Q2 2014 Earnings Presentation July 29, 2014 Forward-Looking - - PowerPoint PPT Presentation

▶
q2 2014
SMART_READER_LITE
LIVE PREVIEW

Q2 2014 Earnings Presentation July 29, 2014 Forward-Looking - - PowerPoint PPT Presentation

Feb 01, 2023 105 likes •279 views

Q2 2014 Earnings Presentation July 29, 2014 Forward-Looking Statements and Non-IFRS Financial Information All financial references are expressed in US$ unless otherwise noted. Financial numbers prior to 2010 were prepared in

slide-1
SLIDE 1

Q2 2014 Earnings Presentation

July 29, 2014

slide-2
SLIDE 2

2

  • 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 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 Information

slide-3
SLIDE 3

3

Q2 2014 Financial and Operational Highlights

  • OSB prices remained stable, as industry capacity is gradually absorbed
  • EBITDA of $33 million - up $6 million from Q1 2014
  • YTD NA sales volume up 10% year-over-year
  • YTD EU sales volume up 3% year-over-year

− Best-ever quarterly EU panel production

  • YTD MIP gains of $6 million
  • Received APA’s 2013 Safest Company Award
  • Declared CAD $0.60/share dividend payable September 21 (record date

September 1)

slide-4
SLIDE 4

4

US Housing Starts

(1) Based on US housing economist forecasts Source: US Department of Commerce, except where otherwise noted

610,000 781,000 927,000 893,000 1,050,000

2011 2012 2013 Jun-14 SAAR 2014F

June YTD data: housing starts up 6% yr/yr; building permits up 5%

(1)

slide-5
SLIDE 5

North American Benchmark OSB Prices

5

$/Msf-7/16” 347 252 245 219 219 313 207 192 193 199 150 200 250 300 350 400 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014

North Central South East

Spread SE vs. NC 34 45 53 26 20

Source: Random Lengths

slide-6
SLIDE 6

European Indicative OSB Prices(1)

6

€/m3

(1) European indicative average OSB price represents the gross delivered price to the largest Continental market

273 278 276 273 269 255 260 265 270 275 280 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014

slide-7
SLIDE 7

Financial Summary

7

(US $ millions, except per share information, unless otherwise noted)

Q2 Q1 Q2 YTD YTD 2014 2014 2013 2014 2013

Sales $ 311 $ 303 $ 365 $ 614 $ 730 EBITDA North America 24 17 92 41 198 Europe 12 13 12 25 22 Unallocated (3) (3) (2) (6) (7) Total 33 27 102 60 213 Earnings 11 7 53 18 120 EPS, basic 0.21 0.13 1.00 0.34 2.46 EPS, diluted 0.20 0.13 0.99 0.33 2.26

slide-8
SLIDE 8

EBITDA Variance

8

EBITDA variance (US $ millions)

Q2 2014 Q2 2014 YTD 2014 vs. vs. vs. Q1 2014 Q2 2013 YTD 2013

EBITDA – current period $ 33 $ 33 $ 60 EBITDA – comparative period 27 102 213 Variance 6 (69) (153) Mill nets(1) (2) (80) (171) Volume(2) 2 8 14 Key input prices(3) 1 (4) (7) Key input usage(3) 6 3 2 Mill profit share and bonus

  • 4

8 Maintenance and other(4) (1)

  • 1

Total 6 (69) (153)

1)The mill nets variance represents the change in realized pricing across all products. Mill nets are calculated as sales (net of outbound freight costs) divided by shipment volume. 2)The volume variance represents the impact of shipment volume changes across all products. 3)The key inputs include fibre, resin, wax and energy. 4)The maintenance and other category covers all remaining variances including labour and benefits, and the impact of foreign exchange.

slide-9
SLIDE 9

Liquidity and Capital Resources

9

(US $ millions, except per share information, unless otherwise noted)

Q2 Q1 Q2 YTD YTD 2014 2014 2013 2014 2013

Cash provided by (used for) operating activities $ 20 $ (26) $ 101 $ (6) $ 146 Cash provided by (used for) operating activities per share 0.37 (0.49) 1.91 (0.11) 3.00 Operating working capital 96 93 86

  • Investment in property, plant and equipment

27 15 18 42 30

slide-10
SLIDE 10

Balance Sheet

10 (US $ millions)

Bank Covenant Jun 28 2014 Dec 31 2013 Jun 29 2013

Long-term debt, principal value $ 440 $ 440 $ 440 Less: Cash and cash equivalents (83) (193) (220) Net debt 357 247 220 Add: Letters of credit 3 4 3 Net debt for financial covenant purposes 360 251 223 Tangible net worth

  • min. 250

453 492 520 Net debt to capitalization, book basis

  • max. 65%

44% 34% 30%

  • Liquidity of $425 million = $83 million in cash + $342 million in

unused credit lines

slide-11
SLIDE 11

11

Appendices

slide-12
SLIDE 12

12

50 100 150 200 250 300 350 400 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Annual Average NC Price US$ per Msf 7/16" Source: Random Lengths

15 year average

OSB Prices Strong Over the Cycle

Historical North Central Benchmark OSB Price

Q1 217 261 132 163 175 423 364 285 145 137 154 212 198 203 417 219 Q2 291 240 190 159 215 443 297 238 156 179 146 295 173 235 347 219 Q3 301 171 180 159 381 351 303 181 177 201 178 180 184 313 252 Q4 230 155 140 156 401 264 317 166 165 170 172 191 190 332 245 Average 260 207 160 159 293 369 320 217 161 172 163 219 186 271 315

slide-13
SLIDE 13

13

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

sample of price forecasts by analysts as at July 23, 2014. It is not exhaustive. Annual Average North Central Benchmark OSB Price

US$ per Msf 7/16”

2014 2015 2016 CIBC 230 271

  • Dundee Capital Markets

220 225

  • Raymond James

245 280

  • RBC Capital Markets

225 250 275 Salman Partners 230 260

  • Scotia Capital

231 293 301 TD Securities 226 265

  • Vertical Research Partners

225 290 340 Average $229 $267 $305

Forecast OSB Pricing – North Central 7/16”

slide-14
SLIDE 14

14

Source: Company Documents and Other Public Filings

Additional OSB Capacity Restarting to Meet Additional Demand

38 Mills in Operation 8 Mills Indefinitely Curtailed North American OSB Installed Capacity: Norbord Mill 6 Mills (Re)started in 2013

slide-15
SLIDE 15

15

(1) Assumes operation at full capacity levels Direct exposures only; before the impact of any cash flow currency hedges Tax operating loss carry-forwards (gross) as at Dec. 31, 2013 – US $71 million, Canada C$49 million, Belgium €30 million (2) Excluding dividends on common shares

Exposure Change EBITDA Impact (1)

($ millions)

North American OSB $10 per Msf 7/16” + $36 European OSB €10 per m3 + $7 Canadian dollar(2) $0.01 per Cdn$ < $1 Pound sterling £0.01 per € < $1

Financial Sensitivities