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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
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05
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07
08
09
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25
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27
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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