Norbord, Inc. (NYSE:OSB) Q4 2018 Earnings Conference Call - Final Transcript
Feb 01, 2019 • 11:00 am ET
Good day everyone and welcome to the Norbord Incorporation Fourth Quarter and Year Ending Earnings Conference Call. As a reminder, today's call is being recorded and webcast on Norbord's website at www.norbord.com.
Norbord's discussion today may include certain projections and forward-looking statements regarding Norbord's business, future actions and expected results. These statements are subject to known and unknown risks, and future results may differ materially. For further information on known risks, please see the caution regarding forward-looking information statement on Norbord's January 31st, 2019 Annual Information Form and the cautionary statement contained in the Forward-Looking Statements section of Norbord's Management's Discussion and Analysis dated January 31st, 2019.
And I'd now like to turn our call over to Peter Wijnbergen, President and Chief Executive Officer. Please go ahead, sir.
Peter C. Wijnbergen
Thank you, Ashley, and good morning, everyone. Welcome to our Q4 and year end 2018 conference call. I'm joined today by Robin Lampard, our CFO; and Heather Colpitts, our Senior Manager of Corporate Affairs. I'll comment briefly on 2018 and the markets, then Robin will review the financials before we share our outlook for 2019 and take your questions.
2018 was the best financial year in Norbord's history. We delivered record adjusted EBITDA of $724 million and adjusted earnings of $4.74 per share. Our mills performed well, with production volume up 4% and seven of our mills setting annual production records.
I'm pleased that our employees continue to work safely, despite the distraction of capital projects. But of course, we are never satisfied until we achieve our goal of zero injuries.
The exceptional operating cash flow we generated allowed us to maintain a strong balance sheet, even as we reinvested more than $200 million in our mills and returned over $500 million in cash to our shareholders through a combination of dividends and share buybacks. Our European business had an excellent year, more than doubling its adjusted EBITDA contribution to $86 million, as robust demand growth in our key markets supported high panel prices.
OSB is still in the high-growth stage in Europe with substitution against imported plywood driving double-digit demand growth in our core markets. The new finishing end at our Inverness OSB mill is now complete and will unlock the capacity of the new press, and we expect to make step change in the -- a step change in production volume over the next two years.
To ensure we can continue to support our customers' growth beyond that, our Board has now approved a $46 million next phase project to add a second stranding and drying line at Inverness. The new plant was predisposed for the second phase, that will add an additional 225 million square feet of capacity at a cost of about $200 per thousand, less than half that of greenfield.
Our North American business also had an excellent year, delivering $652 million of adjusted EBITDA. Our shipment volume increased 7% in a market with benchmark OSB prices that averaged $351 for the year, $100 or so above the