Apr 29, 2016 | Posted in Corporate News, News

Note: Financial references in US dollars unless otherwise indicated. Results reflect combined company performance following completion of merger with Ainsworth Lumber Co. Ltd. (Ainsworth) on March 31, 2015 and all prior period comparatives have been restated.


  • Adjusted earnings of $0.23 per diluted share, a $0.39 improvement over Q1 2015
  • Adjusted EBITDA of $61 million, $45 million higher than Q1 2015
  • Norbord shares began trading on New York Stock Exchange; ticker symbol now “OSB”
  • Captured $22 million in cumulative merger synergies ($32 million annualized), 70% of $45 million total commitment
  • Realized $9 million in Margin Improvement Program gains
  • North American manufacturing costs decreased 8% year-over-year
  • Declared quarterly dividend of CAD $0.10 per share to shareholders of record on June 1, 2016

TORONTO, ON (April 29, 2016) – Norbord Inc. (TSX and NYSE: OSB) today reported Adjusted EBITDA of $61 million for the first quarter of 2016 versus $16 million in the first quarter of 2015 and $57 million in the fourth quarter of 2015. The year-over-year improvement is primarily due to higher North American oriented strand board (OSB) prices and shipment volumes as well as lower resin prices and the weaker Canadian dollar. North American operations generated Adjusted EBITDA of $53 million in the quarter compared to $11 million in the same quarter last year and $51 million in the prior quarter. European operations delivered Adjusted EBITDA of $10 million, $3 million higher than the same quarter last year and in line with the prior quarter.

“Our first quarter Adjusted EBITDA result is almost a four-fold increase from a year ago. I’m also encouraged by the sequential improvement despite the seasonally lower North American benchmark OSB prices,” said Peter Wijnbergen, Norbord’s President and CEO. “Our mills in both North America and Europe continued to deliver strong operational results, generating $9 million in Margin Improvement Program gains. In the 12 months since our merger with Ainsworth, we have captured $32 million in annualized synergies and remain on track to deliver our full $45 million target by the end of 2016.”

“The pace of US housing starts is 14% higher than this time last year and single-family building activity is up even more. North American OSB demand continues to grow, sales to all our key customer segments are improving and our order files are strong. Benchmark OSB prices are currently up 16% since their February low as the seasonal pick-up in demand begins to materialize.”

“In Europe, our panel business delivered another solid quarter with $10 million of Adjusted EBITDA, reflecting sales growth and record utilization at our mills. OSB prices continued to rise on the continent and are now starting to turn up in the UK. Work is underway on our $135 million capital investment to modernize and expand our Inverness, Scotland OSB mill, with construction commencing this quarter.”

Norbord recorded Adjusted earnings of $20 million or $0.23 per share (basic and diluted) in the current quarter compared to an Adjusted loss of $14 million or $0.16 per share in the same quarter last year and Adjusted earnings of $16 million or $0.19 per share in the prior quarter. Adjusted earnings/loss exclude non-recurring items and use a normalized income tax rate:

$ millions




Earnings (loss)




Adjust for:

Ainsworth merger transaction costs


Costs to achieve merger synergies




Revaluation loss on Ainsworth Notes


Reported income tax expense (recovery)




Adjusted pre-tax earnings (loss)




Income tax (expense) recovery at statutory rate




Adjusted earnings (loss)




Market Conditions

In North America, the seasonally-adjusted annual pace of US housing starts in March was 14% higher than the same month last year. The pace of single-family starts, which use approximately three times more OSB than multi-family, increased by 23%. The consensus forecast from US housing economists is for approximately 1.23 million starts in 2016, which suggests an 11% year-over-year improvement.

First quarter North American benchmark OSB prices were below the levels seen in the fourth quarter of 2015, but were significantly higher than a year ago as new home construction activity and OSB demand continued to improve. OSB prices moderated somewhat in February before recovering in March as the spring building season ramped up, and the North Central benchmark price finished the quarter at $225 per thousand square feet (Msf) (7/16-inch basis). The North Central benchmark price averaged $226 per Msf for the quarter, compared to $242 per Msf in the previous quarter and $193 per Msf in the same quarter last year. In the South East region, where approximately 35% of Norbord’s North American OSB capacity is located, prices averaged $215 per Msf in the quarter, compared to $221 in the prior quarter and $175 in the same quarter last year. In the Western Canada region, where approximately 30% of Norbord’s North American capacity is located, prices averaged $191 per Msf in the quarter, compared to $204 in the previous quarter and $159 in the same quarter last year.

In Europe, Norbord’s core panel markets in the UK and Germany experienced strong demand growth in the quarter. First quarter average panel prices were 4% lower than the same quarter last year and in line with the previous quarter. OSB prices bottomed in the UK and continued to rise on the continent, resulting in average prices that were 3% lower year-over-year but 5% higher than the prior quarter. Medium density fibreboard (MDF) and particleboard prices, however, were still under pressure in the quarter on increased import competition, and were 5% lower year-over-year and 3% lower quarter-over-quarter.


North American OSB shipments increased 7% year-over-year due to fewer maintenance shuts and improved mill productivity. Shipments were 8% lower quarter-over-quarter as there were 12 fewer fiscal days than the prior quarter.

Norbord’s operating North American OSB mills produced at 92% of stated capacity (excluding the two curtailed mills in Huguley, Alabama and Val-d’Or, Quebec), up from 86% in the same quarter last year and 84% in the prior quarter. Capacity utilization increased versus both comparative periods due to fewer maintenance shutdown days, with improved productivity having additional impact year-over-year.

Norbord’s North American OSB cash production costs per unit (before mill profit share) decreased 8% compared to the same quarter last year due to the weaker Canadian dollar, lower resin prices, improved raw material use and increased productivity. Unit costs decreased by 4% versus the prior quarter due to fewer maintenance shuts, lower labour and benefits costs and the weaker Canadian dollar, which were partially offset by the lower volume impact of fewer fiscal days in the current quarter.

In Europe, Norbord’s shipments were 3% higher than the same quarter last year and 2% higher versus the prior quarter. The European mills produced at 100% of stated capacity in the quarter compared to 94% in the same quarter last year and 95% in the prior quarter. Capacity utilization increased due to improved productivity year-over-year and fewer maintenance shutdown days versus the prior quarter.

Norbord’s mills delivered Margin Improvement Program (MIP) gains of $9 million in the quarter from improved productivity and lower raw material use as well as merger synergies and returns on recent capital investments. MIP gains are measured relative to the prior year at constant prices and exchange rates.

In January 2016, the Board of Directors approved a $135 million investment over the next two years to modernize and expand the Company’s Inverness, Scotland OSB mill. Key supplier negotiations and site preparation activities commenced during the quarter with construction work to start in the second quarter. The Company has decided to move the unused second press from its Grande Prairie, Alberta mill for use in the Inverness project, which is expected to shorten the project timeline by up to six months. Norbord expects the new line to start up in the second half of 2017, with no disruption to existing production capacity in the interim. Capital spending for the Inverness project is expected to be $45 million in 2016.

Capital investments were $11 million in the first quarter, in line with the same quarter last year, but $16 million lower than the prior quarter due to the larger scope of capital projects undertaken in the prior quarter. Norbord’s 2016 capital expenditure budget is $75 million (excluding the Inverness project) and includes further process debottlenecking and manufacturing cost reduction projects under the Company’s multi-year capital reinvestment strategy.

Operating working capital was $172 million at quarter-end compared to $146 million at the end of the same quarter last year and $125 million at year-end 2015. Working capital increased year-over-year due to higher North American sales volume, higher OSB prices, better weather this year for building seasonal log inventory at the northern mills and the continued ramp-up of production at the High Level, Alberta mill. The quarter-over-quarter increase was due to higher North American sales volume and the usual seasonal reasons, including log inventory builds in the northern mills.

At quarter-end, Norbord had unutilized liquidity of $321 million, consisting of $14 million in cash and $307 million in unused credit lines. At quarter-end, $55 million was drawn under the accounts receivable securitization program. The Company’s tangible net worth was $740 million and net debt to total capitalization on a book basis was 50%. Both ratios remain well within bank covenants.

New York Stock Exchange Listing

On February 19, 2016, Norbord’s shares began trading on the New York Stock Exchange (NYSE) under the symbol “OSB”. In conjunction with the NYSE listing, the Company changed its Toronto Stock Exchange ticker symbol to “OSB”.


The Board of Directors declared a quarterly dividend of CAD $0.10 per common share, payable on June 21, 2016 to shareholders of record on June 1, 2016.

Norbord’s dividends are declared in Canadian dollars. Registered and beneficial shareholders may opt to receive their dividends in either Canadian dollars or the US dollar equivalent. Unless they request the US dollar equivalent, shareholders will continue to receive dividends in Canadian dollars. The US dollar equivalent of the dividend will be based on the Bank of Canada noon exchange rate on the record date or, if the record date falls on a weekend or holiday, on the Bank of Canada noon exchange rate of the preceding business day.

Registered shareholders wishing to receive the US dollar dividend equivalent should contact Norbord’s transfer agent, CST Trust Company, by phone at 1-800-387-0825 or by email at Beneficial shareholders (i.e., those holding their Norbord shares with their brokerage) should contact the broker with whom their shares are held.

Norbord’s variable dividend policy targets the payment to shareholders of a portion of free cash flow based upon the Company’s financial position, results of operations, cash flow, capital requirements and restrictions under the Company’s revolving bank lines, as well as the market outlook for the Company’s principal products and broader market and economic conditions, among other factors. The Board retains the discretion to amend the Company’s dividend policy in any manner and at any time as it may deem necessary or appropriate in the future. For these reasons, as well as others, the Board in its sole discretion can decide to increase, maintain, decrease, suspend or discontinue the payment of cash dividends in the future.

Additional Information

Norbord’s Q1 2016 letter to shareholders, news release, management’s discussion and analysis, consolidated unaudited interim financial statements and notes to the financial statements have been filed on SEDAR (, EDGAR ( and are available in the investor section of the Company’s website at Shareholders may receive a hard copy of Norbord’s audited annual financial statements free of charge upon request. The Company has also made available on its website presentation materials containing certain historical and forward-looking information relating to Norbord, including materials that contain additional information about the Company’s financial results. Shareholders are encouraged to read this material.

Conference Call

Norbord will hold a conference call for analysts and institutional investors on Friday, April 29, 2016 at 2:00 p.m. ET. The call will be broadcast live over the Internet via and An accompanying presentation will be available in the “Investors/Conference Call” section of the Norbord website prior to the start of the call. A replay number will be available approximately one hour after completion of the call and will be accessible until May 28, 2016 by dialing 1-888-203-1112 or 647-436-0148. The passcode is 7652934. Audio playback and a written transcript will be available on the Norbord website.

Norbord Profile

Norbord Inc. is a leading global manufacturer of wood-based panels and the world’s largest producer of oriented strand board (OSB). In addition to OSB, Norbord manufactures particleboard, medium density fibreboard and related value-added products. Norbord has assets of approximately $1.7 billion and employs approximately 2,600 people at 17 plant locations in the United States, Canada and Europe. Norbord is a publicly traded company listed on the Toronto Stock Exchange and New York Stock Exchange under the symbol “OSB”.


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

This news release contains forward-looking statements, as defined by applicable securities 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, forward-looking statements can be identified by the use of 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: assumptions in connection with the economic and financial conditions in the US, Europe, Canada and globally; risks inherent to product concentration and cyclicality; effects of competition and product pricing pressures; risks inherent to customer dependence; effects of variations in the price and availability of manufacturing inputs; risks inherent to a capital intensive industry; ability to realize synergies; and other risks and factors described from time to time in filings with Canadian securities regulatory authorities.

Except as required by applicable law, Norbord does not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by, or on behalf of, the Company, 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 January 27, 2016 Annual Information Form and the cautionary statement contained in the “Forward-Looking Statements” section of the 2015 Management’s Discussion and Analysis dated January 27, 2016 and Q1 2016 Management’s Discussion and Analysis dated April 28, 2016.

Norbord defines Adjusted EBITDA as earnings (loss) determined in accordance with International Financial Reporting Standards (IFRS) before finance costs, income taxes, depreciation and amortization, and other unusual or non-recurring items, and adjusted earnings (loss) as earnings (loss) determined in accordance with IFRS before unusual or non-recurring items and using a normalized income tax rate. Adjusted EBITDA and adjusted earnings (loss) are non-IFRS financial measures, do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. See the Non-IFRS Financial Measures section in Norbord’s 2015 Management’s Discussion and Analysis dated January 27, 2016 and Q1 2016 Management’s Discussion and Analysis dated April 28, 2016 for a quantitative reconciliation of Adjusted EBITDA and adjusted earnings (loss) to earnings (the most directly comparable IFRS measure).