Norbord Reports 2013 Results; Declares Quarterly Dividend

Jan 30, 2014 | Posted in Corporate News, News

Note:  Financial references in US dollars unless otherwise indicated.


  • Full-year earnings per share (diluted) of $2.79 on EBITDA of $287 million
  • Initiated new dividend policy; paid $91 million in dividends
  • Restarted Jefferson, TX mill; ramped up to full capacity within three months
  • Added to S&P/TSX Composite Index; issuer credit rating upgrades from Moody’s and DBRS
  • Refinanced 2015 bonds with lowest-ever 5.375% interest rate on investment grade terms
  • Appointed Peter Wijnbergen as CEO effective January 2014

TORONTO, ON (January 30, 2014) – Norbord Inc. (TSX: NBD, NBD.WT) today reported EBITDA of $287 million in 2013 compared to $188 million in 2012.  The year-over-year improvement was driven by higher North American OSB prices and shipment volumes.  With lower North American OSB prices in the fourth quarter, Norbord delivered EBITDA of $29 million versus $45 million in the previous quarter and $70 million in the fourth quarter of 2012.

“2013 was an excellent year for Norbord on several fronts,” said Peter Wijnbergen, Norbord’s recently appointed President and CEO.  “The US housing recovery continued to gain traction, which positively impacted our OSB market through increased customer demand.  This enabled us to run more of our capacity, including our Jefferson, Texas mill which safely resumed operations mid-year.  In Europe, our panel business benefited as the UK housing sector rebounded strongly.  Finally, the operating cash flow we generated this year significantly strengthened our balance sheet, even after reinvesting $83 million in our mills and returning $91 million in dividends to our shareholders.”

“Looking ahead, I remain positive about the unfolding housing recoveries in all our core markets.  In North America, we expect new home construction activity to support further OSB demand growth, keeping pace with the additional capacity that was brought back on-line in 2013.  Meanwhile, our European business is poised for another year of improved earnings.”

Norbord generated earnings of $149 million or $2.92 per share ($2.79 per share diluted) for the full year 2013 compared to $71 million or $1.63 per share ($1.56 per share diluted) in 2012.  The Company recorded earnings of $2 million or $0.04 per share (basic and diluted) in the fourth quarter of 2013 versus $38 million or $0.86 per share ($0.76 per share diluted) in the same quarter of 2012.  Reported earnings included the following one-time items:

$ millions






Earnings before one-time items






2015 bond early redemption costs, after-tax



Non-recurring income tax recoveries




Earnings, as reported






Market Conditions

US housing starts totalled 923,000 in 2013, up 18% from 781,000 in 2012.  Permits were also 18% higher year-over-year.  Single family starts, which use approximately three times more OSB than multifamily, increased by 15%.  The US housing economists’ consensus forecast for 2014 starts is approximately 1.1 million, a 19% year-over-year improvement.

In 2013, the average annual North American OSB price reached its highest level in nine years.  North Central benchmark OSB prices peaked at $430 per thousand square feet (Msf) (7⁄16-inch basis) in March but were lower in the second half of the year, finishing at $228 per Msf.  The North Central benchmark price averaged $315 per Msf in 2013, up 16% from 2012.  In the South East region, where approximately 55% of Norbord’s North American OSB capacity is located, benchmark prices averaged $277 per Msf compared to $241 in the prior year.  The regional price spread was wider than the historical average, reflecting both the impact of OSB industry restart activity in the South East and the comparatively slower pace of the housing recovery in that region.

In the fourth quarter, North Central benchmark OSB prices averaged $245 per Msf, down $7 from the prior quarter and $87 from the fourth quarter of 2012.  South East prices averaged $192 per Msf in the quarter, down $15 from the prior quarter and $104 from the fourth quarter of 2012.

Norbord’s European panel markets were strong in 2013, reflecting improving housing markets in the Company’s core geographies.  In the UK, where three out of Norbord’s four European mills are located, housing starts increased by 30% compared to the prior year, supported by government stimulus initiatives and improving consumer confidence.  In Germany, Norbord’s largest continental European market, housing starts improved for the fifth consecutive year.

European panel prices remained on a positive trend, with OSB and particleboard prices increasing 8% and 7%, respectively, versus the prior year.  MDF prices, which are less directly impacted by the recovering housing sector, improved 4%.


Norbord maintained industry-leading safety performance with a company-wide Occupational Safety and Health Administration (OSHA) recordable rate of 0.78 in 2013.  In addition, four mills completed the year injury-free.

North American OSB shipments for the full year increased 7% compared to the prior year.  Fourth quarter shipments were in line with the third quarter and 14% higher than the same quarter in 2012 as the Company ran more of its North American capacity to meet increased OSB demand from Norbord’s existing customers.  For the full year, Norbord’s OSB mills produced at approximately 75% of installed capacity, compared to 70% in 2012.

The Jefferson, Texas mill was restarted in mid-2013 and ramped up to full capacity by the fourth quarter.  As previously announced, Norbord will begin rebuilding the press line at the curtailed Huguley, Alabama mill to prepare it for a restart in mid-2015.  The Company has not set a restart date, however, and will do so only when it is sufficiently clear that Norbord’s customers require more product.  Norbord does not currently expect to restart its curtailed mill in Val-d’Or, Quebec in 2014, but will continue to monitor market conditions.

Norbord’s 2013 North American OSB cash production costs per unit (before mill profit share) increased by 9% versus 2012.  Excluding the impact of uncontrollable higher raw material prices and one-time Jefferson, Texas restart costs, unit costs increased by 4% due to higher maintenance spending across all mills. This was principally the result of five weeks of additional annual maintenance shuts taken in 2013.

In Europe, all of Norbord’s panel mills continued to run on full operating schedules and produced at approximately 95% of capacity in 2013.  Shipments were flat year-over-year.   

Norbord’s mills continued to progress Margin Improvement Program (MIP) initiatives in 2013.  However, the benefits of improved productivity and a richer value-added product mix were offset by the higher maintenance spending and as a result, there was no net reportable MIP gain for the year.

Capital investments totaled $83 million in 2013, versus $26 million in 2012, and included investments to prepare the Jefferson, Texas plant for restart and other key strategic projects across the Company’s mills.   Norbord’s 2014 planned capital expenditures are targeted at $65 million, including approximately $25 million approved for preliminary work at the mothballed Huguley, Alabama mill and a continuation of strategic investments across the other mills to improve productivity and reduce manufacturing costs.

Operating working capital ended the year at $44 million, in line with the prior year-end.  Working capital continues to be managed at minimal levels.

At year-end, Norbord had unutilized liquidity of $534 million, consisting of $193 million in cash and $341 million in unused credit lines.  The Company’s tangible net worth was $492 million and net debt to total capitalization on a book basis was 34%, down from 43% a year ago.  Both ratios remain well within bank covenants.


Norbord targets the pay out to shareholders of a portion of expected future free cash flow over the cycle.  It is the Company’s intention to pay a substantial dividend during the strong part of the cycle and, recognizing the cyclicality of the business, to reduce the level of the dividend during the weaker part of the cycle.

Consistent with this policy, the Board of Directors declared a quarterly dividend of CAD $0.60 per common share, payable on March 21, 2014 to shareholders of record on March 1, 2014.

The Board expects to maintain the quarterly dividend at this level for the remainder of 2014 (CAD $2.40 per share annualized).  This reflects the Company’s positive view of the housing recovery and panel demand in its core North American and European markets.


The outstanding warrants that were issued in conjunction with the 2008 Rights Offering came due at the end of 2013.  In order to minimize shareholder dilution, Norbord added a cashless exercise feature in March 2013, which allowed warrantholders to elect to receive common shares based on the in-the-money amount of their warrants.  As a result, a total of 8.6 million new shares were issued, approximately 5 million fewer than would have been issued had all warrantholders exercised on a cash basis.  On December 24, 2013, the Company’s outstanding warrants expired and were de-listed from the TSX.  At year-end, Norbord had 53.4 million common shares outstanding.

Additional Information

Norbord’s year-end 2013 letter to shareholders, news release, management’s discussion and analysis, annual consolidated audited financial statements and notes to the financial statements have been filed on SEDAR ( and are available in the investor section of the Company’s website at  Shareholders are encouraged to read this material.

Conference Call

Norbord will hold a conference call for analysts and institutional investors on Thursday, January 30, 2014 at 11:00 a.m. ET.  The call will be broadcast live over the Internet via and  A replay number will be available approximately one hour after completion of the call and will be accessible until March 1, 2014 by dialing 1-888-203-1112 or 719-457-0820.  The passcode is 1507762.  Audio playback and a written transcript will be available on the Norbord website.

Norbord Profile

Norbord Inc. is an international producer of wood-based panels with assets of more than $1 billion, employing approximately 1,950 people at 13 plant locations in the United States, Europe and Canada.  Norbord is one of the world’s largest producers of oriented strand board (OSB).  In addition to OSB, Norbord manufactures particleboard, medium density fibreboard (MDF) and related value-added products.  Norbord is a publicly traded company listed on the Toronto Stock Exchange under the symbol NBD.

Heather Colpitts
Manager, Corporate Affairs
Tel. (416) 365-0705

This news release contains forward-looking statements, as defined in applicable legislation, including statements related to our strategy, projects, plans, future financial or operating performance and other statements that express management’s expectations or estimates of future performance. Often, but not always, words such as  “expect,” “believe,” “forecast,” “likely,” “support,” “target,” “consider,” “continue,” “suggest,” “intend,”  “should,” “appear,” “would,” “will,” “will not,” “plan,” “can,” “may,” and other expressions which are predictions of or indicate future events, trends or prospects and which do not relate to historical matters identify forward-looking statements.  Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Norbord to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

Although Norbord believes it has a reasonable basis for making these forward-looking statements, readers are cautioned not to place undue reliance on such forward-looking information.  By its nature, forward-looking information involves numerous assumptions, inherent risks and uncertainties, both general and specific, which contribute to the possibility that the predictions, forecasts and other forward-looking statements will not occur.  Factors that could cause actual results to differ materially from those contemplated or implied by forward-looking statements include:  general economic conditions; risks inherent with product concentration; effects of competition and product pricing pressures; risks inherent with customer dependence; effects of variations in the price and availability of manufacturing inputs; risks inherent with a capital intensive industry; and other risks and factors described from time to time in filings with Canadian securities regulatory authorities.

Except as required by applicable laws, Norbord does not undertake to update any forward-looking statements, whether as a result of new information, future events or otherwise, or to publicly update or revise the above list of factors affecting this information.  See the “Caution Regarding Forward-Looking Information” statement in the March 1, 2013 Annual Information Form and the cautionary statement contained in the “Forward-Looking Statements” section of the 2013 Management’s Discussion and Analysis dated January 29, 2014.

Norbord defines EBITDA as earnings before finance costs, income taxes, depreciation and non-recurring items.  EBITDA is a non-International Financial Reporting Standards (IFRS) financial measure, does not have any standardized meaning prescribed by IFRS and is therefore unlikely to be comparable to similar measures presented by other companies. See “Non-IFRS Financial Measures” in Norbord’s 2013 Management Discussion and Analysis dated January 29, 2014 for a quantitative reconciliation of EBITDA to earnings (the most directly comparable IFRS measure).