Industry Note

Equity Research Published and distributed by TD Securities Inc. July 18, 2023

Paper & Forest Products

North American Paper & Forest Products: Q2/23 Preview Sean Steuart, CFA
Wood-weighted Equities Poised for Sequential Earnings Rebound Kasia Trzaski Kopytek, CFA, CPA, CA
Expect Upward Bias to H2 Consensus Estimates for Wood Producers

Q2/23 earnings season for our forest products coverage universe starts
July 26. Our general expectations: we forecast above-consensus results for most
wood-weighted equities and below-consensus earnings for pulp-focused equities.
Our Q2/23 EBITDA estimates — although still below trend and well-below Q2/22
unsustainable peaks — imply a sharp q/q rebound for all commodity lumber/panel-
weighted producers. For quarterly outliers, we highlight CFP to the upside and MERC
to the downside.
Changes to our commodity deck (Exhibit 9) are most notable for OSB and
pulp. Given recent price acceleration, we are increasing our lumber and OSB price
forecasts. We are raising our average Western SPF lumber price forecast 1% in 2023
to $410/Mfbm and 2% in 2024 to $480/Mfbm. Changes to our OSB price outlook are
more substantial: our North Central average price estimate increases 18% in 2023
to $324/Msf and 3% in 2024 to $340/Msf. Downward revisions to our 2023/2024
pulp price forecasts are relatively pronounced (average price reductions of 7-8% in
each year). As a result of the changes to our commodity price deck, volume, input/
conversion cost assumptions, our average EBITDA forecasts for wood producers
increase 11% for 2023 and 5% for 2024.
We are raising our target prices for six of the nine companies and downgrading
our rating on Louisiana-Pacific to HOLD from Buy. Our average adjusted trend
EV/EBITDA target-price multiple increases to 5.2x from 5.0x previously. Please see
our separate Action Notes on LPX and WFG, both published this morning.
We reiterate our sector MARKET WEIGHT stance. The average share-price
recovery for lumber/panel-weighted equities in our coverage universe from the end
of May is 26%, but the group has materially underperformed U.S. homebuilders,
big-box retailers, and pro dealers since late-2022 (up 26% versus average gains of
92% for the latter groups). Lumber-weighted equities are trading at an average P/BV
multiple of 0.7x (LTA of 1.2x) and 3.8x trend EV/EBITDA, adjusting for FCF through
2024 (LTA of 5.2x). On P/BV, the gap between lumber and U.S. homebuilder equity
valuations has expanded to 1.2 points — the largest discount since 2009. Our top
picks are CFP and WFG.

Exhibit 1. Target Prices and Recommendations

Share Market Target Total Rating
Company Name Ticker Price Cap Current Previous Return Current Previous
Wood Products Companies
Canfor Corp. C$ CFP-T $22.70 $2,738.8 $29.00 $26.00 28% BUY BUY
Interfor Corp. C$ IFP-T $25.06 $1,289.0 $31.00 $29.00 24% BUY BUY
Louisiana-Pacific Corp. US$ LPX-N $78.60 $5,635.6 $85.00 $75.00 9% HOLD BUY
Western Forest Products Inc. C$ WEF-T $1.05 $333.3 $1.25 $1.25 24% HOLD HOLD
West Fraser Timber Co. Ltd. US$ WFG-N,T $88.34 $7,381.3 $110.00 $100.00 26% BUY BUY
Pulp, Paper and Packaging Companies
Canfor Pulp Products Inc. C$ CFX-T $2.25 $146.8 $2.50 $2.50 11% HOLD HOLD
Cascades Inc. C$ CAS-T $12.07 $1,215.5 $13.50 $12.50 16% HOLD HOLD
KP Tissue Inc. C$ KPT-T $10.18 $739.4 $11.50 $11.00 20% HOLD HOLD
Mercer International Inc. US$ MERC-Q $9.12 $605.8 $10.00 $10.00 13% HOLD HOLD
Note: (1) Target EV/EBITDA multiple is based on trend EBITDA, adjusted for free cash flows expected through 2024.
Source: TD Securities Inc., Thomson One.

Please see the final pages of this document for important disclosure information. Page 1 of 16
Industry Note July 18, 2023
Equity Research July 18, 2023
Exhibit 2. Q2/23 Earnings Forecasts versus Consensus Expectations and Prior-period Figures

EBITDA (1) EPS (1)

Reporting TD vs. Q2/23E Q2/23E
Q2/23 Earnings Estimates Currency Consensus TD Cons. Q2/22A Q1/23A TD Cons. Q2/22A Q1/23A

Wood Products Companies

Canfor Corp. C$ Above $43.0 $15.4 $630.3 ($105.7) ($0.41) ($0.43) $3.07 ($1.20)
Interfor Corp. C$ Below $40.3 $57.0 $428.6 $26.1 ($0.40) ($0.03) $5.11 ($0.80)
Louisiana-Pacific Corp. US$ Above $107.0 $95.0 $491.0 $66.0 $0.75 $0.65 $4.57 $0.34
Western Forest Products Inc. C$ Below ($4.2) $12.3 $66.2 ($5.0) ($0.04) ($0.01) $0.12 ($0.05)
West Fraser Timber Co. Ltd. US$ Above $142.7 $130.6 $1,124.0 $58.0 $0.03 $0.30 $7.59 ($0.52)
Pulp, Paper & Packaging Companies
Canfor Pulp Products Inc. C$ Below ($4.3) $9.5 $15.7 ($0.6) ($0.32) ($0.18) ($0.09) ($0.29)
Cascades Inc. C$ In line $122.2 $126.4 $91.0 $134.0 $0.23 $0.26 $0.10 $0.32
KP Tissue Inc. (2) C$ In line $51.6 $49.7 $11.8 $50.0 $0.03 $0.05 ($0.31) $0.09
Mercer International Inc. US$ Below ($10.2) $34.6 $145.1 $27.5 ($0.82) ($0.26) $1.07 ($0.46)

Q2/23 Reporting Dates & Conference Report Call Call

Call Details Date Date Time (ET) Dial-in Replay and Pass Code

Wood Products Companies

Canfor Corp. Jul 27 Jul 28 11:00 AM 888-390-0546 888-390-0541 code: 989608#
Interfor Corp. Aug 3 Aug 4 11:00 AM 888-396-8049 877-674-7070 code: 138247#
Louisiana-Pacific Corp. (3) Aug 2 Aug 2 11:00 AM 855-513-1368 (3) www.lpcorp.com
Western Forest Products Inc. Aug 3 Aug 4 2:00 PM 800-952-5114 800-408-3053 code: 5520759#
West Fraser Timber Co. Ltd. Jul 26 Jul 27 11:30 AM 888-390-0605 www.westfraser.com
Pulp, Paper & Packaging Companies
Canfor Pulp Products Inc. Jul 27 Jul 28 11:00 AM 888-390-0546 888-390-0541 code: 989608#
Cascades Inc. Aug 3 Aug 3 9:00 AM 888-390-0620 888-390-0541 code: 259981#
KP Tissue Inc. Aug 10 Aug 10 8:30 AM 800-319-4610 855-669-9658 code: 0272
Mercer International Inc. (4) Aug 3 Aug 4 10:00 AM 855-513-1368 (4) www.mercerint.com

Notes:
1) Figures exclude non-recurring items.
2) Figures shown are for Kruger Products LP.
3) Registration required to receive personal access pin https://register.vevent.com/register/BI4e1f59c3ecf44d81a2c1daebf36a8f5d
4) Registration required to receive personal access pin https://register.vevent.com/register/BI1a5c16805a8f4c38bfbb5dee04c9ae8f
Source: Company reports, Bloomberg, TD Securities Inc.

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 Exhibit 3. North American Paper & Forest Products Commodity Summary

Reference Current Quarterly Average Price Annual Average Price

Commodity Segment Grade(s) Momentum Current Q2/23 Q2/22 Q1/23 2020A 2021A 2022A 2023E 2024E Comments

Pulp, Paper & Packaging

Softwood Market Pulp North America NBSK $1,330 $1,510 $1,743 $1,675 $1,138 $1,479 $1,704 $1,446 $1,288 Prices for NBSK pulp imported into China have improved over the past week, Equity Research
(US$/metric tonne) % ∆ vs. -12% -24% -21% % ∆ y/y 30% 15% -15% -11% but remain near the lowest level since November 2020.

Hardwood Market Pulp North America BEK $1,070 $1,280 $1,520 $1,533 $896 $1,244 $1,517 $1,191 $975 The current BEK price represents a 34% decline since the November
(US$/metric tonne) % ∆ vs. -16% -30% -30% % ∆ y/y 39% 22% -21% -18% 2022 peak.

Newsprint North America, East $870 $887 $853 $920 $632 $708 $868 $873 $780 North American newsprint prices are down 5% year-to-date due to weak
Industry Note

(US$/metric tonne) % ∆ vs. -2% 2% -5% % ∆ y/y 12% 23% 1% -11% demand and oversupply.

Linerboard 42-lb Unbleached Kraft $840 $847 $930 $867 $718 $827 $915 $844 $815 Containerboard prices have stabilized, but demand remains soft.
(US$/short ton) % ∆ vs. -1% -10% -3% % ∆ y/y 15% 11% -8% -3%

Wood Products
Softwood Lumber Western SPF, #2 & Btr. $445 $360 $889 $385 $553 $875 $790 $410 $480 Current WSPF price is close to our view of trend, but remains below
(US$/Mfbm) % ∆ vs. 24% -50% 16% % ∆ y/y 58% -10% -48% 17% current regional cash costs in the B.C. Interior.

Oriented Strand Board 7/16" North Central $455 $300 $725 $242 $439 $807 $630 $324 $340 OSB prices have surged 47% over the past month amid low supply.
(US$/Msf) % ∆ vs. 52% -37% 88% % ∆ y/y 84% -22% -48% 5% Mill order files stretch into August.

Recovered Paper (input costs)

Old Corrugated Containers New York $50 $46 $132 $30 $59 $123 $101 $52 $90 OCC prices have rallied 67% year-to-date, but remain 36% below
(US$/ton) % ∆ vs. 9% -62% 67% % ∆ y/y 110% -18% -49% 75% the five-year average.

Sorted Office Paper New York $145 $180 $230 $217 $106 $130 $230 $177 $165 SOP prices have declined 42% vs. the October 2022 (decade-high) peak
(US$/ton) % ∆ vs. -19% -37% -33% % ∆ y/y 23% 78% -23% -7% and are close to the average over the preceding five years.
Exchange Rates
U.S. dollar/Canadian dollar $0.75 $0.74 $0.78 $0.74 $0.75 $0.80 $0.77 $0.74 $0.74 The CAD has appreciated 5% vs. its mid-Oct. 2022 low (a 2.5-year low).
% ∆ vs. 1% -4% 2% % ∆ y/y 7% -3% -4% -1%

U.S. dollar/euro $1.10 $1.09 $1.07 $1.07 $1.14 $1.18 $1.06 $1.00 $0.93 The EUR has rallied 15% since September 2022.
% ∆ vs. 1% 3% 3% % ∆ y/y 4% -11% -6% -7%

Source: Pulp & Paper Week, Random Lengths, Bloomberg, TD Securities Inc.

Source: Fastmarkets RISI, Random Lengths, Bloomberg, TD Securities Inc.

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July 18, 2023
July 18, 2023
Industry Note July 18, 2023
Equity Research July 18, 2023
Q2/23 Earnings Preview: Expect Sharp Q/Q Earnings Recovery for Most
Lumber and Panel Producers
We expect above-consensus Q2/23 results for most wood-weighted equities and
are below consensus expectations for equities heavily exposed to market pulp.
In addition to positive commodity wood products price momentum q/q, we expect
Q2/23 results to reflect the benefit of improved sawmill productivity. Our Q2/23 EBITDA
estimates imply a sharp q/q rebound for all commodity lumber/panel-weighted
producers.

For positive Q2/23 outliers, we highlight Canfor, which we believe benefited from
a company-specific lumber inventory valuation recovery. This reflects an
unwinding of Q1/23 trends when Canfor recorded an inventory valuation provision that
was more pronounced than peers. For downside outliers, we highlight Mercer. We
believe that Q2/23 consensus estimates underestimate the company’s exposure to
weak pulp prices.

Exhibit 4. Canadian Lumber Shipment and Wood Products Carload Trends

Canada Lumber Shipments to U.S. CN & CP Wood Products Carloads
5,500 40% 65,000 30%

5,000 30% 60,000

20%
Quarterly Shipments (MMfbm)

4,500 55,000
20%
10%
Quarterly Carloads

4,000 50,000
10%
3,500 45,000 0%
0%
3,000 40,000 -10%
-10%
2,500 35,000
-20%
Q2/23 shipments: -20%
2,000 30,000 Q2/23 carloads:
- up 8.2% q/q - up 3.0% q/q
1,500 - down 10.1% y/y -30% -30%
25,000 - down 2.9% y/y
1,000 -40% 20,000 -40%
Dec-06 Dec-09 Dec-12 Dec-15 Dec-18 Dec-21 Dec-05 Dec-08 Dec-11 Dec-14 Dec-17 Dec-20
Canada Shipments to U.S. Y/Y Growth Quarterly Carloads Y/Y Growth
Source: Global Affairs Canada, Association of American Railroads, TD Securities Inc.

Canadian wood products railcar data indicates better q/q volumes. Q2/23
Canadian wood product carloads (CN and CP data) increased 3.0% q/q, directionally
consistent with Canadian lumber exports to the U.S. (up 8.2% q/q). We attribute better
volumes to improved demand, as buyers replenished stocks. We expect that higher
productivity will drive unit costs lower for wood producers this quarter.

Notwithstanding the tough y/y comparison (Q2/22 reflected an unwinding of elevated

mill-level lumber inventories as distribution networks normalized), Q2/23 shipments
(carloads down 2.9% y/y) indicate that sawmills continue to take downtime to match
current market conditions.

Forest Products Commodity Market Update

We anticipated an eventual wood products price recovery, but the pace at which
North American lumber and OSB prices have improved in recent weeks has
surprised to the upside. Since the end of May, the Random Lengths Framing Lumber
Composite price has increased 19%. In our view, a reversal in momentum was
inevitable – too many Canadian sawmills (especially in B.C.) were operating at prices
below cash costs and an eventual supply response was needed. Permanent supply
reduction announcements have not materialized to the expected extent, but we believe
that production cuts have happened “under the hood” (i.e., shift reductions).

Page 4 of 16
Industry Note July 18, 2023
Equity Research July 18, 2023

We attribute much of the recent lumber-price rally to moderation of excessive inventory

through distribution channels. Better-than-expected U.S. new home starts and sales
data in recent months have likely contributed to improved order files.

Exhibit 5. Indexed Forest Product Commodity Prices (U.S. dollar-denominated)

4.5
Wood products prices,
4.0 especially OSB, have staged a
Indexed to 1.0 at January 2018

rally in recent months.

3.5
Pulp prices are nearing a
3.0 cyclical trough. Paper markets
are weak.
2.5

2.0

1.5

1.0

0.5
Jan-18 Jan-19 Jan-20 Jan-21 Jan-22 Jan-23
OSB Composite (N.A., US$) Lumber Composite (N.A., US$)
NBSK Pulp (China, US$) Newsprint (N.A., US$)
Canadian Plywood (C$)
Source: Random Lengths, Fastmarkets RISI.

OSB price momentum has outpaced lumber. The North Central OSB benchmark
price has improved 107% since the start of the year and 82% since early April.
Although U.S. single-family home starts are on pace to decline in 2023, construction
levels have substantially outpaced expectations in recent months, which has
contributed to improved momentum for this commodity.

Thoughts on Valuation
Notwithstanding the recent share-price recovery, lumber- and panel-weighted equities
have significantly underperformed U.S. homebuilders and big-box/pro dealers. Since
mid-October 2022, the S&P homebuilders sub-index and U.S. big-box retailers/pro
distributors have each rallied 92%, markedly outperforming our equally weighted wood
products composite over this duration (+26%, heavily weighted to the past month).

Valuations of lumber equities remain compelling, in our view, on both mid-cycle

EV/EBITDA (average multiple of 3.8x, adjusting for FCF through 2024, versus LTA of
5.2x) and P/BV (0.7x versus 1.2x over the past decade).

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Industry Note July 18, 2023
Equity Research July 18, 2023
Exhibit 6. Wood Products, Homebuilders, Distributors – P/Trailing BVPS & P/NTM EPS

Share Prices - Homebuilders, Wood Producers, Distributors Valuations - Homebuilders, Lumber Producers, Distributors
6.0 2.5 24.0

5.5 2.3 22.0

5.0
Indexed Share Price Performance

Share price performance since Q4/22 trough: 2.1

20.0
4.5 - S&P Homebuilders +92%
- Lumber & Panel Producers +26% 1.9

P to Trailing BVPS
4.0 - U.S. Big Box & Prodealer +92% 18.0

P/NTM EPS
3.5 1.7
16.0
3.0 1.5
14.0
2.5 1.3
2.0 12.0
1.1
1.5
10.0
0.9
1.0
0.7 8.0
0.5
0.0 0.5 6.0
Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Jan-22 Jan-23 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Jan-22 Jan-23
S&P Homebuilders Subindex (1) S&P Homebuilders Subindex LHS (1)
Lumber & Panel Producers (2) Lumber Producers LHS (4)
U.S. Big Box Retailers & Prodealer (3) U.S. Big Box Retailers & Prodealers RHS (3)
Notes: (1) S&P Homebuilders constituents = DHI, LEN, NVR, PHM, BLD, TOL, MTH, TMHC, KBH, IBP, TPH, LGIH, CVCO, MDC, CCS, MHO, GRBK. (2) Lumber & Panel Producers constituents = WFG, CFP, IFP, WEF, LPX.
(3) U.S. Big Box Retailers & Prodealer constituents = HD, LOW, BLDR. (4) Lumber Producers constituents = WFG, CFP, IFP, WEF.
Source: Capital IQ.

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Industry Note July 18, 2023
Equity Research July 18, 2023
Exhibit 7. Q2/23 Earnings Preview Summary for Wood-weighted Companies
Target Return EBITDA ($mm) Q/Q Earnings Reporting Conference Conference
Wood Products Companies Ticker Recomm. Price to Target Q2/23E TD Q2/23E Cons. Q1/23A Momentum Date Call Date Call Time
Canfor Corp. CFP-T BUY $29.00 28% $43.0 $15.4 ($105.7) Positive 27-Jul 28-Jul 11:00 am ET
Key Positive Factors: • Q/Q lumber volume improvement, augmented by inventory reductions. • Expected modest improvement in Q2/23 lumber price realizations. Composite
• Resilient European lumber margins. price was flat q/q, but momentum improved through quarter end.
• Pulp mill input cost relief (fibre costs partly tied to pulp mill net price realizations). • Expected optimized pulp operating costs post-Prince George pulp line closure.
• No planned Q2/23 pulp maintenance downtime. • B.C. stumpage cost relief.
• Expected positive lumber segment inventory revaluation.

Key Negative Factors: • Substantial pulp price realization pressure. Q/Q reference price trends: NBSK N.A. = -10%; NBSK China = -22%.
• Pressure on kraft paper prices (-1% q/q). • Small Q2/23 maintenance closure at kraft paper machine.
• Modest q/q pressure on European lumber shipments. • Small Western Canada sawmill downtime related to forest fires.
Interfor Corp. IFP-T BUY $31.00 24% $40.3 $57.0 $26.1 Positive 3-Aug 4-Aug 11:00 am ET
Key Positive Factors: • Expected modest improvement in Q2/23 lumber price realizations. Composite price was flat q/q, but momentum improved through quarter end.
• Improved productivity expected across all key regions. • Conversion cost tailwinds tied to higher operating rates.
• Solid contributions from I-joist business in Eastern Canada. • Seasonal working capital declines.

Key Negative Factors: • Less material sequential inventory revaluation tailwinds. • Still below-trend lumber market conditions.
• Pockets of input cost inflation.
Louisiana-Pacific Corp. (1) LPX-N HOLD $85.00 9% $107.0 $95.0 $66.0 Positive 2-Aug 2-Aug 11:00 am ET
Key Positive Factors: • Management guided to Q2/23 adjusted EBITDA of at least $80 million in tandem with Q1/23 earnings release early-May 2023.
• Surging North American OSB prices: composite price +21% q/q. • Normalizing siding margins following Q1/23 pullback.

Key Negative Factors: • Expected OSB price realization lag as Q1/23 flooring premium narrows. • Sagola ramp-up costs (i.e., relatively expensive production to start).
Western Forest Products Inc. WEF-T HOLD $1.25 24% ($4.2) $12.3 ($5.0) Flat 3-Aug 4-Aug 2:00 pm ET
Key Positive Factors: • Sequential shift to higher-value sales mix. • Stumpage cost relief on B.C. Coast.
• Recent price improvement for some commodity lumber grades.

Key Negative Factors: • Weaker prices for specialty and niche grades (previously resilient). • Production downtime related to markets and harvest limitations (dry weather).
• Lower price realizations in Japan (partly tied to the weaker Yen). • Lower residual price realizations.
West Fraser Timber Co. Ltd. (1) WFG-N,T BUY $110.00 26% $142.7 $130.6 $58.0 Positive 26-Jul 27-Jul 11:30 am ET
Key Positive Factors: • Expected modest improvement in Q2/23 lumber price realizations. Composite price was flat q/q, but momentum improved through quarter end.
• Surging North American OSB prices: composite price +21% q/q. • Resilient European panel margins.
• B.C. stumpage cost relief. • General North American wood product volume improvement
• Conversion cost tailwinds tied to higher operating rates. augmented by inventory drawdowns.

Key Negative Factors: • Substantial pulp price realization pressure. Q/Q reference price trends: NBSK N.A. = -10%; NBSK China = -22%; BCTMP China = -21%.
• Lower Canadian plywood prices (down 9% q/q in CAD-denomination). • Still below-trend lumber market conditions.
Notes:
1) Target prices and earnings for Louisiana-Pacific and West Fraser are denominated in U.S. dollars.
2) Figures are in Canadian dollars unless indicated otherwise.
Source: TD Securities Inc., Bloomberg, company reports.

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Industry Note July 18, 2023
Equity Research July 18, 2023
Exhibit 8. Q2/23 Earnings Preview Summary for Pulp & Paper-weighted Companies
Pulp, Paper & Target Return EBITDA ($mm) Q/Q Earnings Reporting Conference Conference
Packaging Companies Ticker Recomm. Price to Target Q2/23E TD Q2/23E Cons. Q1/23A Momentum Date Call Date Call Time
Canfor Pulp Products Inc. CFX-T HOLD $2.50 11% ($4.3) $9.5 ($0.6) Negative 27-Jul 28-Jul 11:00 am ET
Key Positive Factors: • Input cost relief (fibre costs partly tied to pulp mill net price realizations). • Expected optimized operating costs post-Prince George pulp line closure.
• No planned Q2/23 maintenance downtime.

Key Negative Factors: • Substantial pulp price realization pressure. Q/Q reference price trends: NBSK N.A. = -10%; NBSK China = -22%.
• Pressure on kraft paper prices (-1% q/q). • Small Q2/23 maintenance closure at kraft paper machine.
Cascades Inc. CAS-T HOLD $13.50 16% $122.2 $126.4 $134.0 Negative 3-Aug 3-Aug 9:00 am ET
Key Positive Factors: • In May 2023 management guided to Q2/23 adjusted EBITDA to weaken slightly q/q and improve y/y.
• Lower input costs for tissue segment (fibre and energy). • Profitability initiatives at tissue operations expected to bear fruit.
• Lower corporate costs on a q/q basis. • Gradual start-up of Bear Island.

Key Negative Factors: • Weaker containerboard prices - reference prices down 2%-3% q/q. • Higher OCC input costs (up 38% q/q from a low base).
• Lower contribution from Specialty Packaging segment; higher raw material costs. • No benefit from containerboard insurance proceeds ($7mm benefit in Q1/23).
KP Tissue Inc. KPT-T HOLD $11.50 20% $51.6 $49.7 $50.0 Flat 10-Aug 10-Aug 8:30 am ET
Key Positive Factors: • Mid-May 2023 management guided to Q2/23 adjusted EBITDA to be similar to Q1/23. • Input cost tailwinds: reference pulp and recycled fibre prices down 10%-17% q/q.
• Tissue price increases fully implemented across all segments and regions. • Optimized mix at Memphis (refocused to TAD and facial tissue).

Key Negative Factors: • Excluding fibre, ongoing elevated input cost backdrop (freight, labour and energy).
Mercer International Inc. (1) MERC-Q HOLD $10.00 13% ($10.2) $34.6 $27.5 Negative 3-Aug 4-Aug 10:00 am ET
Key Positive Factors: • Fibre cost relief expected across Canada and Germany. • Other than targeted downtime, pulp mills ran reasonably well.
• Expected finished pulp inventory reduction.

Key Negative Factors: • Substantial pulp price realization pressure. Q/Q reference price trends: NBSK Europe = -9%; NBSK N.A. = -10%; NBSK China = -22%.
• Heavy maintenance downtime at Peace River. • Pressure on surplus energy revenues.
• Challenging markets for pallets (HIT Torgau product).

Notes:
1) Target price and earnings for Mercer are denominated in U.S. dollars.
2) Figures are in Canadian dollars unless indicated otherwise.
Source: TD Securities Inc., Bloomberg, company reports.

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Industry Note July 18, 2023
Equity Research July 18, 2023
Exhibit 9. Commodity Price Forecasts & Exchange Rate Outlook
2023E 2024E
Forest Product Commodity 2018A 2019A 2020A 2021A 2022A Current Previous % Δ Current Previous % Δ Trend
Pulp & Paper
Market Pulp (US$/tonne)
NBSK (N.A., list) $1,337 $1,239 $1,138 $1,479 $1,704 $1,446 $1,544 -6% $1,288 $1,425 -10% $1,150
NBSK (Europe, list) $1,182 $944 $847 $1,241 $1,416 $1,188 $1,228 -3% $1,059 $1,135 -7% $1,110
NBSK (China, transaction) $878 $624 $589 $849 $943 $714 $772 -8% $650 $725 -10% $750
BCTMP (China, transaction) $655 $494 $464 $533 $662 $515 $616 -16% $513 $516 -1% $535
Paper
Newsprint (N.A, East, US$/tonne) $740 $732 $632 $708 $868 $873 $873 - $780 $775 1% $650
Linerboard (42-lb. unbleached, US$/ton) $823 $729 $718 $827 $915 $844 $843 <1% $815 $830 -2% $750
Wood Products
Softwood Lumber (US$/Mfbm)
Western SPF (2x4, #2 & better) $481 $358 $553 $875 $790 $410 $405 1% $480 $470 2% $460
Southern Pine (2x4, #2 & better) $525 $406 $599 $926 $836 $469 $470 <1% $498 $495 1% $495
Eastern SPF (Great Lakes, 2x4, #2 & better) $565 $440 $641 $978 $905 $505 $498 1% $584 $575 2% $550
Oriented Strand Board (US$/Msf, 7/16")
North Central $351 $209 $439 $807 $630 $324 $276 18% $340 $330 3% $295
South East $315 $188 $425 $736 $595 $325 $255 28% $324 $310 4% $265
Western Canada $307 $165 $418 $898 $613 $306 $247 24% $310 $295 5% $285
Recovered Paper (Input Costs, US$/ton)
Old Corrugated Container (New York) $72 $38 $59 $123 $101 $52 $51 <1% $90 $90 - $95
Sorted Office Paper (New York) $188 $125 $106 $130 $230 $177 $216 -18% $165 $220 -25% $120
Currency (US$/C$) $0.772 $0.754 $0.747 $0.798 $0.772 $0.743 $0.738 1% $0.738 $0.755 -2% $0.800
Notes: 1) NBSK = Northern Bleached Softwood Kraft; BCTMP = Bleached Chemical Thermo-Mechanical Pulp; SPF = Spruce Pine Fir; UGW = Uncoated Groundwood.
Source: TD Securities Inc., RISI Inc., Random Lengths, Bloomberg.

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Industry Note July 18, 2023
Equity Research July 18, 2023
Exhibit 10. Changes to EPS and EBITDA Estimates
TD Q2/23E TD 2023E TD 2024E
EPS Changes Q2/22A Q3/22A Q4/22A Q1/23A Revised Previous %Δ Revised Previous %Δ Revised Previous %Δ
Wood Products Companies
Canfor Corp. C$ $3.07 $0.80 ($1.04) ($1.20) ($0.41) ($0.54) 24% ($1.24) ($1.39) 11% $1.40 $1.07 30%
Interfor Corp. C$ $5.11 $0.58 ($1.40) ($0.80) ($0.40) ($0.67) 40% ($0.37) ($0.59) 37% $2.38 $1.95 23%
Louisiana-Pacific Corp. US$ $4.57 $1.72 $0.61 $0.34 $0.75 $0.78 -3% $3.99 $3.01 32% $5.03 $4.71 7%
Western Forest Products Inc. C$ $0.12 $0.02 ($0.07) ($0.05) ($0.04) ($0.02) -102% ($0.07) ($0.08) 3% $0.05 $0.04 23%
West Fraser Timber Co. Ltd. US$ $7.59 $2.50 ($1.13) ($0.52) $0.03 ($0.36) 107% $1.00 $0.25 301% $3.92 $3.64 8%
Pulp, Paper & Packaging Companies
Canfor Pulp Products Inc. C$ ($0.09) $0.25 ($0.52) ($0.29) ($0.32) ($0.21) -51% ($1.35) ($0.96) -41% ($0.80) ($0.49) -63%
Cascades Inc. C$ $0.10 $0.20 $0.22 $0.32 $0.23 $0.21 10% $1.19 $1.10 8% $1.66 $1.13 46%
KP Tissue Inc. C$ (1) ($0.31) ($0.13) ($0.09) $0.09 $0.03 $0.02 129% $0.52 $0.29 78% $0.58 $0.35 62%
Mercer International Inc. US$ $1.07 $1.00 $0.30 ($0.46) ($0.82) ($0.40) -106% ($2.49) ($1.78) -40% ($1.13) ($0.37) -207%

TD Q2/23E TD 2023E TD 2024E

EBITDA Changes (mm) Q2/22A Q3/22A Q4/22A Q1/23A Revised Previous %Δ Revised Previous %Δ Revised Previous %Δ
Wood Products Companies
Canfor Corp. C$ $630.3 $211.5 ($62.6) ($105.7) $43.0 $24.0 80% $195.2 $182.5 7% $685.8 $645.6 6%
Interfor Corp. C$ $428.6 $129.5 ($68.7) $26.1 $40.3 $20.5 97% $261.4 $245.3 7% $444.9 $415.0 7%
Louisiana-Pacific Corp. US$ $491.0 $200.0 $100.0 $66.0 $107.0 $109.6 -2% $518.7 $426.0 22% $626.0 $598.4 5%
Western Forest Products Inc. C$ $66.2 $17.3 ($11.9) ($5.0) ($4.2) $4.9 -186% $26.5 $25.7 3% $80.9 $76.9 5%
West Fraser Timber Co. Ltd. US$ $1,124.0 $426.0 $70.0 $58.0 $142.7 $98.8 45% $652.9 $568.6 15% $1,051.7 $1,020.2 3%
Pulp, Paper & Packaging Companies
Canfor Pulp Products Inc. C$ $15.7 $46.7 ($15.1) ($0.6) ($4.3) $5.3 -181% ($19.3) $14.4 -234% $33.2 $58.2 -43%
Cascades Inc. C$ $91.0 $111.0 $116.0 $134.0 $122.2 $119.4 2% $527.4 $515.4 2% $589.6 $519.9 13%
KP Tissue Inc. C$ (1) $11.8 $30.7 $44.4 $50.0 $51.6 $49.7 4% $237.4 $214.5 11% $253.5 $231.4 10%
Mercer International Inc. US$ $145.1 $140.9 $96.1 $27.5 ($10.2) $29.8 -134% $38.1 $105.5 -64% $168.8 $240.5 -30%

Notes:
1) Figures shown are for Kruger Products LP.
Source: TD Securities Inc., Bloomberg.

Page 10 of 16
Industry Note July 18, 2023
Equity Research July 18, 2023
Exhibit 11. TD Securities Paper and Forest Products Universe

Estimates
Current Price Reporting Target Risk Total EPS (excl. extraordinary items) EBITDA (mm)
Wood Products Ticker Price Curr. Curr. Rec. Price Rating Return (%) 21A 22A 23E 24E Trend 21A 22A 23E 24E Trend

Canfor Corp. CFP-T $22.70 C$ C$ BUY $29.00 HIGH 28% $12.15 $7.08 ($1.24) $1.40 $1.37 $2,563 $1,610 $195 $686 $688
Interfor Corp. IFP-T $25.06 C$ C$ BUY $31.00 HIGH 24% $12.81 $10.90 ($0.37) $2.38 $3.74 $1,247 $1,059 $261 $445 $537
Louisiana-Pacific Corp. LPX-N $78.60 US$ US$ HOLD $85.00 HIGH 9% $13.86 $12.00 $3.99 $5.03 $6.20 $1,972 $1,389 $519 $626 $756
Western Forest Products Inc. WEF-T $1.05 C$ C$ HOLD $1.25 HIGH 24% $0.55 $0.18 ($0.07) $0.05 $0.13 $302 $137 $27 $81 $112
West Fraser Timber Co. Ltd. WFG-N,T $88.34 US$ US$ BUY $110.00 HIGH 26% $26.61 $19.21 $1.00 $3.92 $8.13 $4,569 $3,212 $653 $1,052 $1,548

Average 22%

Current Price Reporting Target Risk Total EPS (excl. extraordinary items) EBITDA (mm)
Pulp, Paper & Packaging Ticker Price Curr. Curr. Rec. Price Rating Return (%) 21A 22A 23E 24E Trend 21A 22A 23E 24E Trend

Canfor Pulp Products Inc. CFX-T $2.25 C$ C$ HOLD $2.50 HIGH 11% $0.38 ($0.67) ($1.35) ($0.80) ($0.26) $117 $41 ($19) $33 $77
Cascades Inc. CAS-T $12.07 C$ C$ HOLD $13.50 HIGH 16% $0.26 $0.37 $1.19 $1.66 $1.15 $389 $376 $527 $590 $524
KP Tissue Inc. (1) KPT-T $10.18 C$ C$ HOLD $11.50 HIGH 20% $0.01 ($0.65) $0.52 $0.58 $0.86 $153 $116 $237 $254 $314
Mercer International Inc. MERC-Q $9.12 US$ US$ HOLD $10.00 HIGH 13% $3.03 $3.71 ($2.49) ($1.13) $1.39 $479 $537 $38 $169 $416

Average 15%

Multiples
Price Reporting Target (2) Trailing Trailing Trailing P/E Multiple TEV/EBITDA
Wood Products Currency Currency EV/EBITDA D/D+E BVPS P/BV 21A 22A 23E 24E Trend 21A 22A 23E 24E Trend

Canfor Corp. C$ C$ 4.5x nmf $33.81 0.7x 2.6x 3.0x nmf 16.2x 16.5x 1.0x 1.6x 13.4x 3.8x 3.8x
Interfor Corp. C$ C$ 4.1x 31% $38.60 0.6x 3.2x 1.9x nmf 10.5x 6.7x 1.7x 2.0x 8.3x 4.9x 4.0x
Louisiana-Pacific Corp. US$ US$ 8.0x 13% $20.22 3.9x 5.7x 4.9x 19.7x 15.6x 12.7x 3.0x 4.2x 11.3x 9.4x 7.8x
Western Forest Products Inc. C$ C$ 3.8x 4% $1.97 0.5x 3.8x 6.4x nmf 21.0x 8.3x 1.2x 2.6x 13.6x 4.5x 3.2x
West Fraser Timber Co. Ltd. US$ US$ 5.3x nmf $90.63 1.0x 3.6x 4.6x nmf 22.5x 10.9x 1.5x 2.2x 10.8x 6.7x 4.5x

Average 5.1x 16% 1.3x 3.8x 4.2x 19.7x 17.2x 11.0x 1.7x 2.5x 11.5x 5.8x 4.7x

Price Reporting Target (2) Trailing Trailing Trailing P/E Multiple TEV/EBITDA
Pulp, Paper & Packaging Currency Currency EV/EBITDA D/D+E BVPS P/BV 21A 22A 23E 24E Trend 21A 22A 23E 24E Trend

Canfor Pulp Products Inc. C$ C$ 4.8x 13% $6.29 0.4x 17.6x nmf nmf nmf nmf 1.8x 5.0x nmf 6.2x 2.7x
Cascades Inc. C$ C$ 5.8x 53% $17.68 0.7x nmf 22.9x 10.1x 7.3x 10.5x 8.6x 8.9x 6.5x 5.8x 6.5x
KP Tissue Inc. (1) C$ C$ 6.3x 66% $7.85 1.3x nmf nmf 19.7x 17.7x 11.8x 11.9x 15.8x 7.7x 7.2x 6.7x
Mercer International Inc. US$ US$ 4.4x 57% $12.39 0.7x 4.0x 3.1x nmf nmf 6.6x 3.5x 3.1x nmf 10.0x 4.0x

Average 5.3x 47% 0.8x 10.8x 13.0x 14.9x 12.5x 9.6x 6.5x 8.2x 7.1x 7.3x 5.0x

Notes:
1) Figures shown are for Kruger Products LP.
2) Target EV/EBITDA multiple is based on trend EBITDA, adjusted for free cash flows expected through 2024.
Source: TD Securities Inc., Company reports, Thomson One.

Page 11 of 16
Industry Note July 18, 2023
Equity Research July 18, 2023
Exhibit 12. Justification of and Key Risks to Target Prices
Company
Risk
Name and Target Price Rec. Justification of Target Price Key Risks to Target Price
Rating
Ticker

Key risks to our target price include: 1) a slower-than-expected

recovery in the U.S. housing market; 2) a stronger CAD; 3) input cost
inflation; 4) long-term fibre shortage in B.C.; 5) ongoing constraints for
In deriving our $29.00 target price for Canfor, we separate
lumber exports; 6) potential First Nations land entitlement issues; 7)
the company’s 54.8% equity stake in Canfor Pulp from the
trade dispute with the U.S. regarding softwood lumber; 8) highly
core wood products business. We value Canfor’s stake in
competitive markets; 9) potential labour disruptions; and 10) share-
CFX using our 12-month target price of $2.50 for that
price performance of Canfor Pulp (CFX-T). Key risks to our target
Canfor Corp. investment. We then apply a 4.5x EV/EBITDA multiple to
$29.00 BUY HIGH price for Canfor Pulp include: 1) weaker-than-expected pulp
(CFP-T) our estimate of trend EBITDA for the remaining wood
demand/pricing; 2) a stronger Canadian dollar; 3) input cost
products business unit and adjust for free cash flow through
pressures, including fibre cost inflation in B.C.; 4) higher interest rates;
2024 to capture the impact of changing net debt
5) inconsistent implementation of the dividend policy; 6) unplanned
expectations. Our average target multiple for relevant
production disruptions; 7) control by Canfor Corp. (owns 54.8% of the
lumber and panel producers is 5.1x.
common shares); 8) highly competitive markets; 9) execution risk
associated with significant discretionary capex; and 10) potential asset
closures in response to shrinking residual fibre supply in B.C.

Key risks to our target price include: 1) weaker-than-expected pulp

Our 12-month target price of $2.50 for Canfor Pulp is based
demand/pricing; 2) a stronger Canadian dollar; 3) input cost
on a 4.8x target EV/EBITDA multiple using our trend
pressures, including fibre cost inflation in B.C.; 4) higher interest rates;
Canfor Pulp EBITDA estimate. To capture the impact of changing net
5) inconsistent implementation of the dividend policy; 6) unplanned
Products Inc. $2.50 HOLD HIGH debt expectations, we adjust our enterprise value calculation
production disruptions; 7) control by Canfor Corp. (owns 54.8% of the
(CFX-T) with expected free cash flows through 2024. The target
common shares); 8) highly competitive markets; 9) execution risk
multiple compares with an average of 5.2x applied across
associated with significant discretionary capex; and 10) potential asset
our coverage universe.
closures in response to shrinking residual fibre supply in B.C.
Our 12-month target price of $13.50 for Cascades is based
Key risks to our target price include: 1) a decline in packaging and
on a 5.8x target EV/EBITDA multiple using our trend
tissue prices; 2) input cost inflation; 3) a stronger Canadian dollar; 4)
Cascades EBITDA estimate. To capture the impact of changing net
weakness in the North American manufacturing sector; 5) high
Inc. $13.50 HOLD HIGH debt expectations, we adjust our enterprise value calculation
financial leverage; 6) highly competitive markets; 7) acquisition
(CAS-T) with expected free cash flows through 2024. The target
integration risk; and 8) execution risk associated with significant
multiple compares with an average of 5.2x applied across
discretionary capex.
our coverage universe.

Key risks to our target price include: 1) a slower-than-anticipated U.S.

Our 12-month target price of $31.00 for Interfor is based on
housing recovery; 2) an erosion in offshore lumber demand; 3) a
a 4.1x target EV/EBITDA multiple using our trend EBITDA
faster-than-expected response in North American lumber production;
Interfor Corp. estimate. To capture the impact of changing net debt
$31.00 BUY HIGH 4) a strengthening Canadian dollar; 5) input cost pressures, including
(IFP-T) expectations, we adjust our enterprise value calculation with
labour and raw materials (e.g., fibre costs); 6) acquisition integration
expected free cash flows through 2024. Our average target
risk; 7) potential First Nations timber claims; 8) trade dispute with the
multiple for relevant lumber and panel producers is 5.1x.
U.S. regarding softwood lumber; and 9) highly competitive markets.

Our 12-month target price of $11.50 for KP Tissue is based

Key risks to our target price include: 1) the impact of COVID-19 on the
on a 6.3x target EV/EBITDA multiple using our trend
AFH segment demand; 2) control of KPLP by Kruger Inc. — 86.3%
EBITDA estimate for KPLP. To capture the impact of
ownership, majority Board and senior management representation; 3)
changing net debt expectations, we adjust our enterprise
commercial contracts between KPLP, KP Tissue, and Kruger; 4)
KP Tissue value calculation with expected free cash flows through
sensitivity of the North American tissue market to growth in capacity;
Inc. $11.50 HOLD HIGH 2024, including all capex associated with the Sherbrooke
5) input cost inflation; 6) negative exposure to weaker Canadian dollar;
(KPT-T) expansion. Our trend EBITDA estimate includes a full
7) equipment failure, production/labour disruptions, natural disasters,
contribution from the TAD Sherbrooke asset, plus the LDC
and environmental liabilities; 8) highly competitive markets; 9) risks
paper machine/converting line expansion of this site. The
associated with the Sherbrooke expansion project; and 10) high
target multiple compares with an average of 5.2x applied
financial leverage.
across our coverage universe.

Our 12-month target price of US$85.00 for Louisiana-Pacific

Key risks to our target price include: 1) earnings sensitivity to weaker
is based on a 8.0x target EV/EBITDA multiple using our
OSB and siding markets; 2) weaker U.S. housing or renovation related
Louisiana- trend EBITDA estimate. To capture the impact of changing
demand; 3) weaker South American demand; 4) fluctuating exchange
Pacific Corp. US$85.00 HOLD HIGH net debt expectations, we adjust our enterprise value
rates; 5) faster-than-expected industry capacity additions; 6)
(LPX-N) calculation with expected free cash flows through 2024. Our
unexpected production disruptions; 7) input cost inflation; and 8)
average target multiple for relevant lumber and panel
highly competitive markets.
producers is 5.1x.

Source: TD Securities Inc.

Page 12 of 16
Industry Note July 18, 2023
Equity Research July 18, 2023
Exhibit 13. Justification of and Key Risks to Target Prices
Company
Risk
Name and Target Price Rec. Justification of Target Price Key Risks to Target Price
Rating
Ticker

Our 12-month target price of US$10.00 for Mercer is based

Key risks to our target price include: 1) weaker-than-expected pulp
on a 4.4x target EV/EBITDA multiple using our trend
Mercer demand and pricing; 2) currency fluctuations; 3) input cost inflation; 4)
EBITDA estimate. To capture the impact of changing net
International equipment failures, production disruptions, and/or environmental
US$10.00 HOLD HIGH debt expectations, we adjust our enterprise value calculation
Inc. liabilities; 5) high financial leverage; 6) risks associated with capital
with expected free cash flows through 2024. The target
(MERC-O) investment projects; 7) highly competitive markets; and 8) failure to
multiple compares with an average of 5.2x applied across
attain synergies from acquisitions.
our coverage universe.

Key risks to our target price include: 1) changes in lumber/log demand

and pricing; 2) stronger Canadian dollar; 3) input cost inflation; 4)
Our 12-month target price of $1.25 for Western is based on
production disruptions at sawmills; 5) potential First Nations land
Western a 3.8x target EV/EBITDA multiple using our trend EBITDA
entitlement issues; 6) proposed margin improvement initiatives that
Forest estimate. To capture the impact of changing net debt
$1.25 HOLD HIGH may not yield the expected returns; 7) concentration of by-product
Products Inc. expectations, we adjust our enterprise value calculation with
sales; 8) softwood lumber trade dispute with the U.S.; 9) highly
(WEF-T) expected free cash flows through 2024. Our average target
competitive markets; and 10) potential operational impact related to
multiple for relevant lumber and panel producers is 5.1x.
the B.C. government’s proposal to suspend harvesting on 2.6 million
hectares of B.C. old-growth timberlands.

Key risks to our target price include: 1) weaker-than-expected North

Our 12-month target price of US$110.00 for West Fraser is
American and European wood products demand; 2) North American
based on a 5.3x target EV/EBITDA multiple using our trend
West Fraser and European lumber and OSB market competition; 3) foreign
EBITDA estimate. To capture the impact of changing net
Timber Co. currency fluctuations; 4) B.C. fibre shortage; 5) equipment failures,
US$110.00 BUY HIGH debt expectations, we adjust our enterprise value calculation
Ltd. production disruptions, environmental liabilities, labour disruptions,
with expected free cash flows through 2024. Our average
(WFG-N,T) and/or natural disasters; 6) input cost pressure; 7) acquisition
target multiple for relevant lumber and panel producers is
integration risk; 8) potential First Nations claims to timber; and 9)
5.1x.
softwood lumber trade dispute between Canada and the U.S.

Source: TD Securities Inc.

Page 13 of 16
Industry Note
Equity Research July 18, 2023

TD Securities Equity Research Disclosures

 Company Ticker Disclosures
Canfor Corp. CFP-T 9
Canfor Pulp Products Inc. CFX-T n/a
Cascades Inc. CAS-T 2, 4, 9
Interfor Corp. IFP-T 9
KP Tissue Inc. KPT-T n/a
Louisiana-Pacific Corp. LPX-N n/a
Mercer International Inc. MERC-Q 10
Resolute Forest Products Inc. RFP-N n/a
West Fraser Timber Co. Ltd. WFG-N | WFG-T 2, 4, 9
Western Forest Products Inc. WEF-T 9

1. TD Securities Inc., TD Securities (USA) LLC or an affiliated company has managed or co-managed a public offering of securities within the last 12 months with respect to the subject
company.
2. TD Securities Inc., TD Securities (USA) LLC or an affiliated company has received compensation for investment banking services within the last 12 months with respect to the
subject company.
3. TD Securities Inc., TD Securities (USA) LLC or an affiliated company expects to receive compensation for investment banking services within the next three months with respect to
the subject company.
4. TD Securities Inc., TD Securities (USA) LLC or an affiliated company has provided investment banking services within the last 12 months with respect to the subject company.
5. A long position in the securities of the subject company is held by the research analyst, by a member of the research analyst’s household, or in an account over which the research
analyst has discretion or control.
6. A short position in the securities of the subject company is held by the research analyst, by a member of the research analyst’s household, or in an account over which the research
analyst has discretion or control.
7. A long position in the derivative securities of the subject company is held by the research analyst, by a member of the research analyst’s household, or in an account over which the
research analyst has discretion or control.
8. A short position in the derivative securities of the subject company is held by the research analyst, by a member of the research analyst’s household, or in an account over which
the research analyst has discretion or control.
9. TD Securities Inc. and/or an affiliated company is a market maker, or is associated with the specialist that makes a market, in the securities of the subject company.
10. TD Securities Inc. and/or affiliated companies own 1% or more of the equity securities of the subject company.
11. A partner, director or officer of TD Securities Inc., TD Securities (USA) LLC or an affiliated company, or a research analyst involved in the preparation of this report has, during the
preceding 12 months, provided services to the subject company for remuneration.
12. This security has Subordinate voting shares.
13. This security has Restricted voting shares.
14. This security has Non-voting shares.
15. This security has Variable voting shares.
16. This security has Limited voting shares.

Additional Important Disclosures

On September 20-22, 2022, we visited three Interfor sawmills near Eatanton, Georgia, Georgetown, SC, and Summerville, SC. The sawmills visited account for 10% of the company's total sawmill
count. The company provided travel between sawmills and some meals.
TD Securities Inc. Is acting as exclusive financial advisor to West Fraser Timber Co. Ltd. in the sale of its Hinton, Alberta pulp mill to Mondi Group plc.

Price Graphs
Full disclosures for all companies covered by TD Securities can be viewed at https://portal.tdsecurities.com/alpha/important-disclosures by TD Securities' institutional equity clients.

Distribution of Research Ratings^ Investment Services Provided*

100%

REDUCE - 1.0% 78.63%

75%
NOT RATED - 0.7%

50%
BUY - 71.0%
HOLD - 27.3%

25% 19.85%

0.76% 0.76%
0%
BUY HOLD NOT REDUCE
RATED

Current as of: July 18, 2023

^ Percentage of subject companies under each rating category: BUY (covering ACTION LIST BUY,
BUY and SPECULATIVE BUY ratings), HOLD, and REDUCE (covering TENDER and REDUCE
ratings) and NOT RATED (covering UNDER REVIEW, SUSPENDED, and NOT RATED).

Page 14 of 16
Industry Note
Equity Research July 18, 2023

* Percentage of subject companies within each of the four categories (BUY, HOLD, REDUCE, and
NOT RATED) for which TD Securities Inc. has provided investment banking services within the last
12 months.

Definition of Research Ratings

ACTION LIST BUY: The stock's total return is expected to exceed a minimum of 15% (with higher thresholds for less liquid, more risky securities) over the next 12 months and it is a
top pick in the Analyst's sector.
BUY: The stock's total return is expected to exceed a minimum of 10% (with higher thresholds for less liquid, more risky securities) over the next 12 months.
SPECULATIVE BUY: The stock's total return is expected to exceed a minimum of 30% over the next 12 months (with higher thresholds for less liquid securities); however, there is material
event risk associated with the investment that could result in a significant loss.
HOLD: The stock's total return is expected to be between 0% and 10%, (with higher thresholds for less liquid, more risky securities) over the next 12 months.
TENDER: Investors are advised to tender their shares to a specific offer for the company's securities or to support a proposed combination reflecting our view that a superior offer
is not forthcoming.
REDUCE: The stock's total return is expected to be negative over the next 12 months.
SUSPENDED: Due to evolving circumstances, we can no longer generate what we consider a defensible target price and rating at the current time.
UNDER REVIEW: Our rating is under review pending additional information and/or analysis. The prior rating should not be relied on.
NOT RATED: We do not currently produce a recommendation and a target price on this security.
Risk ratings are relative to other companies in the TD Securities Equity Research coverage universe. In order of increasing risk, our risk ratings are LOW, MEDIUM, HIGH, and
SPECULATIVE. These risk ratings are not meant to be compared to ratings on other securities and asset classes outside our Equity Research coverage universe.
Overall Risk Rating in order of increasing risk: Low (7.2% of coverage universe), Medium (41.8%), High (42.5%), Speculative (8.5%)

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Industry Note
Equity Research July 18, 2023

Australia: If you receive this document and you are domiciled in Australia, please note that it is intended to be issued for general information purposes only and distributed to a person who is a
wholesale client, as defined in the Corporations Act 2001 and Corporations Regulations 2001, by Toronto Dominion (South East Asia) Limited ("TDSEA"). TDSEA does not hold itself out to be providing
financial advice in these circumstances. TD Securities is a trademark and represents certain investment dealing and advisory activities of The Toronto-Dominion Bank and its subsidiaries, including
TDSEA. The Toronto-Dominion Bank is not an authorized deposit-taking or financial services institution in Australia. TDSEA is a holder of an Australian Financial Services License (528885) and is
regulated in Australia by the Australian Securities and Investments Commission.
Canada: Canadian clients wishing to effect transactions in any security discussed herein should do so through a qualified salesperson of TD Securities or TD Securities Inc. TD Securities Inc. is a
member of the Canadian Investor Protection Fund.
China, India and South Korea: Insofar as the document is received by any persons in the People's Republic of China (“PRC”), India and South Korea, it is intended only to be issued to persons
who have the relevant qualifications to engage in the investment activity mentioned in this document. The recipient is responsible for obtaining all relevant government regulatory approvals/licenses
themselves, and represents and warrants to TD Bank that the recipient's investments in those securities do not violate any law or regulation, including, but not limited to, any relevant foreign exchange
regulations and/or overseas investment regulations. The Toronto-Dominion Bank has a representative office in Shanghai, Mumbai and Seoul which should be contacted for any general enquiry related
to The Toronto-Dominion Bank or its business. However, neither any of the Toronto-Dominion Bank offshore branches/subsidiaries nor its representative offices are permitted to conduct business within
the borders of the PRC, India and South Korea. In locations in Asia where the Bank does not hold licenses to conduct business in financial services, it is not our intention to, and the information contained
in this document should not be construed as, conducting any regulated financial activity, including dealing in, or the provision of advice in relation to, any regulated instrument or product. This publication
is for general information only, without addressing any particular needs of any individual or entity, and should not be relied upon without obtaining specific advice in the context of specific circumstances.
Hong Kong SAR (China): This document, which is intended to be issued in Hong Kong SAR (China) ("Hong Kong") only to Professional Investors within the meaning of the Securities and Futures
Ordinance (the "SFO") and the Securities and Futures (Professional Investor) Rules made under the SFO, has been distributed through Toronto-Dominion Bank, Hong Kong Branch, which is regulated
by the Hong Kong Monetary Authority and the Securities and Futures Commission.
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(“QFI”) only under a relevant exemption to the Financial Instruments and Exchange Act.

If you have received this document from TD Securities (Japan) Co., Ltd., it is being provided only to institutional investors. TD Securities (Japan) Co., Ltd. is regulated by the Financial Services Agency
of Japan and is distributing this document in Japan as a Type 1 Financial Instruments Business Operator registered with the Kanto Local Finance Bureau under registration number, Kinsho 2992,
and a member of Japan Securities Dealers Association.
New Zealand: The Toronto-Dominion Bank is not a “registered bank” in New Zealand under the Reserve Bank Act 1989.
Singapore: This report is distributed in Singapore by The Toronto-Dominion Bank, Singapore Branch, and recipients in Singapore of this report are to contact The Toronto-Dominion Bank, Singapore
Branch in respect of any matters arising from, or in connection with, this report. The Toronto-Dominion Bank, Singapore Branch is regulated by the Monetary Authority of Singapore. Where this report
is issued or promulgated in Singapore, it is only intended for distribution to a person who is an accredited investor, expert investor or institutional investor as defined in the Securities and Futures Act
(Cap. 289) or the Securities and Futures (Prescribed Specific Classes of Investors) Regulations 2005 issued by the Monetary Authority of Singapore.
United Kingdom and Europe: The Toronto-Dominion Bank and TD Bank Europe Limited are regulated for investment business conducted in the UK by the UK Financial Conduct Authority. TD Global
Finance unlimited company is regulated for investment business conducted in Ireland by the Central Bank of Ireland. This document is prepared, issued or approved for issuance in the UK by the
Toronto-Dominion Bank, TDBEL and/or in Europe by TD Global Finance unlimited company in respect of investment business. Insofar as the document is issued in or to the United Kingdom, it is
intended only to be issued to persons who (i) are persons falling within Article 19(5) ("Investment professional") of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as
amended, the "Financial Promotion Order"), (ii) are persons falling within Article 49(2)(a) to (d) ("High net worth companies, unincorporated associations, etc.") of the Financial Promotion Order, or
(iii) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000) in connection with the issue
or sale of any securities may otherwise lawfully be communicated or caused to be communicated. Insofar as the document is issued in or to the European Union, it is intended only to be issued to
persons categorised as 'Per Se Professional' or 'Eligible Counterparties' as defined in S.I. No 375 of 2017, European Union (Markets in Financial Instruments) Regulations 2017, Schedule 2. Clients
in the United Kingdom wishing to effect transactions in any security discussed herein should do so through a qualified salesperson of TD Bank Europe Limited. European clients wishing to effect
transactions in any security discussed herein should do so through a qualified salesperson of TD Global Finance unlimited company. Article 20 Market Abuse Regulation 596/2014 ("MAR") requires
market participants who produce or disseminate Investment Recommendations or other information recommending or suggesting an investment strategy to take reasonable care that such information
is objectively presented, and to disclose their interests or indicate conflicts of interest.
In accordance with the MAR requirements, see the Investment Recommendations Disclaimer for relevant information in relation to The Toronto-Dominion Bank – London Branch, TDBEL and TD
Global Finance unlimited company. https://www.tdsecurities.com/tds/document/MAR-IR-Disclaimer
United States: U.S. clients wishing to effect transactions in any security discussed herein must do so through a registered representative of TD Securities (USA) LLC.
TD Securities is a trademark of TD Bank and represents TD Securities Inc., TD Securities (USA) LLC and TD Securities Limited and certain investment and corporate banking activities of TD Bank and its
subsidiaries. TD Cowen is a division of TD Securities and is the name under which Cowen and Company, LLC and certain entities that fall under the brand TD Securities conduct certain of its businesses.
© Copyright 2023 The Toronto-Dominion Bank. All rights reserved.
Full disclosures for all companies covered by TD Securities can be viewed at https://portal.tdsecurities.com/alpha/important-disclosures

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