Canfor Q3 2026 Earnings Results & Report

Canfor EPS Results

• Actual EPS: -C$0.48
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A
• EPS Beat Rate: 2 of last 7 quarters

Canfor Revenue Results

• Actual Revenue: C$1.28 billion
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Canfor (TSE:CFP) Corp is a global leader in the manufacturing of high-value low-carbon forest products including dimension and specialty lumber, engineered wood products, pulp and paper, wood pellets and green energy. Proudly headquartered in Vancouver, British Columbia, Canfor Corp produces renewable products from sustainably managed forests, at more than 50 facilities across its diversified operating platform in Canada, the United States and Europe. Canfor Corp has a 77% stake in Vida AB, Sweden's largest privately owned sawmill company and also owns, approximately, a 54.8% interest in Canfor Pulp.

Canfor Q3 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Canfor’s lumber business generated CAD 108 million in adjusted EBITDA in Q3, bringing year-to-date adjusted EBITDA to CAD 280 million. Improved North American realizations and southern yellow pine shipments, along with European log-cost relief, supported results despite subdued markets.
• Positive Sentiment: The company’s U.S. lumber duty rate fell from 47.6% to 31% after the latest review, easing a significant cost pressure. Management does not expect a major rebound in Canadian exports to the U.S., as much of the capacity that exited is permanently closed.
• Positive Sentiment: Canfor completed the Iron Mountain sawmill rebuild and acquired PinkWood, which management says is meeting expectations and adds exposure to specialty products. The company also closed Northwood pulp and three sawmills, saying portfolio changes should support further cost improvements.
• Negative Sentiment: Management remains cautious on near-term demand amid affordability challenges and higher U.S. mortgage rates, with customers taking a more guarded view of late 2026 and 2027. European demand was mixed, and the company expects repair-and-remodel activity to remain broadly steady.
• Neutral Sentiment: Paper and pulp produced just CAD 2 million in adjusted EBITDA for the quarter, though that was CAD 14 million above the prior quarter. Canfor ended Q3 with about CAD 1.1 billion in available liquidity and plans to reduce capital spending from approximately CAD 210 million in 2026 to CAD 100 million in 2027.

Presentation

[Operator]

Good morning. My name is Riska, and I'll be your host today. Welcome to Canfor's third quarter analyst call. At this time, all lines have been placed on mute to prevent any background noise. During this call, Canfor's Chief Financial Officer will be referring to a slide presentation that is available in the Investor Relations section of the company's website. Also, the company would like to point out that this call will include forward-looking statements, so please refer to the press releases for the associated risks of such statements. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded.

[Operator]

I would now like to turn the meeting over to Susan Yurkovich, Canfor's President and Chief Executive Officer. Please go ahead, Susan.

[Susan Yurkovich, President and CEO at Canfor]

Thanks, Riska. Good morning, everyone. Thanks for joining Canfor's Q3 2026 results call. We're pleased to be taking this call from our Vida offices in Växjö, Sweden, and I'm joined today by Pat Elliott, our Canfor's Chief Financial Officer, also Stephen Mackie, Canfor's Chief Operating Officer, and Kevin Pankratz, our Senior Vice President of Sales and Marketing, who are available for questions after I'll make a few comments. Our lumber business generated solid EBITDA in the third quarter, supported by improved sales realizations, modest log cost reductions in Europe, and increased southern yellow pine shipments. While lumber markets conditions remain subdued, our underlying business continues to perform well, supported by the actions we've taken to reshape our asset base and improve the long-term competitiveness of our company over the last several years.

[Susan Yurkovich, President and CEO at Canfor]

As part of that work, we successfully completed the rebuild of our Iron Mountain sawmill in Arkansas in October and finalized our acquisition of PinkWood early in the third quarter, which strengthens our asset base in Western Canada and increased our exposure to higher-value specialty products. We've also continued to optimize our asset portfolio through the difficult but necessary closure of our Northwood pulp mill and the closure of three sawmills, including two here in Sweden. These actions have further strengthened our operating platform and will support additional cost improvements as we head into 2027, positioning us to generate strong returns as market conditions recover. While we continue to be impacted by the punitive duties and tariffs, we have recently had a reduction in our duty rate from 47.6% to 31% following the finalization of the period of review seven, which will also support our cost structure going forward.

[Susan Yurkovich, President and CEO at Canfor]

While we continue to be cautious about market conditions in the near term, given ongoing affordability challenges and economic uncertainty, our balance sheet remains strong, and we are encouraged by the progress we have made in strengthening our portfolio and improving our competitiveness of our operations. We believe the actions taken over the past several years have created a more resilient company that is well-positioned to capitalize on strong lumber fundamentals over the medium to longer term. With that, I will turn it over to Pat to provide an overview of our financial results.

[Pat Elliott, CFO at Canfor]

Thanks, Susan, and good morning, everyone. In my comments, I will speak to our third quarter financial highlights, a summary of which is included in our overview slide presentation, as always, located in the Investor Relations section on our website. Our lumber business generated Adjusted EBITDA of CAD 108 million in the quarter. These results have been adjusted to exclude one-time items totaling CAD 36 million, comprised of restructuring and impairment charges, net of a recovery of a previously recorded inventory write-down. Our European lumber business generated Adjusted EBITDA of CAD 20 million in the quarter, with log cost relief and improved pricing supporting earnings, despite the annual scheduled downtime in July. In North America, improved lumber sales realizations and stronger southern yellow pine shipments supported another quarter of solid earnings.

[Pat Elliott, CFO at Canfor]

Despite relatively muted lumber demand through 2026, our business has generated adjusted EBITDA of CAD 280 million year to date, highlighting the value of the investments and portfolio optimization actions undertaken over the last several years. Our paper and pulp business generated adjusted EBITDA of CAD 2 million in the third quarter, CAD 14 million higher than the prior quarter, reflecting the benefit of increased production and continued strong performance in our paper business, which has generated CAD 26 million of EBITDA to date in 2026. These results have been adjusted to exclude one-time items totaling CAD 38 million, which include impairment charges and restructuring costs associated with the announced closure of our Northwood pulp mill, net of a recovery of a previously recorded inventory write-down.

[Pat Elliott, CFO at Canfor]

Turning to our balance sheet, Canfor ended the quarter with available liquidity of approximately CAD 1.1 billion and net debt, excluding the duty loan, of approximately CAD 364 million. Available liquidity decreased by approximately CAD 70 million in the third quarter, following our acquisition of PinkWood and capital spend associated with our investment at our Iron Mountain sawmill in Arkansas, as Susan previously mentioned. We anticipate capital spending of approximately CAD 210 million in 2026, including approximately CAD 40 million for our pulp business. Looking ahead, we currently anticipate capital spend of CAD 100 million in 2027, reflecting the completion of our major strategic investment program and a transition to a lower level of sustaining capital. And with that, we are now ready to take questions from analysts.

[Operator]

Thank you. At this time, we will conduct the question-and-answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Nikolai Goroupitch of CIBC Capital Markets. Your line is now open.

[Nikolai Goroupitch, Analyst at CIBC Capital Markets]

Hi, good morning. You described the repair and remodel activity as broadly steady in Q3, but with higher mortgage rates, how are you seeing R&R demand hold up in Q4 and going forward?

[Kevin Pankratz, SVP of Sales and Marketing at Canfor]

Yeah. Good morning, Nikolai. Yes, it has been steady, and against our forecast here, we pretty much in line with expectations. Year over year, I would say within 3%-5%, and we expect that to continue for the balance of the year.

[Nikolai Goroupitch, Analyst at CIBC Capital Markets]

Okay, I see. Thanks. With European log costs easing in Q3, can you give us an update on what is behind the decline there and maybe your expectations going forward?

[Pat Elliott, CFO at Canfor]

Yeah. Thanks, Nikolai. I mean, I think we've talked about for the last couple of quarters that log costs in Europe had really run higher, and we've actually seen quite a number of reductions in capacity, either permanent or temporary reduction in hours, and I think also the summer shuts in July are helpful, and that log cost has started to trend down. I think it's flattening out now. Our expectation is for the remainder of the year, we'll stay about where we are now, but we've definitely seen some good relief in the last couple of quarters.

[Nikolai Goroupitch, Analyst at CIBC Capital Markets]

Okay, got it. Thanks. I'll turn it over.

[Operator]

One moment for our next question. Our next question comes from the line of Sean Steuart of TD Cowen. Your line is now open.

[Sean Steuart, Analyst at TD Cowen]

Thanks. Good afternoon, I guess, everyone. Pat, you buried the lead with the CapEx guide for next year, which I guess is bare maintenance. I guess broader thoughts on holding it at that level. You've got liquidity here. Should we read this as the modernization plans you can roll out, you have rolled out, you'll wait for clarity on demand before toggling that back up? Do you have flexibility to increase that next year if markets perform better than you're currently anticipating? I guess broader context on that low level next year for the spend.

[Pat Elliott, CFO at Canfor]

Sure, Sean. We thought we'd sneak it by you, but I guess not. Yeah, I mean, obviously, it's a low number, but at the same time, we spent a lot of capital in the last five years, and we're really happy with the fleet that we have. I think that if you ask our operators, Are there opportunities? Of course, there are. But I think it's prudent for us in a market where we're cautious about 2027. We'd like to be more optimistic, but at least with the finance hat, we're cautious. We can run at CAD 100 million next year. Is that a number we're going to stay at forever? No, it's definitely going to go up from there, but I think you can anticipate that our maintenance of business capital spending is going to be lower.

[Pat Elliott, CFO at Canfor]

We've got less operations, and we've got better operations, and that's one of the benefits of that.

[Sean Steuart, Analyst at TD Cowen]

Okay. Second question, just on Europe in general, is a strong contribution better than we expected given the seasonal volume constraints, and you mentioned the log cost relief there. I guess it looks like there's a lot of moving pieces, and I'm looking at just the simple math of your European sales versus volumes. It looks like your price realizations were down substantially quarter-over-quarter. Can you give us some context on mix and maybe around some of the closures you've had there and how it's changed things? But I guess the resilience of overall margin profile there and changes you've had in mix that have maybe contributed to some of the volatility in the price realizations.

[Kevin Pankratz, SVP of Sales and Marketing at Canfor]

Sure. Sean, I'll take a stab at that there. So, within the U.K. markets, they do serve quite a diverse group of markets. In fact, we were just with them today, and they serve over 57 different countries, not all equally, of course. I think the Scandinavian market actually performed very well for the group. I think Central Europe struggled a little bit more just with the demand and economic dynamics, and probably the other market that's fairly big for a lot of the European producers is the U.K. market that struggled with some of the similar headwinds that we experienced in North America. So, a bit of a diverse mix there, but that's probably the color I can give you right now.

[Sean Steuart, Analyst at TD Cowen]

Okay. Thanks for that, Kevin. That's all I have for now. Thanks, everyone.

[Operator]

One moment for our next question. Our next question comes from the line of Ben Isaacson of Scotia. Your line is now open.

[Ben Isaacson, Analyst at Scotia]

Thank you very much. Susan, can you reflect on the decline of Canadian lumber exports into the U.S.? Do you expect volume to pick up with lower duties, or is the supply now gone? And for your Canadian production, are you happy with the balance between what stays in Canada and what moves south of the border?

[Susan Yurkovich, President and CEO at Canfor]

Yeah. Hey, again. Well, for sure, we've seen a decline in product moving over the border for, obviously, B.C., the cut has come down substantially, and of course, we've closed a number of assets, so that's been a story for us, but also for other companies. And of course, we've faced a very heavy duty environment, which has constrained the ability of product to go across the border. Duties are easing up a little bit. Do I think there'll be a mass supply come back on? No, because the supply that has come out is permanently out, and so I don't expect to see a massive uptick.

[Ben Isaacson, Analyst at Scotia]

Thank you for that. My second question is, can you talk about the puts and takes of a mild winter? I presume it's better in the southern U.S. and not as helpful in B.C. Is that right?

[Stephen Mackie, COO at Canfor]

Hey, Ben, it's Stephen. Yeah, look, a mild winter has its pros and cons, as you note. Mills typically run a little bit better if we have a mild winter and we're not sort of fighting through extreme cold temperatures or lots of heavy snow load conditions. But there are some challenges that can be presented along with that in terms of fiber supply and availability, accessing all the areas that we need to get enough fiber to support our operations through the winter. We're running lean inventories, but we're anticipating, we're doing well on log supply right now, and we're not anticipating any real shortages through the winter.

[Ben Isaacson, Analyst at Scotia]

Great, thanks. Just my last one, if I may. If energy prices were to normalize, would you expect the increase that you have faced in costs all to normalize, or would it be about 50/50 in terms of what's sticky and what can go back down in a more normal energy price environment?

[Pat Elliott, CFO at Canfor]

Well, Ben, what we find is that costs go up quickly and they come down slowly. I mean, I think you're probably right. It will take longer to come down, Ben. I mean, the general uncertainty in the market, if there was a clear if the Iran situation was settled and it was clear that it was settled, then I think we'd see it come down. But in the absence of that, I think you're going to see a continued sort of conservatism of those that are charging us for fuel and fuel surcharges, and they'll stay on for longer than we'd like.

[Ben Isaacson, Analyst at Scotia]

Okay. Thanks so much. Appreciate it.

[Susan Yurkovich, President and CEO at Canfor]

Thanks, Ben.

[Operator]

One moment for our next question. Our next question comes on the line of Matthew McKellar of RBC Capital Markets. Your line is now open.

[Matthew McKellar, Analyst at RBC Capital Markets]

Good morning. Thank you for taking my questions. How would you compare sentiment around lumber demand in North America and Europe, and maybe how that has evolved over the past month or two? Would you expect tight natural gas markets in Europe to have any effects on your business, maybe even indirectly as it relates to the biofuels market and Vida Energy? Thank you.

[Kevin Pankratz, SVP of Sales and Marketing at Canfor]

Sure, I'll take the demand question there, Matthew. In North America, I would say that the markets were somewhat balanced in supply and demand for much of Q3, which I think helped keep prices somewhat elevated, especially on the SPF side. I do think that in the last month or so with the rise of the 30-year U.S. rate of 7.4, whatever, that was quite elevated in a relatively short period of time that I think has really tempered the expectations on demand. We sure heard that from our major customers in the U.S. as that being a bit of a governor and more of a cautious approach going into the balance of the year and into 2027, versus maybe the setup that we had last year.

[Pat Elliott, CFO at Canfor]

Matthew, on the natural gas question, I think the residual opportunity in Europe just generally tends to be better than we see in North America, and I think just this continues to reinforce that opportunity. It's hard to say. I don't really have a prediction on the natural gas market other than to say that I think anything more natural gas type benefits Vida.

[Matthew McKellar, Analyst at RBC Capital Markets]

Helpful. Thank you. Just second for me, almost a full quarter of PinkWood in the portfolio. How did that asset perform? What did the financial contribution look like? Any new observations around the assets at this point? Thank you.

[Stephen Mackie, COO at Canfor]

Hey, Matt. It's Stephen. Yeah, look, we're really pleased with the progress that we're making with PinkWood. Really happy with the team. They've been a great group of people that know their business and know it well, and they run a good business. That's part of the reason it was attractive to us. We're working through integration within Canfor of the PinkWood operation. Progressively getting closer to the business and finding opportunities to enhance the vertical integration and capture more value. I don't think we're going to disclose a specific contribution of that operation and call that out, but we're pleased with it, and it's meeting our expectations.

[Matthew McKellar, Analyst at RBC Capital Markets]

Okay. Thanks very much. I'll pass it back.

[Operator]

As a reminder, to ask a question, please press star one one on your telephone keypad and wait for your name to be announced. Our next question comes from Roshni Athaide of BMO Capital Markets. Your line is now open.

[Roshni Athaide, Analyst at BMO Capital Markets]

Hi. Good morning. Thank you for taking my questions. I just want to maybe start off with the PinkWood acquisition. You said it's going well. Just wanted to still ask, is there any impact from the new tariff rounds that were announced recently, or is PinkWood safe from that? Just wondering if you could talk a little bit about that.

[Stephen Mackie, COO at Canfor]

Yeah, sure, Roshni. It's Stephen here again. Yeah, no impact on the recently announced tariffs or any of the changes to those tariffs currently at PinkWood. I mean, the tariff environment continues to change on us frequently, so I guess we don't know whether we're protected forever there, but currently not experiencing any issues.

[Roshni Athaide, Analyst at BMO Capital Markets]

Okay, thanks. In the U.S. South especially, I know you have your own trucking fleet, but with everything going on with freight, transportation, higher fuel costs, what sort of impact are you seeing there now versus a few months ago when everything started with the Middle East conflict? How have you been able to mitigate more of the risk?

[Stephen Mackie, COO at Canfor]

Hi, Roshni. It's Stephen. We are experiencing, like everyone, our trucking business is experiencing rising costs of diesel and fuel, so energy costs are pushing costs up. We are largely serving our own operations with our fleet there, and we find lots of benefit in terms of doing that. We have a lot of influence over how that cost structure flows through our business and how it impacts us. But I think we're seeing generally that fuel costs, as Pat noted earlier, are impacting the industry broadly, and it's also impacting trucking availability with some trucks getting parked as owner-operators, independents, maybe having a total capacity impact. I don't know, Kevin, if you want to add anything.

[Kevin Pankratz, SVP of Sales and Marketing at Canfor]

The only thing I would add that it's also allowing us to leverage rail as an option, and for facilities that have that rail siding availability, that's proven to help offset some of that risk.

[Roshni Athaide, Analyst at BMO Capital Markets]

Okay, thank you. Just last one for me. I know you've talked about 2027 CapEx being lower. I think last time you said maybe it was 20%-25% lower. Is there anything more you can tell us going into next year with Northwood pulp mill shutting down by the end of Q4, if you should be kind of thinking that it should be even maybe greater than a 20%-25% reduction next year?

[Pat Elliott, CFO at Canfor]

Yeah, Roshni, our target for next year is CAD 100 million.

[Roshni Athaide, Analyst at BMO Capital Markets]

Okay, thank you.

[Pat Elliott, CFO at Canfor]

Yeah.

[Operator]

At this time, I am showing no further questions. I will now turn the call back to Susan Yurkovich for any closing comments. Please go ahead, Susan.

[Susan Yurkovich, President and CEO at Canfor]

Thanks very much, operator, and thanks everyone for joining us, and we'll see you next quarter.

[Operator]

Ladies and gentlemen, this concludes today's conference call. Thank you very much for your participation. You may now disconnect.

Participants

Executives

• Susan Yurkovich, President and CEO
• Pat Elliott, CFO
• Kevin Pankratz, SVP of Sales and Marketing
• Stephen Mackie, COO

Analysts

• Nikolai Goroupitch, Analyst at CIBC Capital Markets
• Sean Steuart, Analyst at TD Cowen
• Ben Isaacson, Analyst at Scotia
• Matthew McKellar, Analyst at RBC Capital Markets
• Roshni Athaide, Analyst at BMO Capital Markets