West Fraser Timber Q2 2025 Earnings Report

West Fraser Timber EPS Results

• Actual EPS: -$0.38
• Consensus EPS: $0.36
• Beat/Miss: Missed by -$0.74
• One Year Ago EPS: N/A

West Fraser Timber Revenue Results

• Actual Revenue: $1.53 billion
• Expected Revenue: $1.61 billion
• Beat/Miss: Missed by -$82.63 million
• YoY Revenue Growth: N/A

West Fraser Timber Announcement Details

• Quarter: Q2 2025
• Date: 7/23/2025
• Time: After Market Closes
• Conference Call Date: Thursday, July 24, 2025
• Conference Call Time: 11:30AM ET

West Fraser Timber (NYSE:WFG) Co. Ltd., a diversified wood products company, engages in manufacturing, selling, marketing, and distributing lumber, engineered wood products, pulp, newsprint, wood chips, and other residuals and renewable energy. It offers spruce-pine-fir, douglas fir-larch, hem-fir, and southern yellow pine lumber, treated wood products, medium density fiberboard panels and plywood, oriented strand board, and laminated veneer lumber wood products, as well as particleboards. The company also provides northern bleached softwood Kraft pulp and bleached chemical thermo-mechanical pulp used to produce various paper products, including printing and writing papers, paperboard products, tissue and towel products, and a variety of other paper grades. Further, it offers bioproducts, including bioenergy and biomaterial. Its products are used in home construction, repair and remodeling, papers, tissue, and box materials, and industrial applications. The company sells its products to major retail chains, contractor supply yards, and wholesalers, as well as industrial customers for further processing or as components for other products in Canada, the United States, the United Kingdom, Europe, and internationally. West Fraser Timber Co. Ltd. was founded in 1955 and is headquartered in Vancouver, Canada.

West Fraser Timber Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: West Fraser generated $84 million of adjusted EBITDA in Q2 2025, equating to a 6% margin despite a cyclical downturn.
• Negative Sentiment: Lumber and North American OSB segments saw sequential EBITDA declines (lumber: $15 M vs. $66 M; OSB: $68 M vs. $125 M) due to lower pricing and inventory valuation adjustments.
• Positive Sentiment: The balance sheet remains strong with $1.7 billion of available liquidity, a net cash position of $310 million, and an extended $1 billion credit facility, while deploying $60 million to share buybacks and dividends.
• Negative Sentiment: 2025 shipment guidance for SPF, SYP, and North American OSB was revised downward amid ongoing U.S. housing affordability challenges and subdued repair/remodeling demand.
• Negative Sentiment: Preliminary combined CVD and ADD rates of 26.05% could result in an estimated $65 million pre-interest expense if confirmed, increasing export duties payable.

Presentation

[Operator]

Good morning, ladies and gentlemen, and welcome to West Fraser's Second Quarter twenty twenty five Results Conference Call. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. During this conference call, West representatives will be making certain statements about West Fraser's future financial and operational performance, business outlook, and capital plans. These statements may constitute forward looking information or forward looking statements within the meaning of Canadian and United States securities laws.

[Operator]

Such statements involve certain risks, uncertainties, and assumptions, which may cause West Fraser's actual or future results and performance to be materially different from those expressed or implied in these statements. Additional information about these risk factors and assumptions is included both in the accompanying webcast presentation and in our 2024 annual MD and A and annual information form as updated in our quarterly MD and A, which can be accessed on Russ Fraser's website or through Cedar Plus for Canadian investors and EDGAR for United States Investors. I would now like to turn the conference call over to Sean McLaren, President and Chief Executive Officer. Please go ahead.

[Sean McLaren, President, CEO & Director at West Fraser Timber]

Thank you, Jenny. Good morning, everyone, and thank you for joining our second quarter twenty twenty five earnings call. I am Sean McLaren, President and CEO of West Fraser. And joining me on the call today are Chris Vorostik, Senior Vice President and Chief Financial Officer Matt Tobin, Senior Vice President of Sales and Marketing and other members of our leadership team. On the earnings call this morning, I will begin with a brief overview of West Fraser's Q2 twenty twenty five financial results and then pass the call to Chris for additional comments before I share some thoughts on our outlook and offer concluding remarks.

[Sean McLaren, President, CEO & Director at West Fraser Timber]

West Fraser generated $84,000,000 of adjusted EBITDA in the second quarter of twenty twenty five, representing an approximate 6% margin as we continue to operate within a cyclical downturn. After several months of relatively stable homebuilding markets, new home construction has more recently taken a step lower with annualized U. S. Housing starts averaging just 1,320,000 units on a seasonally adjusted basis in the second quarter as relatively elevated mortgage and interest rates have continued to present headwinds to U. S.

[Sean McLaren, President, CEO & Director at West Fraser Timber]

Housing demand and affordability. Repair and remodeling demand has also appeared to be impacted by these broader macro factors remaining somewhat subdued again this quarter. As an additional consideration, we continue to deal with the shifting landscape of tariffs and their possible inflationary effects that have the potential to moderate future demand for our wood building products. We'll continue to watch these developments closely. These factors notwithstanding, our balance sheet continues to demonstrate strength as we exited Q2 with nearly $1,700,000,000 of available liquidity and a strong cash position net of debts.

[Sean McLaren, President, CEO & Director at West Fraser Timber]

A strong balance sheet and liquidity profile, along with our investment grade rating, remain key elements of our capital allocation strategy, which allow us to invest in our business counter cyclically and take advantage of growth opportunities if and when they arise. With that brief overview, I'll now turn the call to Chris for additional detail and comments.

[Chris Virostek, SVP - Finance & CFO at West Fraser Timber]

Thank you, Sean. And a reminder that we report in U. S. Dollars and all my references are to U. S.

[Chris Virostek, SVP - Finance & CFO at West Fraser Timber]

Dollar amounts unless otherwise indicated. The lumber segment posted adjusted EBITDA of $15,000,000 in the second quarter compared to $66,000,000 adjusted EBITDA in the first quarter, with the sequential change driven largely by lower pricing, higher fiber costs, and inventory valuation adjustments required due to the drop in lumber pricing close to the end of the quarter. Our North America EWP segment generated $68,000,000 of adjusted EBITDA in the second quarter, down from $125,000,000 in the first quarter, with a sequential change driven largely by lower OSB pricing and inventory valuation adjustments. The Pulp and Paper segment generated negative $1,000,000 of adjusted EBITDA in the second quarter, compared to $7,000,000 in the first quarter, with a sequential change again largely attributable to an inventory write down. Conversely, our European business posted $2,000,000 of adjusted EBITDA in the second quarter versus negative $2,000,000 in the first quarter with a sequential improvement linked to higher OSB pricing and shipments in UK and European markets.

[Chris Virostek, SVP - Finance & CFO at West Fraser Timber]

In terms of our overall Q2 results, lower product prices for our lumber and North American OSB products and inventory valuation adjustments were the largest contributing detractors as compared to Q1. While supply and demand experienced imbalances for a number of our key products in the second quarter, we were able to see some of the financial benefits of the portfolio optimization initiatives we've previously undertaken. This approach allowed us to shift select production from higher cost mills to a number of our lower cost operations, helping to mitigate some downside financial exposure. Cash flow from operations was $85,000,000 in the second quarter with our net cash balance at $310,000,000 up from $156,000,000 in the prior quarter. The relative increase in our net cash balance reflects the large seasonal release of working capital, offset in part by lower earnings, 78,000,000 of capital expenditures and nearly $60,000,000 of cash deployed towards share buybacks and dividends.

[Chris Virostek, SVP - Finance & CFO at West Fraser Timber]

Also pleased to note that in the second quarter, we successfully amended and extended our $1,000,000,000 credit facility and increased our and extended our $300,000,000 term loan up from the prior $200,000,000 In terms of guidance for 2025, both our lumber and North American OSB segments continue to experience softer than expected demand levels, owing to ongoing challenges with housing affordability and repair and remodeling markets. Such, we are modifying our 2025 shipments guidance ranges for SPF, SYP and North American OSB as per the updated ranges shown on Slide seven. Further to these guidance revisions, if and as the U. S. Administration's tariffs and other trade policies evolve, including the Section two thirty two investigation into U.

[Chris Virostek, SVP - Finance & CFO at West Fraser Timber]

S. Lumber imports, we will revisit the impact of any tariffs on our operations and consider whether further revisions to our 2025 guidance forecasts are required. Regarding softwood lumber duties, on 04/04/2025, the U. S. Department of Commerce released preliminary CVD rates for Administrative Review Period six, based on the year 2023.

[Chris Virostek, SVP - Finance & CFO at West Fraser Timber]

Our preliminary CVD for AR6 is 16.57%, combined with our preliminary ADD rate for AR6 of 9.48%, our preliminary combined rate for AR6 is 26.05%, which is the lowest preliminary rate in the Canadian industry. Final rates are expected to be released in the coming days and weeks. If the AR6 rates were to be confirmed, it would result in an expense of $65,000,000 before the impact of interest for the period of review covered by AR6, increasing export duties payable recorded on our balance sheet. With that financial overview, I will pass the call back to Sean.

[Sean McLaren, President, CEO & Director at West Fraser Timber]

Thank you, Chris. Looking forward, we continue to monitor shifting macroeconomic conditions that are being complicated by evolving trade policies. However, despite this backdrop, the company remains well positioned to navigate the dynamic business environment we face today. Our focus on controlling costs and optimizing our mill portfolio and production across different segments and geographies has been purposeful in an effort to create a more resilient company. You should expect us to continue to be flexible in our operating strategy, which will allow us to meet the needs of our customers while keeping our focus on a safe working environment for our employees as well as operationalizing the benefits of our strategic capital to drive down costs.

[Sean McLaren, President, CEO & Director at West Fraser Timber]

And we will do all this while sticking to a balanced capital allocation strategy that includes investment in positive NPV projects while maintaining sufficient liquidity to support the pursuit of opportunistic growth and return of capital to shareholders. Shifting now to tariffs. As the Prime Minister has indicated publicly, the government of Canada is presently engaged with The United States in discussions about bilateral trade broadly. West Fraser and the Canadian industry continue to work closely with our federal and provincial governments and are prepared to support these discussions when called upon as they relate to softwood lumber. As we've said before, we continue to monitor the Canada US trade situation closely and remain agile and ready to respond as needed.

[Sean McLaren, President, CEO & Director at West Fraser Timber]

Specifically, we remain policy current so that we can be well prepared for whatever outcomes unfold. Actively scenario plan in preparation for a broad range of trade related and macroeconomic outcomes. We continue to prepare our business operations and operational plans to be quickly aligned to various scenarios, which includes our long maintained variable operating strategy to optimize how we meet our customers' needs. And finally, we continue to prepare and engage with our employees, our communities, and our customers for what may lie ahead. While we are unable to provide any kind of certainty to our stakeholders, we believe it is important to be as transparent as possible and to commit to regular communications should events warrant.

[Sean McLaren, President, CEO & Director at West Fraser Timber]

In closing, at West Fraser, we aim to deliver strong financial results through the business cycle. We achieved this by leveraging our product and geographic diversity, low cost assets and the dedication of our people and culture rooted in cost discipline and a commitment to operate responsibly and sustainably. And we will be steadfast with this fundamental strategy even in a world with significant uncertainty. Although our near term outlook remains somewhat cloudy, given the broad implications of ongoing complexities in global trade, we are optimistic about the longer term prospects for our industry and for West Fraser. And we look forward to continue to build one of the world's leading sustainable building products companies.

[Sean McLaren, President, CEO & Director at West Fraser Timber]

Thank you. And with that, we'll turn the call back to the operator for questions.

[Operator]

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the one and a touch tone phone. If you wish to cancel your request, please press the star followed by the two. And our first question is from Ben Isaacson from Scotiabank. Your line is now open.

[Ben Isaacson, Managing Director - Equity Research at Scotiabank]

Thank you very much and good morning everyone. Just two quick ones for you Sean and then one for Chris. Sean, what have you seen a pivot in the trend or maybe I'll ask a different way. What have you learned, if anything, about the substitutability between SPF and SYP over the past two or three quarters? Have you seen a shift in the price elasticity of demand?

[Sean McLaren, President, CEO & Director at West Fraser Timber]

Yes. Good morning, Ben. I'll make a few comments, then I'm going to ask Matt to fill in what I missed. I think as we've seen over the last number of years that the spreads between the products, the price spreads move around quite a bit. In a period of higher demand, they tend to close as people search for the products they need.

[Sean McLaren, President, CEO & Director at West Fraser Timber]

In periods of lower demand, like we've seen the last year, those spreads have separated. And they really become more supply demand driven within that species. So in the South, where you have more supply and less currently R and R demand, where new home building, which is more directed to SPF and, of course, lower supply in Western Canada, really hard to kind of predict exactly what's happening there, but we think that's driving some of the spreads. And there is substitution when products are not available. But when they're available and customers have a preference and they're willing to pay that difference, then that spread persists. Matt, would you have anything to add to that?

[Matt Tobin, SVP - Sales & Marketing at West Fraser Timber]

No. I think that's a good summary. And I'd say, like I say, it's really up to the customer preference as to which one of our products they're looking to apply to their end use.

[Ben Isaacson, Managing Director - Equity Research at Scotiabank]

Great. Thank you. And my second question for you, Sean, is the media has been talking a lot about a possible lumber export quota. What are your general views on this? And why was this frowned upon in the past?

[Sean McLaren, President, CEO & Director at West Fraser Timber]

Yeah. You know, you know, I'll make a few comments here, Ben. Again, you know, I think as you can imagine, with the complexity of the current trade discussions on many product fronts and all product fronts between Canada and The U. S, there's a lot of balls in the air. And, I think I think the industry has really been standing ready to support the government when the opportunity presents itself for that dialogue.

[Sean McLaren, President, CEO & Director at West Fraser Timber]

We and the government has been supportive and clear with us that softwood lumber will be part of those discussions. So as a result, I think all options are on the table for those discussions. And hard for us to speculate what that looks like, but we will be ready to support our government and the governments in those discussions as part of the broad industry coalition of what is best long term for the industry. And I think just as specific to West Fraser, we have a long history of dealing with different border measures in lumber, a long history of flexing our production in other products. And whatever that order measure is, we think we're well positioned with the assets we have, our cost position and finally, our integrated model, which allows us to optimize within that system.

[Sean McLaren, President, CEO & Director at West Fraser Timber]

That's probably all I would make on that question, Ben.

[Ben Isaacson, Managing Director - Equity Research at Scotiabank]

That's great. Thank you, Sean. And then just one for Chris. Chris, I'm not sure how comfortable you are talking about this, but can you just give a sense of magnitude of are you cash flow positive right now in the North American lumber business at where pricing is right now? And then the same question for the North American OSB business.

[Chris Virostek, SVP - Finance & CFO at West Fraser Timber]

Yes, I think we're going to steer clear of talking about any one particular segment or business relative to sort of day to day pricing trends. Think if you look at how the business has performed through what's been a pretty tough lumber cycle going on two years, the diversity of our products being in not only OSB, but the other panel products, which have been important contributors, the portfolio optimization work that we've done. We think we've built a pretty strong business here that can weather what comes at us here. And our countercyclical investing, we've been continuing to spend capital to lower costs. We've been flexing production.

[Chris Virostek, SVP - Finance & CFO at West Fraser Timber]

We were early in the process in terms of mill closures and removing high cost production. So the way I would look at that is, look, we've been at this for a long time. It's in our DNA to deal with the cycles that we have and to drive cash flow even in difficult markets. Obviously, there can reach points where it's very difficult from a pricing standpoint. But those are we're doing everything we can to make sure those are transitory and short lived.

[Chris Virostek, SVP - Finance & CFO at West Fraser Timber]

And I think our dedication to investing in the business and being durable with our capital allocation allows us pretty well to weather those short periods when those things can get dislocated.

[Ben Isaacson, Managing Director - Equity Research at Scotiabank]

That's really helpful. I'll pass it on. Thanks so much.

[Operator]

Thank you. And our next question is from Ketan Namtora from BMO Capital Markets. Your line is now open.

[Ketan Mamtora, Director - Building Products Equity Research at BMO Capital Markets]

Hi. Good morning, and thanks for taking my question. Sean, just coming back to Ben's earlier question on quota, is it fair to say then that West Fraser is open to having a a, you know, potential quota there. That were to be the case. Is is West Fraser open to that?

[Sean McLaren, President, CEO & Director at West Fraser Timber]

Yeah. Good morning, Keaton. You know, I think I think West Fraser, our position, along with the entire Canadian industry, is, as you can imagine in this moment, with with with so many trade issues between the two con between Canada and The US and lumber consistently, historically, being off to the side and being separate, including lumber in a broader trade deal is our focus and our priority in supporting supporting the Canadian government in those discussions. And I think to give the Canadian government the ability to be able to navigate through that, You know, I don't think there's been anything that the industry has taken off the table. And we are aligned with the industry in supporting the federal government in those negotiations and inclusion of lumber.

[Sean McLaren, President, CEO & Director at West Fraser Timber]

You have to see what all those details look like in the end, but that is our where we're at today, Keith.

[Ketan Mamtora, Director - Building Products Equity Research at BMO Capital Markets]

Got it. No, that's helpful. And then just one more, so far as trade is concerned. On section two thirty two investigation, do you all have any update, anything that you can, you know, share with us in terms of sort of timelines or any other information you've you've got and whether OSP is also included in that investigation.

[Sean McLaren, President, CEO & Director at West Fraser Timber]

You know, we really we really don't, Keaton. We don't have any additional insight into the timing, the the nature of it, what that might look like. This is really something that is, you know, is controlled completely by the US administration on their timing and as part of their overall thought process around around trade between various countries. And and as you, I'm sure, well aware, there is a number of two thirty two investigations, you know, currently underway, that affect a lot of products. So so we don't have any other insight, other than what you would have, reading publicly on February.

[Sean McLaren, President, CEO & Director at West Fraser Timber]

And just to reinforce, we think whatever happens, whatever whether it's lumber or OSB for a border measure, quality of our assets, our cost position, and our integrated model, we think we're we're able to compete whatever that looks like.

[Ketan Mamtora, Director - Building Products Equity Research at BMO Capital Markets]

Got it. No. That's that's helpful. And then maybe maybe, Chris, would you be able to share with us sort of operating rates in the second quarter for lumber and OSB?

[Chris Virostek, SVP - Finance & CFO at West Fraser Timber]

Yeah. I wouldn't have those necessarily, you know, to the decimal point off the top of my head. But I would say, we haven't really made substantive changes to our capacity, which is in the AIF. They're on an annual basis. I think what we published in February is the current state of our capacity.

[Chris Virostek, SVP - Finance & CFO at West Fraser Timber]

And so that capacity is pretty ratable over the four quarters. There's no big sort of seasonal changes there. So I think when you take a look at our production in Q2 relative to those annual capacity numbers there, that's your best guide as to what our utilization rate was in Q2. I mean, it's fair to say, particularly in U. S, in lumber, we're well below kind of the capacity that we would prefer to well below the utilization that we would prefer to run at because we've been very diligent and thorough in terms of managing our schedules, controlling inventory and meeting demand in in the marketplace.

[Ketan Mamtora, Director - Building Products Equity Research at BMO Capital Markets]

That's helpful. Just one last one from me, and I'll turn it over. In the ORC business, what indicators you talked about sort of having a flexible operating approach. What indicators that you all are looking at, whether it is demand, it is inventory or anything else that you would point us to in terms of sort of your approach to having that flexible operating schedule?

[Chris Virostek, SVP - Finance & CFO at West Fraser Timber]

Yes, I mean, I think we're looking at all those factors. As you know, the biggest driver of OSB consumption is new housing construction. So we monitor the trends and developments in the new housing market pretty closely. We look at where that's trending in terms of starts and permits, both globally and across North America, but also regionally in line with kind of where our productive capacity is and how that's shaking out. Our inventory levels in that we can hold in OSB are pretty limited, because it has to be stored inside.

[Chris Virostek, SVP - Finance & CFO at West Fraser Timber]

So we don't really build a lot of inventory and then sort of draw it down. So we have to react pretty quick in OSB and we tend to do that. And we look at all those sort of macro factors principally around interest rate or housing and housing construction as indicators of how we need to be thinking about the ability to flex over the near term and medium term.

[Ketan Mamtora, Director - Building Products Equity Research at BMO Capital Markets]

Thank you very much. I'll jump back in the queue. Good luck.

[Chris Virostek, SVP - Finance & CFO at West Fraser Timber]

Thanks.

[Sean McLaren, President, CEO & Director at West Fraser Timber]

Thank you.

[Operator]

Thank you. And our next question is from Hamir Patel from CIBC Capital Markets. Your line is now open.

[Hamir Patel, Executive Director - Equity Research at CIBC Capital Markets]

Hi. Good morning. Sean, the European business has been kinda hovering around breakeven for the past two years. What do you need to do to fix that operation? And at what point would you consider putting that business up for sale and kind of focusing on what you do best in North America?

[Sean McLaren, President, CEO & Director at West Fraser Timber]

Yes. Morning, Hamir. I would say Europe is largely the same challenges as North America from a macro perspective. Know, end use demand has been has been difficult for some time. Saying that, you know, our our assets are are well positioned.

[Sean McLaren, President, CEO & Director at West Fraser Timber]

You know, they they operate well. We have an excellent team over there. We've got kind of good strong relationships with our customers. We think we're really well positioned as Europe comes back. Again, that is really, I guess, the unknown part.

[Sean McLaren, President, CEO & Director at West Fraser Timber]

Saying that, sequentially, we've seen some improvement in our OSB business over there, still modest, but moving in the right direction. In terms of your other question, I think we're very pleased to have Europe as part of West Fraser. You know, again, we we we have to wait and see on the macro for Europe, but good assets, good people, well positioned in the cost structure. Things will get better in Europe. And when they do, we're gonna be in a good spot to participate in that. So that's all I would say about Europe.

[Hamir Patel, Executive Director - Equity Research at CIBC Capital Markets]

Okay. Fair enough. Thanks, Sean. And I just want to follow-up on a potential quota framework for lumber. If we ever do end up with that as a solution, how would West Fraser like to see quotas allocated between the provinces?

[Hamir Patel, Executive Director - Equity Research at CIBC Capital Markets]

And then how would you like to see the provinces allocate quota to the companies?

[Sean McLaren, President, CEO & Director at West Fraser Timber]

You know, that's that's a very, detailed question there, Hamir. You know, I I'm really not gonna comment on on what any of those details are. What I would what could be or, you know, speculate on what that may or may not be. What I would say is that, you know, the federal government, the Canadian industry, good alignment on, on on being, you know, inclusion of lumber, inclusion of wood products, open to discussion around what the framework and dialogue would be. I think the most important part in the in the immediate term is inclusion of wood products, inclusion of lumber, and supporting the industry staying aligned and supporting our government and having open dialogues on what's best long term.

[Sean McLaren, President, CEO & Director at West Fraser Timber]

All those other details are hypothetical and really, we're just not in a position to comment on any of that.

[Hamir Patel, Executive Director - Equity Research at CIBC Capital Markets]

Fair enough. That's that's all I had. I'll I'll turn it over. Thanks.

[Sean McLaren, President, CEO & Director at West Fraser Timber]

Thanks, Sameer.

[Operator]

Thank you. And our next question is from Matthew McCallor from RBC Capital Markets. Your line is now open.

[Matt McKellar, Vice President at RBC Capital Markets]

Hi. Good morning. Thanks for taking my questions. First for me, just like to ask, do you get the sense that we're seeing any pre buying or inventory accumulation of SPF in The U. S. Ahead of those higher duty rates taking effect? And if not, I guess, when do you really expect that to start?

[Sean McLaren, President, CEO & Director at West Fraser Timber]

Morning, Matthew. I might turn this one over to Matt just to talk a little bit about current planning patterns.

[Matt Tobin, SVP - Sales & Marketing at West Fraser Timber]

Good morning. I would say, we haven't seen a noticeable change in customer purchasing patterns to date. And generally, I think in uncertain economic outlooks, we generally don't see an increase in purchasing patterns.

[Matt McKellar, Vice President at RBC Capital Markets]

Okay. And mean, do we need to see the final kind of results there for that accumulation start to occur? Or in your mind, are we likely to see some buying in the market just kind of ramp up here over the next couple of weeks? How are you thinking about how that plays out?

[Matt Tobin, SVP - Sales & Marketing at West Fraser Timber]

Think hard to speculate how our customers will react to the the new duties. But, you know, I would say they're really focused on on having enough inventory to meet meet their demand and and how to navigate the uncertainty ahead of them.

[Matt McKellar, Vice President at RBC Capital Markets]

Okay. Thanks. That's very helpful. I'll turn it back.

[Operator]

Thank you. Once again, please press star once if you wish to ask a question. And your next question is from Sean Stewart from TD Cowen. Your line is now open.

[Sean Steuart, Managing Director at TD Securities]

Thanks. Good morning, everyone. A couple of questions, Sean. I'll I'll ask one more on the the lumber trade stuff. I I guess I'm just curious on, you know, as this comes to a head seemingly in the short term and a lot of changes get made to potential terms in a short period of time, how is the federal government or the provinces corresponding directly with industry to get input along the way?

[Sean Steuart, Managing Director at TD Securities]

Are you guys being consulted constantly to provide input on potential structure? Or just more curious on the logistics of how the government involves industry in this.

[Sean McLaren, President, CEO & Director at West Fraser Timber]

Yes. Sean, I think, frankly, the past year, like a lengthy period of time, the industry has been collaborating. There's been a lot of discussion along the way with both federal and provincial governments. So awareness of the current situation, alignment with the industry and that open dialogue, all of that pre work has been done. And our, you know, our relationships, the industry's relationships are open, they're collaborative, and the lines of communication are in place, when the moment comes when if the moment comes for that discussion.

[Sean Steuart, Managing Director at TD Securities]

Okay. Thank you for that. And then a question for Chris. Optimization ongoing optimization of the Wood product portfolio in North America. This year will still be a busy CapEx year for you guys, but maybe less than we've seen the last few with Henderson wrapping up.

[Sean Steuart, Managing Director at TD Securities]

Can you give perspective on the pipeline of discretionary CapEx projects you guys have in the hopper? And any constraints on contractor labor equipment availability? I'm just trying to get a sense of how things could trend into 2026 and beyond.

[Chris Virostek, SVP - Finance & CFO at West Fraser Timber]

Yes. Thanks, Sean. I think as noted, we've had a lot of major projects underway here. And one of the things we've been proud of is our ability to position ourselves to invest counter cyclically to take the downtime to do these capital projects in a weak market is the best time to do them from our perspective and to make investments when possibly others aren't. It's beneficial from the standpoint of being able to get access contractors and equipment.

[Chris Virostek, SVP - Finance & CFO at West Fraser Timber]

I think anecdotally, we understand that contractor backlogs are shrinking, probably not unsurprising in the lumber environment that we've been in that there's just fewer projects going on. And there's a little bit better availability there on some front. But what I would say is this, right? Like as Sean mentioned, there's a ton of uncertainty out there right now. We have, I think, probably a lot of great projects in the pipeline that we could do over the next several years.

[Chris Virostek, SVP - Finance & CFO at West Fraser Timber]

Our focus in the near term is going to be on wrapping up the stuff that we have underway, operationalizing that, getting the benefits continuing to work the cost position down through operationalizing those projects. And then probably in all likelihood, seeking a little bit of greater clarity about the macro conditions and the trade environment before making major decisions on the next whatever those next round of projects would be for us. I think that's how I'd frame it up. Sean, I don't know if you want to add anything to that.

[Sean McLaren, President, CEO & Director at West Fraser Timber]

No. I think that was perfect, Chris. Thank you.

[Sean Steuart, Managing Director at TD Securities]

Maybe just one follow on. As we're in this extended trough for web product markets, Whether you guys are interested right now or not, can you speak to what the M and A opportunity set looks like for bull bonds as more potential sellers come into the market as this trough has extended here?

[Sean McLaren, President, CEO & Director at West Fraser Timber]

I can Yes, go ahead, Charlie. That would be great, Chris. Why don't you take that one, Chris? Yes,

[Chris Virostek, SVP - Finance & CFO at West Fraser Timber]

Sean, I think our track record in particular over the last several years has been that we're ready and able to be an acquirer of quality assets, should those quality assets come available. And we made fairly selective additions to the portfolio that in our view have made the portfolio better. I think tremendous amount of uncertainty out there right now in the marketplace. If that creates distress, does that create opportunities? That's a lot of speculation as to what that's going to mean.

[Chris Virostek, SVP - Finance & CFO at West Fraser Timber]

But what I would say is, we've got the financial capacity to grow. I think we've got the ability to execute when things happen. We've got a strong track record of integrating acquisitions, both large and small. We have the balance sheet to do things that make sense. But it's all going to be through a lens of quality of things where there's it makes us better very quickly or there's a very clear path to strong synergies and improvement of the franchise on an overall basis.

[Chris Virostek, SVP - Finance & CFO at West Fraser Timber]

We're not looking to buy assets just because they're available.

[Sean Steuart, Managing Director at TD Securities]

Got it.

[Sean Steuart, Managing Director at TD Securities]

Okay, that's all I have for now. Thank you very much. Thanks, Sean.

[Operator]

Thank you. There are no further questions at this time. Please proceed.

[Sean McLaren, President, CEO & Director at West Fraser Timber]

Thank you, Jenny. As always, Chris and I are available to respond to further questions as is Robert Winslow, our Director of Investor Relations and Corporate Development. Thank you for your participation today. Stay well, and we look forward to reporting on our progress next quarter.

[Operator]

Thanks, Mayu. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect your

Participants

Executives

• Sean McLaren, President, CEO & Director
• Chris Virostek, SVP - Finance & CFO
• Matt Tobin, SVP - Sales & Marketing

Analysts

• Ben Isaacson, Managing Director - Equity Research at Scotiabank
• Ketan Mamtora, Director - Building Products Equity Research at BMO Capital Markets
• Hamir Patel, Executive Director - Equity Research at CIBC Capital Markets
• Matt McKellar, Vice President at RBC Capital Markets
• Sean Steuart, Managing Director at TD Securities