Norbord Reports 2013 Results; Declares Quarterly Dividend

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, Jan. 30, 2014 /CNW/ - 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   2013   2012   Q4-2013   Q3-2013   Q4-2012
Earnings before one-time items   147   71   9   18   38
2015 bond early redemption costs, after-tax   (16)   -   (16)   -   -
Non-recurring income tax recoveries   18   -   9   9   -
Earnings, as reported   149   71   2   27   38

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.

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). 

January 30, 2014

To Our Shareholders,

I am delighted to have this opportunity to share Norbord's 2013 achievements and to provide you with some insight into our key objectives for the current year.  Sharing good news in my first official shareholder correspondence is a pleasure.

2013 was one of the most successful years we have had in the past decade.  The markets we serve in North America and Europe continued to gain momentum, we restarted our Jefferson, Texas mill to meet increasing customer demand, our financial results were very strong and our balance sheet ended the year in excellent shape.

Robust Financial Results

All financial metrics improved in 2013.  We delivered EBITDA of $287 million, our best result since 2005.  This translates into earnings of $2.79 per diluted share, compared to $1.65 the prior year.  Our return on capital employed reached 35%, up from 23% in 2012.  These robust results were achieved despite volatile North American OSB prices through the year.

Our strong operating cash flow significantly improved our balance sheet.  This gave us the financial flexibility to deliver on both our capital priorities, reinvesting $83 million in our mills and returning cash to our shareholders through $91 million in dividends.  We ended the year with $534 million in liquidity and a net debt-to-capitalization ratio of 34%, down from 43% in 2012.

This solid financial footing, coupled with the positive outlook for our business, allowed us to refinance our 2015 bonds with new seven-year bonds at our lowest-ever interest rate of 5.375%.  Further, we chose to amend our warrants to allow holders to exercise on a cashless basis, limiting the dilutive effect.  DBRS and Moody's recognized our improved financial picture by upgrading our issuer rating one notch and Norbord was added to the S&P/TSX Composite Index back in June.

Jefferson Mill Running at Capacity

One of the key achievements of 2013 was the successful restart and quick ramp-up of our mill in Jefferson, Texas.  Within three months it was running at full capacity and achieved positive EBITDA in Q4.  Furthermore, I'm pleased to report that the mill finished the year without a single recordable injury - a real accomplishment given that we hired 100 new employees and had more than 100 contractors on site during the rebuild.  As our Jefferson team becomes more familiar with the process and equipment, we expect to achieve greater operating efficiencies through the next year.

Strong Operating Performance

All of our operating mills ran on full production schedules throughout the year and three set annual records.  This, combined with the additional output from Jefferson, allowed us to produce 5% more volume than the previous year.

I am, however, disappointed in our Margin Improvement Program (MIP) result last year.  The mill productivity and product mix gains we did realize were offset by higher maintenance costs, as we took five more annual shuts in 2013.  With this one-time maintenance spend now behind us and our recent strategic capital investments starting to pay back, our MIP results will get back on track in 2014.

Safety is always a priority, and it goes hand-in-hand with our operating performance.  Our 2013 Occupational Safety and Health Administration (OSHA) injury rate was 0.78, in line with our best-ever performance in 2012.  We achieved a 65% reduction in incident severity as measured by the number of work days lost due to injury and four of our mills were injury-free.  Last year, our Bemidji, Minnesota and Genk, Belgium plants both achieved Norbord Safety Star certification - a rigorous in-house program that goes well beyond regulatory requirements - and all but two of our mills are now certified.  I congratulate all our employees for their ongoing efforts to keep our workplaces safe.

North American Market Gathering Momentum

US housing starts, the largest driver of North American OSB demand, totalled 923,000 in 2013, an improvement of 18%.  Our shipments to the new home construction segment increased by 23% - actually outpacing housing starts - and our big box and industrial sales picked up as the year progressed.  While OSB prices fluctuated considerably during the year (from a high of $430 per Msf to a low of $228), they still averaged $315, the highest level in nine years.  The spread between North Central and South East prices widened as the year progressed, reflecting the impact of both OSB mill restarts and a lagging housing recovery in the South East region.

Looking ahead, US housing economists forecast 2014 starts in the 1.1 million range, another 20% year-over-year increase.  This rebounding new home construction activity will drive further OSB demand growth, absorbing the additional capacity that was brought back online in 2013.  We expect the continuing improvement in demand will support a gradual increase in OSB prices through this year.

Housing headlines have developed a more cautious tone in the last few months, particularly following reports that building activity has been hampered by the extreme cold weather across North America.  However, our customers remain optimistic about the unfolding recovery and the public homebuilders are still reporting a robust backlog of orders that is expected to continue in 2014.  This all leads me to believe the second half of the year will be much stronger.

With the Jefferson restart largely behind us, we have begun rebuilding the press at our Huguley, Alabama plant.  We will not be in a position to restart the mill this year as the scope of work requires a much longer timeline and larger investment than at Jefferson.  We have not set a restart date; however, our goal is to have the mill ready by mid-2015 so that we can respond if our customers require additional volume.

Core European Markets Now in Recovery

Our core markets in Europe are gaining momentum.  In the UK, where most of our assets are located, housing starts grew by 30% in 2013, similar to the turnaround experienced in the US 18 months ago.  In Germany, our largest Continental market, starts increased for the fifth consecutive year.  As a result, our EBITDA reached $46 million in 2013, higher than the prior year and our best performance since 2007.

The ongoing economic recovery in our core European markets and the trend towards OSB substitution will drive even stronger demand this year.  Looking further out, we see OSB consumption increasing by 50% over the next decade, and we are considering an expansion of our European OSB capacity to meet this growing demand.

Balanced Capital Allocation Plan

We began this year with nearly $200 million in cash and $340 million in unused credit lines.  The strength of our balance sheet enables us to continue making the strategic investments needed to maintain our competitive advantage.  Our 2014 capital expenditure target is $65 million, which includes $20 million to rebuild the wood-handling end of our Joanna, South Carolina mill in order to improve reliability and debottleneck our big continuous press.  We also continue to roll out investments in fines screening equipment across the Company to reduce our raw material use.  These projects have quick paybacks and will positively impact our manufacturing costs when they're fully up and running. 

At the same time, we remain committed to returning cash to our shareholders through dividends.  For 2014, the Board of Directors expects to maintain a dividend of CAD $0.60 per share per quarter (CAD $2.40 per share annualized), unchanged from 2013.  This reflects Norbord's positive view of both the housing recovery and panel demand in our core North American and European markets.


Our accomplishments over the past year have been a team effort for which many deserve credit.  My thanks go out to our employees and management team for their hard work and dedication, and to you, our shareholders, for your ongoing support.  I also want to thank our Board of Directors for the confidence they have placed in me.  On behalf of everyone at Norbord, I want to thank Barrie Shineton who served as Norbord's President and CEO since 2004.  In his new role as Vice Chair of the Board, we will continue to benefit from his insight and counsel in the years to come.  Finally, I look forward to reporting on our ongoing progress as our markets continue their multi-year recovery.

Peter Wijnbergen
President & CEO

This letter includes 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," "suggest," "support," "believe," "should," "potential," "likely," "continue," "forecast," "plan," "indicate," "consider," "future," or variations of such words and phrases or statements that certain actions "may," "could," "must," "would," "might," or "will" be undertaken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Norbord to be materially different from any future results, performance or achievement expressed or implied by the forward-looking statements.  See the cautionary language in the Forward-Looking Statements section of the 2013 Management's Discussion and Analysis dated January 29, 2014.


Consolidated Balance Sheets

(US $ millions)         Dec 31, 2013   Dec 31, 2012
Current assets                  
  Cash and cash equivalents         $ 193   $ 128
  Accounts receivable           130     125
  Tax receivable           11     -  
  Inventory           120     98
            454     351
Non-current assets                  
  Property, plant and equipment           794     764
  Deferred income tax assets           14     8
            808     772
          $ 1,262   $ 1,123
Liabilities and Shareholders' Equity                  
Current liabilities                  
  Accounts payable and accrued liabilities         $ 206   $ 173
Non-current liabilities                  
  Long-term debt           433     433
  Other liabilities           27     42
  Deferred income tax liabilities           120     90
            580     565
Shareholders' equity           476     385
          $ 1,262   $ 1,123

Consolidated Statements of Earnings

Years ended December 31 (US $ millions, except per share information)         2013     2012
Sales       $ 1,343   $ 1,149
Cost of sales         (1,042)     (945)
General and administrative expenses         (14)     (16)
Earnings before finance costs, costs on early debt extinguishment, income tax and depreciation         287     188
Finance costs         (37)     (37)
Costs on early debt extinguishment         (20)    
Earnings before income tax and depreciation         230     151
Depreciation         (56)     (53)
Income tax expense         (25)     (27)
Earnings       $ 149   $ 71
Earnings per common share                
 Basic       $ 2.92   $ 1.63
 Diluted         2.79     1.56

Consolidated Statements of Comprehensive Income

Years ended December 31 (US $ millions)       2013   2012
Earnings       $ 149   $ 71
Other comprehensive income, net of tax                
   Item that will not be reclassified to earnings:                
       Actuarial gain on post-employment obligation         15     1
  Item that may be reclassified subsequently to earnings:                
    Foreign currency translation gain on foreign operations         4     7
Other comprehensive income, net of tax         19     8
Comprehensive income       $ 168    $ 79

Consolidated Statements of Changes in Shareholders' Equity

Years ended December 31 (US $ millions)         2013     2012
Share capital                
Balance, beginning of year       $ 346   $ 340
Issue of common shares         315     6
Balance, end of year       $ 661   $ 346
Contributed surplus                
Balance, beginning of year       $ 44   $ 43
Stock-based compensation         1     2
Warrants and stock options exercised         (39)     (1)
Balance, end of year       $ 6   $ 44
Retained earnings                
Balance, beginning of year       $ (11)   $ (83)
Earnings         149     71
Common share dividends         (91)    
Warrants exercised         (263)    
Other comprehensive income         15     1
Balance, end of year       $ (201)   $ (11)
Accumulated Other Comprehensive Income (Loss)                
Balance, beginning of year       $ 6   $ (1)
Other comprehensive income                             4     7
Balance, end of year       $ 10   $ 6
Shareholders' equity       $      476   $ 385

Consolidated Statements of Cash Flows

Years ended December 31 (US $ millions)         2013     2012
CASH PROVIDED BY (USED FOR):                
Operating Activities                
Earnings       $ 149 $   71
Items not affecting cash:                
Depreciation         56     53
Deferred income tax         26     22
Other items         19     4
          250     150
Net change in non-cash operating working capital balances         5     (19)
Net change in tax receivable         (11)     5
          244     136
Investing Activities                
Investment in property, plant and equipment         (79)     (22)
Realized net investment hedge gain         -       3
          (79)     (19)
Financing Activities                
Repayment of debt         (240)     (240)
Issue of debt         240     240
Costs on early debt extinguishment         (17)     -  
Debt issue costs         (5)     (5)
Common share dividends paid         (91)     -  
Issue of common shares, net         13     4
Accounts receivable securitization repayments         -     (71)
          (100)     (72)
Cash and cash equivalents                
Increase during the year         65     45
Balance, beginning of year         128     83
Balance, end of year       $ 193 $   128


SOURCE: Norbord Inc.

For further information:

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

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