Raymond James Institutional Investors Conference March 5, 2019 - - PowerPoint PPT Presentation

Raymond James Institutional Investors Conference

March 5, 2019 – Orlando, Florida

Forward-Looking Statements & Non-IFRS Financial Information

2

Notices

• All financial references are expressed in US$ unless otherwise noted.
• This presentation contains forward-looking statements and estimates.
• Such statements and estimates are based on assumptions as to the future and on

management’s current expectations and are, naturally, subject to risks and uncertainties.

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

Norbord Snapshot

• Leading manufacturer of wood-based panel products
• Largest global producer of Oriented Strand Board (OSB)

– Stated OSB capacity of 9.0 Bsf-3/8”(1) – Stated panel capacity (including particleboard & MDF)

• f 9.9 Bsf-3/8”(1)

– Approximately 2,700 employees at 17 plants across the US, Canada and Europe

• Listed on the NYSE and TSX (“OSB”)
• Report in US dollars and in accordance with IFRS
• 2018 sales of $2.4 billion

3

Company Overview

North America Europe

Oriented Strand Board (OSB) Particleboard Medium Density Fiberboard (MDF) Furniture

Panel Capacity by Region(1)

(1) Based on stated annual capacity as of December 31, 2018. Norbord's total OSB capacity increased by 560 MMsf-3/8" effective December 31, 2018 based on recent capital investments and improved efficiency.

Europe 21% Canada 37% US 42%

9.9 Bsf-3/8"(1)

Favourable Long-term OSB Industry Fundamentals

4

Industry Overview

North American OSB Demand and Capacity

Source: Forest Economic Advisors, LLC (FEA)

26.9 28.0 28.6 29.2 28.3 27.6 27.0 26.7 26.9 27.9 28.3 28.4 27.9 27.9 29.0 29.8 30.2 30.6

– 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% – 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 Effective Demand / Capacity Capacity (Bsf-3/8") Effective Capacity Mothballed Capacity Effective Demand / Capacity

North American OSB Industry Capacity of 27 Bsf

5

Industry Overview

Note: Excludes OSB siding production and capacity. Source: APA, company documents and other public filings

Norbord’s Huguley, AL mill resumed production in October 2017

37 Mills in Operation 5 Mills (Re)started in 2017/18 North American OSB Installed Capacity: Norbord Mill 7 Mills (Re)started in 2012/13 1 Mill Idle

$0 $50 $100 $150 $200 $250 $300 $350 $400 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Annual Average NC Price US$ per Msf 7/16"

Historical North American OSB Prices

6

Appendices

North Central Benchmark OSB Price

Source: Random Lengths

15-year average: $253

Q1 423 364 285 145 137 154 212 198 203 417 219 193 226 293 370 Q2 443 297 238 156 179 146 295 173 235 347 219 193 264 330 426 Q3 351 303 181 177 201 178 180 184 313 252 216 204 301 409 363 Q4 264 317 166 165 170 172 191 190 332 245 216 242 285 379 243 Average 369 320 217 161 172 163 219 186 271 315 218 209 269 353 351

• OSB prices are tied to demand for building products, which is influenced by the general

economy, demographics and the need for housing

Significant OSB Substitution Opportunity in Industrial End Uses

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2017 North American Panel Consumption

EWP Furniture Commercial Roofing Engineered Packaging

79% 21%

New Home

62% 38%

Repair & Remodel

OSB Plywood

Source: APA – The Engineered Wood Association, FEA, RISI, US Forest Products Annual Market Review and Prospects (USDA FS), US International Trade Commission, Norbord estimates

Business Strategy

17% 33% 50%

Industrial

MDF & PB

Norbord is a leading supplier to current industrial end uses

~21 Bsf-3/8” 16 Bsf-3/8” 8 Bsf-3/8”

Europe: Strong Demand Growth Driven by Substitution

8

Industry Overview

OSB Share of Structural Panels

Source: Forest Economic Advisors, LLC (FEA), European Panel Federation (EPF) and Norbord estimates

European OSB Demand (million m3)

Source: Eurostat, UN Comtrade Database, Destatis and Norbord estimates

8%

2005-2018F CAGR

North America Europe

Inverness Mill Expansion Supports Increasing European Customer Demand

9

Business Strategy

• New continuous press line started up in Q4/2017
• Original two press lines demolished during Q2/2018
• New finishing end completed in Q4/2018
• In January 2019, Board of Directors approved US$46 million (£35 million)

second phase investment to further expand capacity

10

Business Strategy

Capex Investment (US$ millions)

• Three main priorities:

– Re-invest in the business – Optimize capital structure – Return cash to shareholders

• 2018 capex of $204 million
• 2019 capex budget of $150 million

₋ Includes investments to prepare Chambord, Quebec mill for restart (when warranted by customer demand) and Inverness, Scotland phase 2 project

Disciplined Capital Allocation

(1)

(1) 2015 onwards reflects Norbord following completion of merger with Ainsworth. Pre 2015 reflects Norbord excluding Ainsworth.

Minimum Maintenance $25 million

0x 3x 6x 9x 12x $0 $25 $50 $75 $100 $125 $150 $175 $200 $225 $250 $275 $300 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18

Leverage Metrics Significantly Improved

11

Financial Overview

Adjusted EBITDA vs Net Debt

Quarterly

• Adj. EBITDA

(in US$ millions) Net Debt to LTM Adj. EBITDA

11.0x 0.6x

24% 0% 5% 10% 15% 20% 25% Norbord Peer1 Peer2 Peer3 Peer4 Peer5 Peer6 Peer7 Peer8

Track Record of Value Creation

12

Financial Overview

15 Year Average ROCE %(1)

Source: Capital IQ

(1) Return on capital employed (ROCE) is a measure of financial performance focusing on cash generation and the effective use of capital. ROCE is calculated as Adjusted EBITDA divided by average capital employed (operating working capital, PP&E, goodwill, intangibles, timberlands & licences).

$200M

Debt permanently repaid

>$1B

Capital invested

$1.4B

Dividends paid out

5.2M

Shares repurchased

Norbord Inc. Suite 600 One Toronto Street Toronto, Ontario, M5C 2W4 Canada Tel: 416-365-0705 www.norbord.com