West Fraser Timber Co. Ltd. · TSX:WFG
West Fraser Timber — Q4 2020 Earnings Presentation
16 slides from West Fraser Timber's earnings presentation, February 2021
Slide 1: Q4 Earnings Presentation
Q4 Earnings Presentation February 2021
Slide 2: Forward-looking information disclaimer
2 General: This presentation contains “forward-looking information” and “forward-looking statements” within the meaning of Canadian provincial securities laws and “forward-looking statements” within the meaning of the U.S. Securities Act of 1933, the U.S. Securities Exchange Act of 1934, and the “sa
Slide 3: Demand Conditions
3 Demand Conditions U.S. Housing Starts (not seasonally adjusted) Leading indicator of Remodeling Activity $B 4 Qtr Moving Improvements and Repairs 160 $400 14.0% 140 $350 12.0% 4 Qtr Moving rate of Change 120 $300 10.0% M Starts 100 $250 80 8.0% Seasonally adjusted: $200 60 2018: 1,250 6.0% 40 2019
Slide 4: Supply Conditions
4 Supply Conditions Total North America Lumber Supply (Production) North America Lumber Supply (Production) 20.0 2020E Canada Other 15.0 24% Billion Board Feet US South 35% 10.0 5.0 US Other BC 0.0 15% Q1-18 Q2-18 Q3-18 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20E 26% Canada US Imports Nor
Slide 5: Consolidated Financial Results
5 Consolidated Financial Results CAD$ Millions CAD$ Millions Adjusted EBITDA Q4-20 Q3-20 Q4-20 Q3-20 Lumber $ 508 $ 552 Sales $ 1,689 $ 1,690 Panels 62 51 Costs and Expenses 1,174 1,203 Pulp & Paper (26) 5 Operating earnings 515 487 Corporate/Other - (3) Finance Expense, net 3 (11) Total $ 544 $ 605
Slide 6: Q4 Consolidated Adjusted EBITDA Reconciliation
6 Q4 Consolidated Adjusted EBITDA Reconciliation Lumber: ($32) million Panels: $26 million Lumber: ($27) million Pulp & Paper: ($1) million Panels: ($12) million Pulp & Paper: ($30) million
Slide 7: West Fraser North America Lumber and OSB EBITDA Margin
7 West Fraser North America Lumber and OSB EBITDA Margin 45% 40% 35% 30% 25% 20% 15% 10% Lumber Average: 15% OSB Average: 21% 5% 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Lumber OSB Note: Lumber EBITDA is after duties; OSB data represents Norbord’s historic margins Improving demand,
Slide 8: Q4-20 versus Q3-20
8 Q4-20 versus Q3-20 $ millions unless Q4 2020 Q3 2020 Change otherwise indicated Lumber Production Less operating days, some COVID and weather- 1,502 1,531 (29) (MMfbm) related downtime Lumber Shipments 1,551 1,507 44 Higher SPF shipments due to improved rail service (MMfbm) Pulp & Paper Shipments
Slide 9: Pro Forma Capitalization
9 Pro Forma Capitalization Pro Forma Available Liquidity at 31 Dec 2020 West PF New West (US$ millions) $2,500 (US$mm) Norbord Fraser Fraser(1) $2,000 Market Cap(2) $4,411 (1) $3,488 (1) $7,916 (1,2) $1,500 $1,000 Long-term Debt $500 $665 $1,165 $500 Cash & Equivalents $461 $568 $1,029 $0 WF Norbord
Slide 10: 2021 Outlook
10 2021 Outlook $CAD unless indicated otherwise 2021 2020 Changes Recapture from temporary curtailments, additional SPF Production (MMfbm) 3,300 3,157 productivity SYP Production (MMfbm) 3,000 2,801 Gain from capital program, executing on investments NBSK Production (M tonnes) 515 462 Continued focu
Slide 11: Summary
11 Summary 2020 Recap Looking Forward ✓ Manageable operational impact due to COVID-19 ✓ Fundamentals for wood product demand continue to remain favorable ✓ Results buoyed by strong lumber and panel pricing ✓ Successful integration of Norbord ✓ Cost improvement from capital execution and ✓ Continued
Slide 12: Appendix
APPENDIX
Slide 13: Analyst Estimates
13 Analyst Estimates (SPF & SYP US$/Mfbm, OSB US$/Msf (7/16" basis), China NBSK US/tonne) 2021 SPF 2x4 2021 SYPW 2x4 2021 OSB NC 7/16” 2021 China NBSK RJ $550 BNS $530 RJ $400 RJ $612 BNS $556 RJ $550 BNS $430 RBC $622 TD $569 RBC $575 TD $444 BMO $632 RBC $588 TD $608 RBC $450 BNS $633 BMO $644 BMO
Slide 14: US Housing Start Estimates (Thousands)
14 US Housing Start Estimates (Thousands) 2021 Average 1,447 ERA (12-20) 1,380 NAHB (1-21) 1,383 RISI(12-20) 1,410 APA (1-21) 1,420 Wells Fargo (12-20) 1,440 RJ (1-21) 1,440 Fannie Mae (1-21) 1,450 Mortgage Bankers (12-20) 1,482 FEA (12-20) 1,489 Zelman (1-21) 1,520 CIBC (2-21) 1,550 1,300 1,400 1,5
Slide 15: Analyst Coverage
15 Analyst Coverage Organization Analyst Name Contact BMO Capital Markets Mark Wilde (212) 883-5102 [email protected] CIBC World Markets Hamir Patel (604) 331-3047 [email protected] ERA Forest Products John Cooney (604) 267-3021 [email protected] Research Raymond James Daryl Swetlishoff (
Slide 16: Non-IFRS Measures and Terminology
16 Non-IFRS Measure s: This presentation makes reference to certain non-IFRS measures, such as Adjusted EBITDA and net debt to capital ratio. Non-IFRS measures do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by others. F