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RAYMOND JAMES LUMBER
SUPER CYCLE FORUM V
INVESTOR PRESENTATION January 15, 2015 | Toronto, Ontario
2
This presentation and comments associated with it contain
forward-looking statements including statements relating to U.S.
housing recovery, the potential for constrained lumber supply,
energy-related opportunities, earnings sensitivity and estimated
annual capital expenditures. These statements are subject to
the cautionary statement which introduces West Fraser’s 2013
Annual Management’s Discussion & Analysis which can be
accessed on the Company website www.westfraser.com.
Forward-Looking Statements
3
• To be a leading forest products manufacturer,
focused on solid wood products
• Strong financial results through the business cycle
• Long-term growth and shareholder value
enhancement
• Stable, conservative financial structure
Our Goals
4
• Operational excellence
• Diversification
• Product differentiation
• Integration
Our Strategy
5
• Managing to ensure a committed workforce
• Cost control and efficiency
• Continuous reinvestment
• Internal and external benchmarking and
competition
• Straightforward, consistent business model
Operational Excellence
6
LUMBER 27 mills
PANELS 7 mills
PULP & PAPER 5 mills
SPF 3.9 Bfbm SYP 2.3 Bfbm Total 6.2 Bfbm
Plywood: 830 MMsf3/8” MDF: 300 MMsf3/4” LVL: 3.2 MMcf
NBSK: 590 Mtonnes BCTMP: 650 Mtonnes Newsprint: 135 Mtonnes
Product Diversification
• North America’s largest lumber producer
• Largest plywood producer in Canada
• Third largest pulp producer in Canada
7
Lumber66%
Panels11%
Pulp & Paper23%
Trend Sales Mix ($)
8
Operations diversified by geography
Geographic diversification
B.C. 40%
Alberta 23%
U.S. 37%
Lumber Capacity
9
• Wood as the best environmental choice
• Renewable resource, sustainable business
• Expanding applications
• Bioenergy, full use of the resource
Product Differentiation
10
• Lumber, panels, pulp, newsprint and energy
• Substantial fibre self-sufficiency
• Fuller utilization of resource
• Some benefits from counter-cyclicality
• Better able to respond to new opportunities
such as bioenergy
Integration (in Canada)
11
Demand - North American housing
- Chinese construction and
industrial applications
- Japanese housing
Supply - Fibre limitations
- Residual offtake
- Mill closures
- People
Efficiency - Capital investment
- Business model
Earnings Growth Drivers - Lumber
12
Returns on Lumber
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
Ytd
Q3
-14
EBITDA Margin (%) - Lumber
Average: 16%
13
U.S. Housing M
illio
n U
nit
s
Source: FEA, Q3 2014
Significant pent up demand bodes well for long-term recovery
Pent Up Housing Demand (conventional + mobile)
0.50
0.75
1.00
1.25
1.50
1.75
2.00
2.25
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
Production Underlying Demand
14
50%
55%
60%
65%
70%
75%
80%
85%
90%
30 year average share = 76%
US Housing
Single Family Share well below 30 year average Share of single-family housing starts
Source: FEA
15
Unlike Single-Family, Multi-family has Recovered
Source: U.S. Census Bureau
0
50
100
150
200
250
300
350
400
450
500
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Thousands
Single-Family (Left Scale) Multi-Family (Right Scale)
16
U.S. Lumber End Use
U.S. Lumber End-use 2013 U.S. Lumber End-use Normalized
Source: FEA and WF
Single Family Construction,
24%
Multifamily Construction, 3%
Residential Improvements,
38%
Industrial Production, 30%
Nonresidential/Mobile, 5%
Single Family Construction,
37%
Multifamily Construction, 4%
Residential Improvements,
29%
Industrial Production, 23%
Nonresidential/Mobile, 7%
17
Canadian Shipments to China
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2006 2007 2008 2009 2010 2011 2012 2013 2014
Proj.
MM
fbm
Source: Council of Forest Industries, September 2014
Equivalent to 300,000 housing starts *
* Based on consumption of 11.5 Mfbm per U.S. housing start (average mix of single and multi family)
18
B.C. Shipments to Japan
0
20
40
60
80
100
120
140
0
200
400
600
800
1,000
1,200
1,400
1,600
2006 2007 2008 2009 2010 2011 2012 2013 2014
Proj.Shipments 2x4 Starts
Source: Council of Forest Industries, September 2014
Mmfbm Thousand 2x4 Starts
19
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
We
st F
rase
r
Can
for
We
yco
GP
Inte
rfo
r
Sie
rra
Pac
ific
Res
olu
te
Tolk
o
Ham
pto
n
Sim
pso
n
Mmfbm
Top 10 Lumber Capacity
Top 10 make up only 43% of Capacity
North American Lumber Capacity
20
Canadian Fibre Supply M
illio
n (
M3
)
Source: FEA, Q4 2014
0
10
20
30
40
50
60
70
80
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
Annual Allowable Cut
Quebec Ontario BC Interior
Forecast
21
U.S. South Positive Timber Inventory
Bfbm Int’l ¼”
Source: FEA, Q4 2014
0
5
10
15
20
25
30
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Growth Drain
Projected Excess Growth
22
Demand - China’s paper, tissue and packaging
demand
- Developing countries’ demand
- Price of cotton and similar products
Supply - European paper capacity closures
- Russian and Canadian start ups
- Product diversification
(e.g. dissolving pulp)
- South American production
Reliability - Capital
- Technology
Earnings Growth Drivers - Pulp
23
Pulp & Paper Sales Mix – 2013 ($)
North America,
38%
Asia, 56%
Europe, 6%
24
Chemical Pulp End-Use Products
Printing and Writing Papers
31%
Tissue 31%
Specialty Papers 19%
Fluff Based Products
10%
Boxboard 5%
Other 4%
Source: PPPC 2013
25
BCTMP Pulp End-Use Products
Boxboard 44%
Printing & Writing 41%
Specialty Papers 8%
Newsprint 4%
Other 3%
Source: PPPC 2013
26
Alberta Newsprint is the lowest cost newsprint producer in North America
and a positive contributor to the profitability of our pulp and paper business
Paper — Newsprint
Source: PPPC Cost Survey 2012
Cd
n$
/to
nn
e
North American Newsprint Cost Structure Par Exchange Rate
ANC
27
• Woodwaste to produce heat and steam to dry
wood products and for electricity and steam for
pulp mills
• Woodwaste to produce electricity to be used or
sold
• Pulp mill effluent as a source for biogas-electricity
generation
• Expanding opportunities to generate and sell
electricity levering off current business
Energy Opportunities
28
Power Generation from Biomass
Cariboo pulp mill turbo-generator (completed) • Mill achieved energy self-sufficiency and excess power sold to
B.C. Hydro
Slave Lake pulp mill biomethanation project • Estimated startup late 2014
B.C. Hydro (Phase II) power generation projects (at two sawmills)
• Long-term contracts to sell power to B.C. Hydro
• Projected to reduce costs and contribute to sawmill earnings
when completed
Energy Opportunities
29
• Reinvest profits to lower costs, improve efficiency
through technology and improved processes
• Estimate normalized annual capital spending
between $150 and $225 million
• Anticipate capital spending in 2014 to exceed $350
million and in 2015 to approximate $300 million
• Growth through opportunistic acquisitions focused
on solid wood
Capital Strategy
30
West Fraser Capital
159
358 321
0
50
100
150
200
250
300
350
400
2012 2013 Ytd Q3-14
Capital Spending
Maintenance Timber Profit Improvement Energy
$ Million
31
BRITISH
COLUMBIA
SMITHERS
HOUSTON
QUESNEL
WILLIAMS LAKE
CHETWYND
FRASER LAKE
SLAVE LAKE
BLUE RIDGE
CHASM
100 MILE SUNDRE
HINTON EDSON
HIGH PRAIRIE
ALBERTA
2014
2012
Recent Growth
32
ARKANSAS
LITTLE
ROCK
MANSFIELD
RUSSELLVILLE
HUTTIG
LEOLA
NEW BOSTON
(TEXAS)
2014
Recent Growth
33
• Proven ability to generate strong cash flow even in
worst markets
• Consistent, straightforward business plan
• Loyal, long-term employee and management base
• Conservative financial management coupled with
proven ability to grow strategically
• Strong historical shareholder returns
Why Invest in West Fraser?
34
Strong Cash Generation ($millions)
Total Ytd Q3-14 2013 2012 2011 2010
Cash from Operations 1,554 434 419 195 85 421
Capital Expenditures 1,140 321 358 159 213 89
Acquisitions 233 203 - 30 - -
35
Annualized Shareholder Return (Cdn$)
17.3%
6.5% 6.1%
2.5%
0.1%
13.7% 13.6%
7.6%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
West Fraser DAX Dow S&P/TSX FTSE Competitor A Competitor B Competitor C
June 2006* – December 31, 2014
* June 2006 marked the beginning of the steep decline in U.S. housing starts
Source: TD Bank
36
Share Value Traded
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2014 2013 2012
WFT CFP IFP
Cdn$ Million
37
“WFT” – Toronto Stock Exchange
www.WestFraser.com
These materials have been prepared by Management of the
Company. No regulatory authority has approved or disapproved of
the contents of these materials. These materials do not constitute an
offer to sell or the solicitation of an offer to buy any securities of the
Company, and shall not constitute an offer, solicitation or sale of the
Company’s securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful. Securities of the Company may
not be offered or sold in the United States absent their prior
registration or qualification or an applicable exemption from the
applicable registration or qualification requirements.
38
APPENDIX
39
Acquisition of Buchanan Lumber,
High Prairie, Alberta • Acquisition includes:
– High Prairie sawmill (current capacity of 110 MMfbm)
– Related real estate and transportation business
– Timber harvesting rights with AAC of 430,000 m3 of coniferous and 21,000 m3 of deciduous timber
• Purchase price of $55.4 million plus working capital paid in cash at closing (April 3, 2014)
• 180 employees
West Fraser intends to expand capacity to approximately 175 MMfbm through an estimated capital investment of $15 million.
40
Acquisition of Travis Lumber,
Mansfield, Arkansas • Western Arkansas sawmill
with a workforce of 140
• Purchase price of US$46 million
(C$51 million) plus
working capital paid in
cash at closing
(March 7, 2014)
• Current capacity of 110 MMfbm
West Fraser is planning expansion to approximately 150
MMfbm through an estimated US$10 million (C$11 million
capital) investment.
41
Acquisition of Bibler Bros.,
Russellville, Arkansas
• Well-capitalized mill with
190 employees and
annual capacity of
approximately 160 MMfbm
• Purchase price of US$61 million
(C$67 million) plus working capital
payable in cash at closing (anticipated April 25, 2014)
• Will be West Fraser's fourth sawmill located in Arkansas
42
Earnings Sensitivity to Key Variables (2013)
Estimated Earnings Sensitivity to Key Variables 1
(based on 2013 production - $ millions)
Factor Variation Change in pre - tax e arnings
Lumber price US$ 1 0 ( per Mfbm ) 55
Plywood price Cdn $ 1 0 ( per Msf ) 8
NBSK price US$ 1 0 ( per tonne ) 5
BCTMP price US$ 1 0 ( pe r tonne ) 6
U.S. – Canadian $ exchange rate 2 US$0.01 ( per Cdn $ ) 21
1. Each sensitivity has been calculated on the basis that all other variables remain constant and assumes year end foreign exchange rates.
2. Excludes exchange impact of translation of U. S. dollar - denominated debt and other monetary items. Reflects the amount of the initial
US$0.01 change; additional changes are substantially, but not exactly, linear.