 7.9% 5.8% 4.7% 9.6% 8.1% 7.8% 0% 2% 4% 6% 8% 10% 12% 14% 16% 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 2017 2016 2015

WFT CFP IFP

Cdn$ Million

✓ Proven ability to generate strong cash flow, even in worst 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

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“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

• ffer 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.

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APPENDIX

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Earnings Sensitivity to Key Variables (2017)

Estimated Earnings Sensitivity to Key Variables1 (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 rate2 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.