why arkansas? | interfor

Investing in Arkansas ……… and the US South

Arkansas Forestry Association 71st Annual MeetingOctober 5, 2016

Todd MullisVice President

US South Operations

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This presentation contains information and statements that are forward-looking in nature, including, but not limited to, statements containing the words “will”, “is expected”, “forecast”, “annualized”, “target” and similar expressions. Such statements involve known and unknown risks and uncertainties that may cause Interfor’s actual results to be materially different from those expressed or implied by those forward-looking statements. Such risks and uncertainties include, among others: price volatility; competition; availability and cost of log supply; natural or man-made disasters; foreign currency exchange fluctuations; changes in government regulation; export and other trade barriers; environmental and community matters; labour disruptions; and other factors referenced herein and in Interfor’s current Annual Report and Management’s Discussion & Analysis, both available on www.sedar.com. The forward-looking information and statements contained in this presentation are based on Interfor’s current expectations and beliefs. Readers are cautioned not to place undue reliance on forward-looking information or statements. Interfor undertakes no obligation to update such forward-looking information or statements, except where required by law.

FORWARD-LOOKING INFORMATION

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• Interfor’s Platform• North American Lumber Log Supply• US Lumber Demand• The Future of Southern Yellow Pine• The Road Ahead

ITEMS FOR DISCUSSION

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INTERFOR’S FOUR REGIONS

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March 2013Rayonier Acquisition• Baxley• Eatonton• Swainsboro

July 2013Keadle Acquisition• Thomaston

Sept 2013Swainsboro second shift

March 2014Tolleson Acquisition• Perry• Preston

Jan 2014Baxley second shift

Nov 2014PTC office opening

March 2015Simpson Acquisition• Georgetown• Meldrim

June 2015Price Acquisition• Monticello

2013 2014 2015

• 5 transactions valued at over $400M

• $55M additional investment to date• Nine operations in three states• Over 1,100 employees• 1.3 Bbf of production capacity• Over 5M tons of logs consumed

From Zero to:

INTERFOR US SOUTH — TIMELINE

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INTERFOR BELIEVES IN AND IS COMMITTED TO THE US SOUTH

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LUMBER FOCUS ONLY

Interfor0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Lumber Panels Engineered Products

% of Sales

Other Major Lumber Producers

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DougFir/Larch

30%

Hem-Fir10% Spruce-Pine-Fir

11%

SouthernYellow Pine

34%

Cedar11%

Lodge Pole/ Ponderosa Pine

4%

INTERFOR’S BROAD RANGE OF PRODUCTS

(1) By value for 2015

Lumber Sales By Species 1

Western Dimension

Cedar

Southern Yellow Pine

Lodge Pole Pine

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Canada8%

China/Tw/HK5%

Other4%

Japan 10%

USA73%

NORTH AMERICAN DRIVEN BUSINESS; BUT DIVERSE SET OF MARKETS SERVED

(1) By value for 2015

Lumber Sales By Market 1

NORTH AMERICAN LUMBER SUPPLY LOG

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BC INTERIOR OVERVIEW

Cumulative Percentage of Merchantable Forest Volume Killed Since 1999

Very High (>45%)

High (31-45%)

Moderate (16-30%)

Low (<16%)

None (0%)

Adams Lake

Castlegar

Grand Forks

Source: BC Ministry of Forests

12Source: FLNRO

AAC: Allowable Annual Cut

1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 -

10

20

30

40

50

60

70 AAC m3/yrMillion m3

BC INTERIOR HARVEST WILL DROP

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US South Timberland Ownership

THE MERITS OF PRIVATE LAND SUPPLY

• Positive “Pro Business” environment. • Timberland is an attractive asset class. • Significant standing timber inventory.

• Abundant commercially harvestable pine habitat.

NIPF60%Pu

blic

13%

Corpo-rate

(REIT, TIMO)27%

Source: Forisk – 2015 Q3

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LOG INVENTORY IS GROWING IN US SOUTH

Source: Forisk Quarterly Q3-2015 Forecast

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03

04

05

06

07

08

09

10

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12

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25

26

27

28

29

30

-

0.5

1.0

1.5

2.0

2.5

3.0 Historic Forisk Base Case Forecast

Grad

e In

vent

ory

(Bill

ion

tons

)

UNITED STATES LUMBER DEMAND

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US HOUSING STARTS WILL GROW

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70 73 76 79 82 85 88 91 94 97 0 3 6 9 12 15 180.00.20.40.60.81.01.21.41.61.82.02.22.4

Housing Starts Underlying Demand

Pent-Up Demand

Millions

Source: FEA Q4-2015 Forecast; Published December 2015

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DEMAND ON NORTH AMERICAN MILLS WILL BE DRIVEN UPWARD

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BBF

Source: FEA Q4-2015 Forecast; Published December 2015

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 202025303540455055606570758085

US Canada Net Exports

THE FUTURE OF SOUTHERN YELLOW PINE

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19Source: FEA – 2015 Q3

SOUTH LEADS SINGLE FAMILY HOUSING STARTS

2013 2014 2015 2016 2017 2018 2019 20200

0.2

0.4

0.6

0.8

1

1.2

1.4

Northeast North Central South West

millions

202020

PINE GRADE INVENTORY & HOUSING STARTS

Source: Forisk Quarterly Q3-2015 Forecast

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

0.0

0.5

1.0

1.5

2.0

2.5

Base Housing Low Housing Historic Base Low

U.S

. Sou

th P

ine

Grad

e In

vent

ory

(tho

usan

ds)

U.S. Housing Starts (m

illions)

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SOUTHERN YELLOW PINE: THE ROAD AHEAD• 2016 North American lumber demand dynamics

have been positive.

• Domestic consumption is forecasted to increase significantly over the next five years….the US South will lead the way.

• Log supply constraints will continue in Canada, but log inventory is growing in the US South.

• The US South is well-positioned and remains a good investment opportunity.

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THANK YOU