What Canfor (CFP) Said on Its Q3 Earnings Call

Key Points

• Canfor’s lumber business generated CAD 108 million in adjusted EBITDA in Q3 2026, with improved sales realizations, lower European log costs and stronger southern yellow pine shipments helping offset subdued markets.
• Management remains cautious about demand amid affordability pressures, economic uncertainty and higher U.S. mortgage rates. Canfor does not expect lower U.S. duties—cut to 31% from 47.6%—to trigger a major rebound in Canadian lumber exports, as mill closures have permanently reduced supply.
• Canfor expects capital spending to fall from about CAD 210 million in 2026 to CAD 100 million in 2027 as its major investment program winds down. It ended the quarter with approximately CAD 1.1 billion in available liquidity and CAD 364 million in net debt, excluding the duty loan.

Canfor TSE: CFP reported CAD 108 million in adjusted EBITDA from its lumber business in the third quarter of 2026, as improved sales realizations, lower European log costs and stronger southern yellow pine shipments helped offset subdued market conditions.

President and CEO Susan Yurkovich said the company remains cautious about near-term demand because of affordability challenges and economic uncertainty. Still, she said recent investments and mill closures have strengthened Canfor’s operating platform and should support further cost improvements heading into 2027.

“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,” Yurkovich said.

Lower Spending Planned for 2027

CFO Pat Elliott said Canfor expects capital spending of approximately CAD 210 million in 2026, including about CAD 40 million for the pulp business. The company anticipates spending CAD 100 million in 2027 as it completes its major strategic investment program and moves to a lower level of sustaining capital.

Elliott said the company has invested heavily over the past five years and is satisfied with its current mill portfolio. Although further investment opportunities remain, he said the lower spending target was prudent given management’s cautious view of the 2027 market.

“Is that a number we’re going to stay at forever? No, it’s definitely going to go up from there,” Elliott said, adding that maintenance spending should be lower because Canfor has fewer and better operations.

Canfor ended the quarter with approximately CAD 1.1 billion in available liquidity and CAD 364 million in net debt, excluding the duty loan. Liquidity declined by about CAD 70 million during the quarter following the acquisition of PinkWood and capital spending at the Iron Mountain sawmill in Arkansas.

European Costs Ease as Demand Remains Muted

The European lumber business generated CAD 20 million in adjusted EBITDA, supported by improved pricing and lower log costs despite scheduled downtime in July. Elliott said capacity reductions and summer shutdowns helped relieve log costs, which he expects to remain near current levels for the rest of the year.

Canfor’s paper and pulp business generated CAD 2 million in adjusted EBITDA, an improvement of CAD 14 million from the previous quarter. Elliott attributed the increase to higher production and continued strength in paper, which generated CAD 26 million in EBITDA during the first nine months of 2026.

The lumber result excluded CAD 36 million in net one-time items, including restructuring and impairment charges offset by a recovery of a prior inventory write-down. The paper and pulp result excluded CAD 38 million in net one-time items, including impairment and restructuring costs related to the planned Northwood pulp mill closure, also offset by an inventory write-down recovery.

Senior Vice President of Sales and Marketing Kevin Pankratz said North American lumber supply and demand were relatively balanced for much of the third quarter. More recently, higher U.S. mortgage rates have tempered demand expectations and made major customers more cautious about the rest of 2026 and 2027, he said.

Portfolio Changes and Duties

Yurkovich said Canfor completed the Iron Mountain rebuild in October and finalized its PinkWood acquisition early in the third quarter. The company has also pursued the closure of the Northwood pulp mill and three sawmills, including two in Sweden.

Chief Operating Officer Stephen Mackie said PinkWood is meeting expectations, although Canfor did not disclose its financial contribution. He said the operation was not currently affected by recently announced tariffs, while noting that the tariff environment continues to change.

Yurkovich said Canfor’s duty rate recently fell to 31% from 47.6% following the finalization of the seventh period of review. Even with lower duties, she does not expect a major rebound in Canadian lumber exports to the U.S., because supply removed through closures is permanently gone.

About Canfor (TSE:CFP)

Canfor 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.

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