2016 annual general meeting - norbord · 2019. 2. 20. · 2016 annual general meeting . april 29,...
TRANSCRIPT
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2016 Annual General Meeting April 29, 2016
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Peter Gordon Chair
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Peter Wijnbergen President & Chief Executive Officer
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Forward-Looking Statements
• All financial references are expressed in US$ unless otherwise noted.
• 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 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.
4
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Agenda
5
2015 in Review
The State of the Company
Favourable Market Conditions in North America
Accelerating Demand Growth in Europe
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2015 in Review
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Created North American leader in OSB
Announced European growth plans
Strong operational performance
Five mills OSHA recordable incident free
NYSE listing – ‘OSB’ ticker symbol
2015 Highlights
7
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Norbord Begins Trading on the New York Stock Exchange
8
Photo credit: NYSE/Valerie Caviness
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2014 2015
North Central OSB Price (US$/Msf-7/16”) $218 $209
Adjusted EBITDA (US$ millions) $115 $122
Shipments (MMsf-3/8”) 6,929 7,237
Adjusted EPS, basic and diluted (US$) $(0.20) $(0.17)
Captured Synergies (annualized, US$ millions) n/a $27
Dividends Paid per Share (C$) $2.40 $0.70
2015 Financial Highlights
9
+4%
-4%
Note: 2014 comparatives restated to reflect Ainsworth merger
+6%
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0
10
20
30
40
50
$0
$100
$200
$300
$400
2000 2003 2006 2009 2012 2015 2018F
Analyst Forecast
Encouraging Demand and Price Outlook
10
North Central OSB Price vs OSB Demand
Source: Random Lengths, Analyst reports and Forest Economics Advisors, LLC
OSB Demand Bsf 3/8” Basis
Annual avg. NC OSB Price
US$ per Msf 7/16"
Demand
Price
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The State of the Company
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“Best in Class Margins”
12
37
28
56
9 14
29
16
25 23
0
24
43
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Margin Improvement Program Gains ($ millions) In Control of Our Controllables
“…the consistency and the magnitude of [Norbord’s] outperformance [versus peers] is impressive.”
(Mark Wilde/Ketan Mamtora, BMO Capital Markets, March 16, 2016)
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Track Record of Disciplined Capital Allocation
13
Countercyclical M&A
• Ainsworth merger (2015)
• Acquired Genk, Belgium mill (2004)
• Acquired remaining 50% of Bemidji, Minnesota mill (2004)
• Acquired Texas and Georgia mills (2002)
Investment in capacity
• Modernization / expansion of Inverness mill (2016-17)
• Twinned Cordele, Georgia line (2006)
Disciplined capital expenditure
• $25 million annual maintenance capex
• Additional investment to debottleneck capacity and lower manufacturing costs
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1 10 20 30 40 50 60
Inverness Fines Screening Paid Back in Less Than One Year
14
Capital Investment
Cumulative Savings
Savings (Lower Raw Material Use)
Time (weeks)
< 1 year payback
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0x
3x
6x
9x
12x
$0
$25
$50
$75
$100
Q2 15 Q3 15 Q4 15 Q1 16 Q2 16F Q3 16F Q4 16F
Leverage Metrics Improving Rapidly
15
Adjusted EBITDA vs Net Debt
Analyst Forecast
Quarterly Adj. EBITDA
Net Debt to LTM Adj. EBITDA
Source: Analyst reports
11.7x
4.8x
3.4x
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Setting the Record Straight
16
Lower oil prices mean lower costs
Weaker Canadian dollar means lower costs
OSB not exposed to Chinese slowdown
Softwood Lumber Agreement does not affect OSB
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Favourable Market Conditions in North America
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US Housing in 7th Year of Recovery
18
US Housing Starts and Underlying Demand
Source: US Census Bureau and Forest Economics Advisors, LLC (FEA)
0.0
0.5
1.0
1.5
2.0
2.5
2000 2003 2006 2009 2012 2015 2018F
Millions
FEA Forecast
Underlying Demand
Pent-up demand > 3.5 million homes
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2015 Future
Specialty Products Will Drive Substitution Growth
19
Specialty
Value added
Commodity
New home construction
Repair & remodel
Industrial & export
• Reduced dependence on new home construction • More predictable, stable margins over business cycle
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Commodity OSB: The Core of Our Business
20
Standard OSB sold into new home construction,
repair & remodel
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Value Added Products Save Builders Money
21
OSB enhanced for higher value proposition
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Growth Opportunity in Specialty Products
22
Upholstered furniture
Utility trailer
Container flooring
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Accelerating Demand Growth in Europe
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Europe Earlier on Substitution Curve Than North America
24 Source: Forest Economics Advisors, LLC and Norbord estimates
OSB Share of Structural Panels
0%
25%
50%
75%
1980 1985 1990 1995 2000 2005 2010 2015
Europe
North America
66%
43%
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Inverness: Expanding to Meet Growing Demand
25
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Reposition Business
Grow European OSB
Grow NA specialty volume
Increase stability
Strategic Repositioning Differentiates Norbord
26
Optimize Existing Operations
Deliver merger synergies Return to full capacity
Improve margins
Increase EBITDA
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27
“Best in class margins”
Prudent allocators of capital
Improving financial metrics
Favourable market fundamentals
Strategy for long-term value creation
Great Time to be Invested in Norbord
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Questions
2016 Annual General MeetingPeter Gordon�ChairPeter Wijnbergen�President & Chief Executive OfficerForward-Looking StatementsAgendaSlide Number 62015 HighlightsNorbord Begins Trading on the New York Stock Exchange2015 Financial HighlightsEncouraging Demand and Price OutlookSlide Number 11“Best in Class Margins”Track Record of Disciplined Capital AllocationInverness Fines Screening Paid Back in Less Than One YearLeverage Metrics Improving RapidlySetting the Record StraightSlide Number 17US Housing in 7th Year of RecoverySpecialty Products Will Drive Substitution GrowthCommodity OSB: The Core of Our BusinessValue Added Products Save Builders MoneyGrowth Opportunity in Specialty ProductsSlide Number 23Europe Earlier on Substitution Curve Than North AmericaInverness: Expanding to Meet Growing DemandStrategic Repositioning Differentiates NorbordGreat Time to be Invested in NorbordSlide Number 28