INVESTOR PRESENTATION - PowerPoint Presentation

INVESTOR PRESENTATION Nine months ended September 2019 And post acquisition of Pacific Mutual Door Company (PMD) TSX: HDI www.hdidist.com

Dark Brown Charleston Oak Crystalite Rain Cloud Antique Oak Icy Mherge Oak Retro Baltimore

Forward Looking StatementCertain statements contained in this presentation, including all statements that are not historical facts, contain forward-looking statements and forward-looking information within the meaning of applicable securities laws. Forward-looking statements normally contain words like believe, expect, anticipate, plan, intend, continue, estimate, may, will, should and similar expressions. Such statements are not guarantees of future performance. They are based on management's expectations and assumptions regarding historical trends, current conditions and expected future developments, as well as other factors that we believe are appropriate in the circumstances. Management has based these statements on estimates and assumptions that they believed were reasonable when the statements were prepared. Actual results could be substantially different because of the risks and uncertainties associated with the Company's business. More information about the risks and uncertainties affecting the Company's business can be found in the "Risk Factors" section of our Annual Information Form dated March 14, 2019 which is available under the Company's profile at SEDAR (www.sedar.com). Although we have attempted to identify factors that would cause actual actions, events or results to differ materially from those disclosed in the forward-looking statements or information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Also, many of the factors are beyond the control of Hardwoods. Accordingly, readers should not place undue reliance on forward-looking statements or information. Hardwoods undertakes no obligation to reissue or update any forward-looking statements or information as a result of new information or events after the date hereof except as may be required by law. All forward-looking statements and information herein are qualified by this cautionary statement. 2 3

HDI is the #1 Distributor of Architectural Building Products in N.A. Import: Guararapes MDF: Commercial fixtures Domestic Supplier: Arauco TFL: Residential Use 4 Measured from December 31, 2014 to September 30, 2019 (2019 period on a trailing twelve month basis) Pro forma basis, includes estimated full year impact of acquisitions made in 2019 Outstanding track record of growth Five year average (1) annual sales growth 21% , and Adj. EPS growth of 12% Proven acquisitions strategy (2) 47 US locations acquired in past seven years $625 million of annual revenue added Highly fragmented industry HDI market share estimated at 10% Shareholder returns Dividend has been increased every year for the past seven years Share repurchase plan in place and being utilized Disciplined business model +50 year old business Experienced management team Low debt leverage No significant supplier/customer concentration

History of Growth and Diversification2 5 2010 2014 2018 Sales Mix by Market Sales Mix by Country Locations Customers 26 + 2,100 32 + 10,000 62 + 35,000 Residential Commercial Diversified USA Canada

Products Diversification6 Higher value decorative products, generally non-commoditized and subject to stable pricing Approximately 25% of the products are exclusive or semi-exclusive offerings Includes globally sourced, proprietary brands Chart is on a pro forma basis, includes estimated annual impact of acquisitions completed in 2019

Critical Role in the Value Chain 7 Manufacturers Approximately 1,000 Suppliers Worldwide No significant supplier concentration (largest less than 6% of purchases) Architects & Designers Residential Customers 50% Commercial Customers 40% Diversified 10% 66 Locations North American Sales Team 450 Strong Customer Base + 35,000 No customer concentration (largest less than 2% of sales)

Comprehensive North American Network Estimated N.A market share = 10% 8

FY 2019 – Summary Statistics9 HDI ($CAD) (millions) Q3 2019 Q3 2018 Chng Chng % Sales $292.5 $290.4 +$2.1 +0.7% US Organic ($USD) -$3.7 -1.9% US Acquisitions ($USD) +$3.1 +1.6% CAD Organic ($CAD) +$0.2 +0.6% Gross Profit $53.3 $51.6 $1.7 +3.3% Gross Profit % 18.2% 17.8% Operating Expenses $39.2 $38.4 $0.8 +2.2% Operating Expenses % 13.4% 13.2% Adjusted Profit $9.4 $9.0 +$0.4 +4.3% Adjusted diluted EPS $0.43 $0.42 +$0.01 +2.4% Cash from operating activities $25.5 $3.9 +$21.6 Less cash outflows for plant and equipment $1.1 $0.7 +$0.4 Free cash flow $24.4 $3.2 +$21.2

Track Record of Growing Sales with Stable Margins 8 Sales Growth % 21% 23% 25% 38% 31% 9% 5% Sales Growth % excluding acquisitions and FX translation impact 18% 10% 9% 5% 5% 6%-1% 10

“Adjusted Profit” and “Adjusted EPS” are non-IFRS and non-GAAP measures. See the Company’s Annual Report filed on SEDAR.com for a reconciliation of these measures to IFRS and GAAP measures. Accretive Growth For Shareholders 11 % Increase 100% 9% 52% 4% 15% 5% -14%

11 12 HDI’s Long Term Growth Strategy 2018 1. Market Growth 2. Organic Growth 3. Acquisitions 2023 $125 m +6% CAGR $150 m $175 m $1.1 $1.5 +$1.1 billion +$1.5 billion Anticipated market growth of 2% per year Strategic initiatives yielding an additional 2% - 4% per year Acquisitions targeting another 3% - 5% per year

13Per FMI Consulting; Construction Outlook Q3 2019 Report12 Approxiamately 50% of our sales end up in residential applications (including repair and remodel) Population growth / demographics suggest pent up demand Long-term mortgage rates near historic lows Supply of existing homes at an all time low Consistent demand for new projects Strong N.A economy Per National Association of Home Builders Residential Construction 13 1. US Construction Market, Capture Share Commercial Construction Prolonged period of below-average construction, potential for catch up growth Remodeling Activity

Wood Products Core competency of HDI Core products: Hardwood lumber, Hardwood Plywood Range of market share by brand, by location Optimize market share opportunity 14 2. Additional Market Share, Strategic Product Categories Decorative Surfaces and Composites High-growth product segment Design trends and market preferences changing at a rapid pace Under-represented from a market share perspective Opportunity to take advantage Decorative Surfaces Est. Market Share Wood Products Est. Market Share

47 U.S. locations acquired in the last 5 years, +$625MM in revenue added 15 3. Acquisitions, Capitalize on Significant Opportunity Significant market share available, highly fragmented industry Robust acquisitions pipeline, dedicated internal resources Attractive purchase multiples, accretive Acquisition Date Target Price Paid (US $) Annual Revenues at acquisition (US $) Optimization Plan Status and Highlights 2019 $34.5 M $58 M See next slide 2019 $3.6 M$12 MStrategic HR: Leverage HDI existing leadership in the region Financial strength: Provide liquidity Status: Ongoing 2018 $3.7 M $13 M Strategic HR: Acquire key salespeople Status: Complete 2017 $6.0 M $25 M Financial strength: Provide liquidity Strategic HR: Leverage HDI existing leadership in region Status: Complete 2017$0.6 M$5 MStrategic HR: Acquire key salespeople Status: Complete 2016 $107.0 M $282 M Supply chain: Consolidate vendors, rebates, product access Marketing: Coordinated approach, enhanced offering Products: Product differentiation, expertise added Specification: Add talent, contacts, consolidate teams Strategic HR: Significant addition of talent Technology: Consolidate operating systems, add functions Financial strength: Provide liquidity Status: Ongoing 2014 $15.0 M $30 M Supply chain: fill in product gaps, unique offering Status: Complete 2013 $2.8 M $4 M Supply chain: fill in product gaps, unique offering Status: Complete 2011 $13.5 M $40 M Supply chain: Leverage HDI import program, product access Strategic HR: Acquire talent Financial strength: Provide liquidity Status: Complete EAGLE PLYWOOD

15 3. Recent Acquisition – Pacific Mutual Door Company US$58 million in revenue, five locations Unique distribution model, highly profitable Focus on door & millwork product segment, compliments existing HDI offering Entry into significant and high-growth Tennessee market No significant overlap of customers, strategic fit with existing supplier base Financed through existing debt facilities Further expands pipeline of M&A targets Immediately accretive to shareholders

HDI supports brands in the market placeCompetitors generally will not have same support structure in place HDI opportunity (represented by the grey color in circles below) to optimize the platform Potential to build a sustainable competitive advantage, improving EBITDA margins over time Supply Chain OptimizationCollaborative Marketing Professional Sales and Product Training Specification sales channel Strategic HR Technology Solutions Financial Strength Profit Opportunity - Optimize the Platform Regional Competitor 16

Continued management of the balance sheetReturn cash to shareholders through dividends and share repurchases Sept 2019 FY 2018 Net Debt $84.5 $111.4 Adjusted EBITDA after rents (1)(2) $52.2 $56.3 Net Debt to Adjusted EBITDA after rents (1) 1.6 2.0 Unused debt facility $100.1$78.4 “Adjusted EBITDA after rents” and “Net Debt to Adjusted EBITDA rents” are Non-IFRS and Non GAAP measure. See the Company’s Annual Report and Second Quarter MD&A filed on SEDAR.com for a reconciliation of this measures to IFRS and GAAP measures September 2019 period is presented on a trailing twelve months basis. 17 Debt and Liquidity Profile Pursue value-added acquisitions Support anticipated organic growth in sales Priorities

Payout ratio is defined as dividends per share divided by adjusted profit per share.(measured as at December 31, 2018) Dividend yield defined as dividends per share divided by the stock price (stock price as at September 30, 2019) 18 Dividends Announced in November a 6% increase to the dividend Seven straight years with annual dividend increases Dividend yield (2) of approximately 2.5%

Sustainable and diversified business modelPositive multi-year outlook in key end marketsFragmented industry, significant acquisition opportunity exists Attractive conversion ratio of EBITDA to free cash flow(1)Strong balance sheet to enable growth and execute on initiativesLong term record of shareholder returns       19 Why HDI? Free cash flow defined as last twelve months operating cash flow, excluding changes in working capital, minus capital expenditures.