31
May 2018 INVESTOR PRESENTATION TSX:WEF
May 2018INVESTOR PRESENTATION
TSX:WEF
1
Forward Looking Statements and Non-GAAP
Financial Measures
All financial references are expressed in C$ unless otherwise noted.
This presentation contains statements and estimates that may constitute forward-looking statements under
the applicable securities laws. Readers are cautioned against placing undue reliance on forward-looking
statements. All statements herein, other than statements of historical fact, may be forward-looking
statements and can be identified by the use of words such as “projected”, “plan”, “should”, “expect”, “will”,
“target”, “expected”, “poised”, “likely” and similar references to future periods.
Forward-looking statements in this presentation include, but are not limited to, statements relating to future
supply and demand; future growth plans and strategy; our marketing plans and strategy; our competitive
position and expectations regarding future competition; regulatory developments; or anticipated trade
challenges.
Although such statements reflect management’s current reasonable beliefs, expectations and assumptions,
there can be no assurance that forward-looking statements are accurate, and actual results and
performance may materially vary. Many factors could cause our actual results or performance to be
materially different including: general economic conditions; changes in annual allowable cut; competition
and selling prices; foreign trade disputes; changes in foreign currency exchange rates; labour disruptions;
natural disasters; relations with First Nations groups; changes in laws, regulations or public policy; and the
factors discussed in the company’s annual information form, which is available on our website at
www.westernforest.com. The foregoing list is not exhaustive, as other factors could adversely affect our
actual results and performance. Forward-looking statements are based only on information currently
available to us and refer only as of the date hereof. Except as required by law, we undertake no obligation
to update forward-looking statements.
During the course of this presentation, certain non-GAAP financial information will be presented. Definitions
and reconciliation of terms can be found in the Company’s annual and quarterly MD&A for Western Forest
Products Inc. (the “Company”).
2
Investment Highlights
Margin-focused business strategy
Superior timber asset base and secure fibre supply
High-value, diverse products serving global markets
Strong financial position and cash flow profile
Business of scale with a liquid share capital
Committed to enhancing shareholder value
Western is Well-positioned to Capitalize on Improving Market Fundamentals
Mill Location Capacity1
(MMfbm)
Ladysmith Ladysmith, BC 130
Cowichan Bay Duncan, BC 215
Saltair Ladysmith, BC 240
Alberni Pacific Port Alberni, BC 175
Duke Point Nanaimo, BC 90
Chemainus Chemainus, BC 130
Somass2
Port Alberni, BC 90
Total 1,070
3
Operations Snapshot
Margin-focused, log and specialty
lumber company
Serving global markets from
Coastal B.C. and Washington
– Largest Crown timber tenure
holder in Coastal B.C.
– Leading cedar lumber
manufacturer in North America
– Timber resource unaffected by
mountain pine beetle
Operating seven sawmills with a
capacity of 1,070 million board
feet, as well as a distribution and
processing facility in Arlington,
Washington
BC
WA
Vancouver
(Head Office)
Canada
U.S.
Strategically Located Manufacturing Locations With Secure Fibre Supply
(1) Based on two shifts and 250 operating days, except Chemainus at three shifts(2) Indefinitely curtailed July 2017
33%
25%
19%
13%
7%3%
Canada
United States
China
Japan
Other
Europe
56%
19%
18%
7% Specialty Lumber
Commodity Lumber
Logs
By-products
4
Financial Snapshot
LTM1 revenue of $1.1 billion
LTM1 EBITDA of $162 million
Market cap. of ~$1.1 billion2
Quarterly dividend of
$0.0225 per share
– $0.09 per share annually
Well capitalized balance
sheet
– Currently in a net cash
position
Strong Financial Performance, Net Cash Position and Attractive Dividend
(1) Last twelve months total external revenue ended March 31, 2018(2) Based on closing share price of $2.79 on May 3, 2018
LTM1 Sales by Product
LTM1 Sales by Geography
75%
Lumber
58%
Canada
& U.S.
5
Strategic Priorities
WFP is Executing on its Strategic Priorities
• Strategic capital
improvement projects
• Invest in people and
systems to create a
platform for growth
• Consolidation of
coastal operating
base
Strengthen
FoundationGrow the Base
• Optimize operations
• Targeted products of
scale to selected
customers
• Margin improvement
program
• Mutually beneficial
relationships with
coastal First Nations
Explore
Opportunities
• Pursue external
opportunities to grow
our margin-focused
business
• Evaluate
opportunities to grow
shareholder value
1 2 3
6
Fibre and Processing Flow Chart
Timber Resource is Directed to Highest Margin Opportunity
(1) Based on the twelve months ended March 31, 2018
Hemlock /
Balsam
Western Red
Cedar
Douglas Fir
Yellow
Cedar
Annual
Allowable Cut
(AAC) For Logs
(~6.0 million m3)
Log
Purchases(1)
(~1.2 million m3)
External Log
Sales
Internal Log
Consumption
Japan Specialty
Western Red
Cedar
Niche
Export Log
Markets
Domestic Log
Markets
Pulp Log
Markets
CommoditySpruce
Raw Inputs Finished
Products / Sales
~68% of Logs
Processed at WFP
manufacturing
facilities
~32% of Logs Sold
Div
ers
e a
nd
Un
iqu
e S
pe
cie
s M
ix
Manufacturing
Facilities
Lumber Segments
Log Markets
21%
2%
8%69%
18%
7%
7%68%
7
Log Flows
Directing Log Volume to Highest Margin Opportunity
Log End Market DescriptionPrimary Target
Geographies
WFP
Sawmills
• All five species of Western’s sawlogs
consumed by internal manufacturing
operations
• Internal log supply supplemented by
open market purchases to maximize
margin
Domestic
• Includes sawlogs, peelers and shingle
logs sold through contractual
commitments and open market
transactions
Pulplogs
• Volumes committed under long-term
fibre supply agreements
• Commitments met through internal log
supply, supply contracts and open
market pulplog purchases
Export
• Represents log sorts produced in
excess of internal mill requirements
• Typically command premium prices
due to strong demand
• Transportation optimization
(1) Based on total external log sales and internal log consumption for the twelve months ended March 31, 2018, including purchased logs. Internal transfer values based on Vancouver Log Market prices
Exte
rna
l L
og
Sa
les
LTM1 Logs by Value
LTM1 Logs by Volume
31%
External
Log
Sales
32%
External
Log
Sales
8
Manufacturing and Sales
Log
Supply
Marketing
Strategy
Manufacturing
Strategy
Sales
Strategy
11 - 18”5 – 11” 16 - 22” 20 - 30” 24”+
Log Cutting
Patterns
Log Dimension
Product
Group
Lumber
Product Type
Narrow
Dimension
Wide
DimensionSquares Timbers
Grade &
Appearance
CommodityCommodity /
Western Red CedarJapan
Niche /
Western Red Cedar
Niche /
Western Red Cedar
Log diameter determines the lumber products manufactured
Western’s Flexible Manufacturing Platform Creates Unique Marketing Opportunity
27%
18%
8%
47%
45%
21%
9%
25%
9
Diversified Lumber Product Offering
Allows Western to Profitably Service Multiple Markets Throughout the Cycle
(1) Based on lumber sales for the twelve months ended March 31, 2018
Lumber Segment DescriptionPrimary Target
Geographies
Western
Red
Cedar
• Consumer-orientated products
• Naturally durable
• Ideal for outside uses
Japan
Specialty
• Products for traditional post
and beam construction
• Requires unique and rigorous
quality standards
Niche
• Specialty products and
markets
• Focused on appearance
grades, value-add products
Commodity• Traditional dimension lumber
and developing grades
• Currently focused on China
Sp
ecia
lty S
eg
me
nts
Asia Europe
LTM1 Lumber by Value
LTM1 Lumber by Volume
75%
Specialty
53%
Specialty
Global
10
Sample Lumber Products
Diverse Product Offering From Complete Harvest Profile of Log Sizes
Western Red Cedar Niche Japan Specialty
Commodity
17.1%
27.5%23.4%
16.8%
3.9%
-1.8%0.8%
2.7%
11.1%
15.9%12.9%
10.5%
Peer 1 Peer 2 Peer 3
$1,037
$545
$682 $666$567
Peer 1 Peer 2 Peer 3 CommodityLumber
11
Specialty Product Focus Reduces Volatility
75% of lumber revenue is
generated from non-commodity
products
Sells at a significant premium to
commodity lumber
More stable margins through the
cycle
Product / market diversity and
global exposure provide
additional opportunities to seek
best margin
Cedar, niche and commodity
grades will benefit from U.S.
housing recovery and global
demand
Focus on Specialty Products Delivered 34 Consecutive Quarters of Positive EBITDA
(1) Includes chips, residuals and logs, as information not separately disclosed (2) KD W S-P-F #2&Btr 2x4 random converted from US$ to C$(3) Reported lumber segment EBITDA which does not deduct for allocated corporate overhead
LTM Average Lumber Selling Price (C$ / mfbm)
Quarterly EBITDA Margins Range (Q1-12 to Q1-18)
(3) (3)
(2)
(1)
High / Low Average
12
Acquisition of Arlington Lumber Distribution and
Processing Facility
18 acre site with a distribution and
processing facility
Centralized warehousing and
distribution closer to our U.S.
customers
Rail spur on site serviced by BNSF
Allows Western to increase
production of targeted specialty
products
Provides Western with protection
from damaging effects of U.S. lumber
duties
Facility and Location Provide Numerous Operating and Logistic Advantages
California Texas
U.S.
Northeast
BC
WA
AB
IDMT
OR
Arlington, WA
1,109
1,340
1,063 1,095
990
1,103
1,008 983
Q1 Q2 Q3 Q4
Average Harvest Volume Average Closing Log Inventory
211
227
221
214
Q1 Q2 Q3 Q4
13
Seasonality of the Business
Weather (snow pack, heat)
and daylight can impact
harvest volumes and costs
Inventory levels can fluctuate
through the year, impacting
working capital
Seasonal market demand
can impact lumber
production
Seasonal Influences Can Impact Operations
(1) Based on last 16 quarters as of Q1-18
Harvest Production and Log Inventory Volume1 – (000 m3)
Average Lumber Production Volume1 – (MMfbm)
14
Competitive Strengths
Sustainable, diverse timber base providing a unique range of products
Customer of choice for other coastal log producers due to competitive
advantages of scale, financial strength and proximity
Flexible manufacturing platform that can target a variety of global markets
High margin specialty products for the U.S. market – cedar, timbers,
moulding & millwork, industrial applications
Low cost access to ocean shipping (break bulk, container & barge)
providing competitive transportation to global markets and avoiding rail
congestion
Uniquely positioned to capitalize on growth in U.S. market. WFP’s market
share in Japan / China likely to benefit from repatriation of U.S. production
Washington State based warehousing and distribution facility close to I-5
corridor servicing U.S. customers
Western is a Compelling Pure-Play, Solid Wood Products Investment
1
2
3
4
5
6
7
15
How is WFP Different From Its Public Lumber Peers
Pure play lumber and log, specialty company
Cedar and specialty products focused with commodity lumber component
– Peers focused on commodity lumber with some specialty products
– Significantly higher average product pricing versus commodity lumber peers
No mountain pine beetle impacted fibre
No material rail or truck transportation issues; ocean going advantage
– WFP uses the BNSF railway line to ship products
Offers an attractive dividend yield to investors
– Quarterly dividend of $0.0225 per share ($0.09 per share annually)
1
2
3
4
5
16
Strategic Capital Investments
Capital projects expected to
generate a return in excess of
20%
Initiatives focused on:
– Reducing costs
– Increasing efficiency
– Improving product flexibility
– Growing production
Applying proven technology in
coastal operations
Capital Projects Benefiting Operations
Duke Point
Planer
Planer
Head Rig
Chemainus
Timber Deck
Timber Deck
Saltair
Merchandiser
17
Demonstrating Sustainability and Environmental
Stewardship
Committed to ensuring the sustainability of the
natural resources in our care
All of Western’s timber tenures are certified
according to globally recognized standards,
including:
– Sustainable Forestry Initiative
– Canadian Standards Association
– Chain of Custody (PEFC and FSC)
Third party independent audits are conducted
annually of Western’s Environmental Management
Systems
Western participates in energy conservation
programs, such as the Sustainable Energy
Management Program with BC Hydro
Operate a tree seed orchard and a seedling
nursery that produces over 6 million seeds per
year and has produced over 100 million seedlings
APPENDIX
19
Western’s Business to Benefit from Global Supply /
Demand Factors
Factors Highly Attractive Underlying Supply/Demand Dynamics
U.S. Economic
and Housing
Market Recovery
• Housing market and repair and remodel activity recovering from
trough levels
• Transition from supply driven to demand driven market expected to
result in improved pricing for wood products
Continued
Growth
in China
• Economic growth and urbanization
• Consumption of wood will increase
• Limited domestic fibre supply; increasing need for imports
U.S. Supply
Exit from
Japan Market
• Repatriation of U.S. lumber exports back to U.S. market creates
opportunity for Western
• Government policy designed to increase domestic consumption
Canadian
Fibre Supply
Reduction
• Mountain pine beetle expected to negatively impact interior fibre
supply and lumber production
• Eastern Canada AAC reductions
Strong
Underlying
Demand
Drivers for
Wood Products
Reduced
Supply
of Fibre
1
2
3
4
$117 $126$146 $135 $128 $124 $114 $116 $120 $114 $114 $120 $128 $136
$152 $155 $160 $167 $174 $176
0
50
100
150
200
2003A 2004A 2005A 2006A 2007A 2008A 2009A 2010A 2011A 2012A 2013A 2014A 2015A 2016A 2017A 2018E 2019E 2020E 2021E 2022E
Ex
pe
nd
itu
res (
US
$ b
illio
ns
)
1.85 1.95 2.071.81
1.34
0.900.55 0.59 0.61
0.78 0.93 1.00 1.11 1.18 1.21 1.31 1.39 1.49 1.61 1.48
0.0
0.5
1.0
1.5
2.0
2.5
2003A 2004A 2005A 2006A 2007A 2008A 2009A 2010A 2011A 2012A 2013A 2014A 2015A 2016A 2017A 2018E 2019E 2020E 2021E 2022E
Housin
g S
tart
s (
mill
ions)
50-Year Average: 1.4MM
20
Demand Drivers: U.S. Economic and Housing Market
Recovery1
U.S. Housing Starts
U.S. Repair & Remodel Expenditures
Source: Forest Economic Advisors (May 2018)
50
150
250
350
450
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2003A 2004A 2005A 2006A 2007A 2008A 2009A 2010A 2011A 2012A 2013A 2014A 2015A 2016A 2017A 2018E 2019E 2020E 2021E 2022E
US
$ p
er M
fbm
Ho
us
ing
Sta
rts
(M
M)
U.S. Housing Starts Canada Housing Starts NA Lumber Exports (Housing Starts Equivalent) KD SPF 2x4 2+Btr (US$) (Actual) KD SPF 2x4 2+Btr (US$) (FEA Projections)
Average NA Housing Starts(since 1990) = 1.3MM
21
Demand Drivers: New Supply / Demand Dynamics
Will Positively Impact Lumber Pricing
Reduced supply from traditional sources combined with increased demand
from U.S. and Asian markets is expected to benefit lumber prices
1
Source: Forest Economic Advisors (May 2018); Western Forest Products
Housing Starts (North American and Lumber Export Equivalent) vs. Western SPF Lumber Pricing
0
5
10
15
20
25
30
'04A '05A '06A '07A '08A '09A '10A '11A '12A '13A '14A '15A '16A '17A
mill
ion
m³
Russia New Zealand North America
0
5
10
15
20
25
30
35
40
'04A '05A '06A '07A '08A '09A '10A '11A '12A '13A '14A '15A '16A '17A
mill
ion
m³
Russia New Zealand North America
22
Demand Drivers: China Growth Has Changed Global
Wood Products Demand Dynamics
A deficit of domestic fibre will require China to rely on imports
Rising wealth/urbanization trends expected to increase demand for structural
and higher grade lumber:
– 300 million Chinese people (roughly equivalent to the U.S. population) expected to
move from rural to urban areas between 2010 and 2025
2
Source: China Customs; International Wood Markets (February 2018)
China Log Imports Chinese Lumber Imports
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
0
500
1,000
1,500
2,000
2,500
3,000
2007A 2008A 2009A 2010A 2011A 2012A 2013A 2014A 2015A 2016A 2017A
Ho
usin
g S
tarts
(millio
ns)
Lum
ber
Imp
ort
s (
mill
ion m
3)
Softwood Lumber Imports from U.S. Softwood Lumber Imports from Canada Japan Housing Starts
0
200
400
600
800
1,000
1,200
1,400
2007A 2008A 2009A 2010A 2011A 2012A 2013A 2014A 2015A 2016A 2017A
Lum
ber
Imp
ort
s (
mill
ion m
3)
U.S. Hem U.S. Douglas Fir CDN Hem CDN Douglas Fir
23
Demand Drivers: U.S. Supply Exit From Japan Will
Create Market Opportunity
Japan continues to be a major source of demand for wood products and
lumber from North America
In recent years, suppliers in the U.S. West have increased export activities to
Japan due to a lack of domestic demand in the U.S
– As North American housing markets recover, much of this U.S. supply will be
diverted back to local U.S. markets, potentially creating a significant supply gap in
Japan for imported lumber
3
Source: Japan Ministry of Land, Infrastructure and Transport; The Trade Statistics, Japan Ministry of Finance; Japan Lumber Importers’ Association (February 2018)
Japanese Lumber Imports of Canadian
and U.S. Douglas Fir and Hemlock
Japanese Imports of Canadian and U.S.
Lumber and Japanese Housing Starts
~100 million board feet opportunity to
replace non-SPF U.S. exports to Japan
30.5 30.524.3 24.3 24.3 24.3 23.3 23.3 23.3 23.3
20.0 20.0 21.2 21.2 21.2 23.0 23.0 23.0 23.0 23.0
0
10
20
30
2003A 2004A 2005A 2006A 2007A 2008A 2009A 2010A 2011A 2012A 2013A 2014A 2015A 2016A 2017A 2018E 2019E 2020E 2021E 2022E
AA
C (
mill
ion m
3)
55.462.2 64.1 65.7 68.0 67.0 66.9 66.4 61.5 60.8 61.3 60.7 62.1 56.5
50.3 50.3 50.3 49.3 49.3 48.8
0
20
40
60
80
2003A 2004A 2005A 2006A 2007A 2008A 2009A 2010A 2011A 2012A 2013A 2014A 2015A 2016A 2017A 2018E 2019E 2020E 2021E 2022E
AA
C (
mill
ion m
3)
24
Supply Drivers: Canadian Fibre Supply Reduction4
Source: Forest Economic Advisors (May 2018)
Mountain Pine Beetle epidemic and lower AAC in B.C. and Eastern Canada are
expected to have significant negative impact on North American lumber capacity
B.C. Interior AAC
Quebec AAC
5.5%
7.2%
5.5%
13.2%
10.5% 10.8%
12.5%13.3%
14.1%
2010 2011 2012 2013 2014 2015 2016 2017 LTMQ1-18
$37
$62 $51
$129
$109 $117
$148 $153 $162
2010 2011 2012 2013 2014 2015 2016 2017 LTMQ1-18
669
811 894 895 909 883
952 857 847
2010 2011 2012 2013 2014 2015 2016 2017 LTMQ1-18
$668
$854 $925
$978 $1,037 $1,082
$1,187 $1,143 $1,147
2010 2011 2012 2013 2014 2015 2016 2017 LTMQ1-18
25
Historical Financial Snapshot – Annual
Revenue ($ millions)
Lumber Shipments (MMfbm)
Adjusted EBITDA ($ millions)
Adjusted EBITDA Margin %
14.2%
11.1% 11.5% 11.8%
16.4%
11.4%
13.7%14.7%
Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18
$43
$36 $34 $34
$47
$33
$39 $43
Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18
232 252
231 225
194
220 201
215
Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18
$302
$323
$293 $288 $287 $285 $283
$292
Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 Q3-17 Q4-17 Q1-18
26
Historical Financial Snapshot – Last 8 Quarters
Revenue ($ millions)
Lumber Shipments (MMfbm)
Adjusted EBITDA ($ millions)
Adjusted EBITDA Margin %
n/a n/a n/a
$16
$31 $32 $32 $32 $32
2010 2011 2012 2013 2014 2015 2016 2017 LTMQ1-18
$100
$52
$15
$83 $78
$54
$15
($35)($47)
2010 2011 2012 2013 2014 2015 2016 2017 Q1-18
$12 $19
$32
$59 $50
$62 $56 $55 $59
2010 2011 2012 2013 2014 2015 2016 2017 LTMQ1-18
$38 $44
$58
$111
$87 $99
$128 $134
$112
2010 2011 2012 2013 2014 2015 2016 2017 LTMQ1-18
27
Historical Cash Flow, Capital Allocation and Debt
Cash Flow from Operations1 ($ millions)
Net Debt / (Cash) ($ millions)
Capex2 ($ millions)
Dividends ($ millions)
(1) After changes in non-cash working capital(2) Additions to property, plant and equipment; excludes acquisition capex
28
Timber Tenures and Facilities
29
Analyst Coverage
Analyst Firm Analyst Name Contact
CIBC World Market Hamir Patel• 604 331-3047
Raymond James Daryl Swetlishoff• 604 659-8246
RBC Capital Markets Paul Quinn• 604 257-7048
Scotiabank Benoit Laprade• 514 287-3627
TD Securities Sean Steuart• 416 308-3399
30
Investor Relations Contacts
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.
Stephen WilliamsExecutive Vice President & Chief Financial Officer
604-648-4572
Dallyn WillisSenior Director, Finance & Administration
604-648-4595
