West Fraser Pronounces 2nd Quarter 2024 Effects

VANCOUVER, BC, July 24, 2024 /PRNewswire/ – West Fraser Plank Co. Ltd. (“West Fraser” or the “Company”) (TSX andNYSE: WFG) reported nowadays the second one quarter result of 2024 (“Q2-24”). All greenback quantities on this information reduce are expressed in U.S. greenbacks except famous another way. 

2nd Quarter Highlights  

• Gross sales of $1.705 billion and income of $105 million, or $1.20 in keeping with diluted proportion
• Adjusted EBITDA¹ of $272 million, representing 16% of gross sales
• Lumber branch Adjusted EBITDA¹ of $(51) million
• North The united states Engineered Log Merchandise (“NA EWP”) branch Adjusted EBITDA¹ of $308 million
• Pulp & Paper branch Adjusted EBITDA¹ of $9 million
• Europe Engineered Log Merchandise (“Europe EWP”) branch Adjusted EBITDA¹ of $6 million
• Repurchased 935,568 stocks for mixture attention of $74 million
• Spared 2023 Sustainability Document
• Introduced building up in quarterly dividend to $0.32 in keeping with proportion from $0.30 in keeping with proportion

“Once again our North American OSB, plywood and other engineered wood products demonstrated strong results and the value of our product diversification strategy. Q2-24 benefited from relative strength in new home construction demand that carried over from the prior quarter. Conversely, we continued to experience demand softness in our North American lumber business, particularly for SYP lumber with its greater relative exposure to repair and remodelling applications,” mentioned Sean McLaren, West Fraser’s President and CEO.

“Despite near-term demand uncertainty across some of our end-markets, the team at West Fraser will continue to work diligently, executing on our strategy of investing capital to modernize mills and lower costs, returning excess capital to shareholders when it is prudent to do so, and maintaining financial flexibility through a strong balance sheet. While it is difficult to see catalysts for a near-term demand recovery across our industry, we remain steadfast in our approach to navigating uncertainty. We continue to realize the financial benefits from the recent closures of some of our higher-cost lumber mills and will continue to focus on optimizing our portfolio of assets to lower costs and create a more resilient organization.”

1. Adjusted EBITDA is a non-GAAP monetary measure. The following the “Non-GAAP and Other Specified Financial Measures” division of this report for more info in this measure.

Effects Abstract 

2nd quarter gross sales have been $1.705 billion, in comparison to $1.627 billion within the first quarter of 2024. 2nd quarter income have been $105 million, or $1.20 in keeping with diluted proportion, in comparison to $35 million, or $0.42 in keeping with diluted proportion within the first quarter of 2024. 2nd quarter Adjusted EBITDA was once $272 million in comparison to $200 million within the first quarter of 2024. 

Liquidity and Capital Allocation 

Money and non permanent investments higher to $1,004 million at June 28, 2024 from $900 million at December 31, 2023.  

Capital expenditures in the second one quarter have been $102 million.

We paid $24 million of dividends in the second one quarter, or $0.30 in keeping with proportion, and introduced an building up to our quarterly dividend for the dividend to be paid within the 1/3 quarter, elevating it to $0.32 in keeping with proportion.

On February 27, 2024, we renewed our customary path issuer bid (“2024 NCIB”), which permits us to obtain as much as 3,971,380 Ordinary stocks for cancellation from March 1, 2024 till the expiry of the bid on February 28, 2025. From January 1, 2024 to July 23, 2024, 1,379,659 overall stocks were repurchased underneath each the prior NCIB and the 2024 NCIB.

As of July 23, 2024, now we have repurchased for cancellation 42,956,254 of the Corporate’s stocks because the terminating of the purchase of Norbord on February 1, 2021 throughout the of entirety of a considerable issuer bid (“SIB”) in 2021, of entirety of a SIB in 2022 and customary path issuer bids, equalling 79% of the stocks issued in appreciate of the Norbord Acquisition.

Outlook 

Markets 

A number of key traits that experience served as sure drivers in recent times are anticipated to proceed to backup medium and longer-term call for for unutilized house development in North The united states.

Essentially the most important makes use of for our North American lumber, OSB and engineered plank panel merchandise are residential development, restore and remodelling and business packages. Over the medium word, stepped forward housing affordability from stabilization of inflation and rates of interest, a massive cohort of the family getting into the everyday house purchasing level, and an growing older U.S. housing reserve are anticipated to pressure unutilized house development and service and renovation spending that helps lumber, plywood and OSB call for. Over the long run, rising marketplace penetration of pile wood in business and industrial packages could also be anticipated to develop into a extra important supply of call for enlargement for plank development merchandise in North The united states.

The seasonally adjusted annualized fee of U.S. housing begins was once 1.35 million gadgets in June 2024, with lets in issued of one.45 million gadgets, in keeping with the U.S. Census Bureau. Week there are near-term uncertainties for unutilized house development, owing in massive phase to rates of interest and the course of adjustments to loan charges and the ensuing affect on housing affordability, unemployment rest reasonably low within the U.S. Even if central bankers throughout North The united states have indicated that charges is also upper for longer, the unedited fee mountain climbing cycle seems to be over with U.S. Federal finances futures lately indicating possibilities for roughly two fee cuts in the second one part of 2024. On the other hand, call for for unutilized house development and our plank development merchandise might abate within the close to word will have to the wider financial system and business gradual or the fashion in rates of interest negatively affect client sentiment and housing affordability.

In Europe and the U.Ok., we proceed to revel in quite higher call for for our OSB merchandise in 2024 however reasonably softer call for for MDF and particleboard panel merchandise. We proceed to be expecting call for for our Ecu merchandise will develop over the long run as worth of OSB as an supplementary to plywood grows. Additional, an growing older housing reserve helps long-term restore and renovation spending and extra call for for our plank development merchandise. Week inflation seems to have stabilized, near-term dangers, together with reasonably prime rates of interest, ongoing geopolitical traits and the lagged affect of prior inflationary pressures might adversely affect day call for for our panel merchandise within the U.Ok. and Europe. Regardless of those dangers, we’re assured that we will navigate throughout the stream situation and capitalize at the long-term enlargement alternatives forward.

With the tendencies of 1 UKP mill and two BCTMP turbines previous this generation, we predict the monetary affect of the Pulp & Paper branch to be much less important and to give a contribution a lot much less variability to our consolidated effects in the future.

Operations

Given the weaker than anticipated call for for SYP within the first part of 2024, we now look ahead to that overall lumber shipments this generation might be quite less than 2023 ranges. The purchase of Scatter Puddle lumber mill and reliability and capital development positive factors throughout our lumber mill portfolio are actually anticipated to be greater than offset by way of capability discounts from lately introduced everlasting closures and indefinite curtailments in addition to shift discounts throughout make a selection lumber turbines. As such, past we’re reiterating 2024 SPF shipments steerage of two.6 to two.8 billion board ft, we’re lowering SYP shipments steerage to two.5 to two.7 billion board ft from our earlier steerage of two.7 to two.9 billion board ft.

In our NA EWP branch, we proceed to be expecting 2024 OSB shipments to be in keeping with 2023 ranges and reiterate shipments steerage of 6.3 to six.6 billion sq. ft (3/8-inch foundation) this generation. Get started-up of the Allendale mill continues to go and we look ahead to a ramp-up duration for the mill of as much as 3 years to fulfill centered manufacturing ranges. We think our total OSB platform to be higher and cheaper price with a contemporary Allendale facility working, and as with any our plank merchandise operations, call for is a key enter in figuring out our working schedules throughout our production footprint. Enter prices for the NA EWP occupation are anticipated to be reasonably solid via 2024. On the other hand, fresh sawmill curtailments around the trade are growing chip shortages for pulp manufacturers, which is expanding call for rigidity for pulp planks, the principle story supply for OSB manufacturing.

In our Europe EWP branch, we proceed to be expecting cushy near-term call for for our panel merchandise, with 2024 shipments of MDF, particleboard and OSB anticipated to be related or quite higher than 2023 ranges. For OSB, we reiterate shipments steerage within the territory of 0.9 to one.1 billion sq. ft (3/8-inch foundation). Enter prices for the Europe EWP occupation, together with power and resin prices, are anticipated to stabilize in 2024 however stay increased.

On steadiness, we skilled reasonably solid prices for inputs throughout our provide chain in Q2-24, together with resins and chemical substances, despite the fact that labour availability and a few capital apparatus manage occasions remained difficult. We think those traits to in large part proceed over the close to word. 

In response to our stream outlook, assuming negative deterioration from stream marketplace call for situations all over the generation and negative extra lengthening of manage occasions for initiatives underway or deliberate, we proceed to look ahead to that we will be able to make investments roughly $450 million to $550 million in 2024¹.

1. It is a extra monetary measure. The following the “Non-GAAP and Other Specified Financial Measures” division of this report for more info in this measure.

Control Dialogue & Research (“MD&A”) 

Our Q2-24 MD&A and period in-between consolidated monetary statements and accompanying notes are to be had on our site at www.westfraser.com and the Gadget for Digital File Research and Retrieval + (“SEDAR+”) at www.sedarplus.ca and the Digital Information Accumulating, Research and Retrieval Gadget (“EDGAR”) site at www.sec.gov/edgar underneath the Corporate’s profile. 

Sustainability Document 

West Fraser’s 2023 Sustainability Document is to be had at the Corporate’s site at www.westfraser.com. This record summarizes our Environmental, Social, and Governance (“ESG”) efficiency with a focal point on our society, communities and function of our merchandise within the carbon cycle. It’s aligned with the Sustainable Accounting Requirements Board (“SASB”), World Reporting Initiative (“GRI”), the Activity Pressure on Circumstance-Homogeneous Monetary Disclosures (“TCFD”) and CDP (previously the Carbon Disclosure Challenge). 

Dangers and Uncertainties 

Possibility and dubiousness disclosures are incorporated in our 2023 Annual MD&A, as up to date within the disclosures in our Q2-24 MD&A, in addition to in our nation filings with securities regulatory government. See additionally the dialogue of “Forward-Looking Statements” underneath.

Convention Name 

West Fraser will store an analyst convention name to talk about the Corporate’s Q2-24 monetary and working effects on Thursday, July 25, 2024, at 8:30 a.m. Pacific Day (11:30 a.m. Japanese Day). To take part within the name, please dial: 1-888-390-0605 (toll-free North The united states) or 416-764-8609 (toll) or attach at the webcast. The decision and an income presentation will also be accessed via West Fraser’s site at www.westfraser.com. Please let the operator know you need to take part within the West Fraser convention name chaired by way of Mr. Sean McLaren, President and Well-known Govt Officer. 

Following control’s dialogue of the quarterly effects, traders and the analyst society might be invited to invite questions. The decision might be recorded for webcasting functions and might be to be had at the West Fraser site at www.westfraser.com. 

About West Fraser

West Fraser is a assorted plank merchandise corporate with greater than 60 amenities in Canada, the USA, the United Kingdom, and Europe, which promotes sustainable woodland practices in its operations The Corporate produces lumber, engineered plank merchandise (OSB, LVL, MDF, plywood, and particleboard), pulp, newsprint, plank chips, alternative residuals, and renewable power. West Fraser’s merchandise are old in house development, restore and remodelling, business packages, papers, tissue, and field fabrics. For more info about West Fraser, seek advice from www.westfraser.com.

Ahead-Taking a look Statements 

This information reduce contains statements and data that constitutes “forward-looking information” inside the that means of Canadian securities rules and “forward-looking statements” inside the that means of United States securities rules (jointly, “forward-looking statements”). Ahead-looking statements come with statements which might be forward-looking or predictive in nature and are dependent upon or please see day occasions or situations. We worth phrases corresponding to “expects,” “anticipates,” “plans,” “believes,” “estimates,” “seeks,” “intends,” “targets,” “projects,” “forecasts,” or detrimental variations thereof and alternative related expressions, or day or conditional verbs corresponding to “may,” “will,” “should,” “would,” and “could,” to spot those forward-looking statements. Those forward-looking statements usually come with statements which replicate control’s expectancies in regards to the operations, occupation, monetary status, anticipated monetary effects, efficiency, possibilities, alternatives, priorities, objectives, objectives, ongoing goals, methods and outlook of West Fraser and its subsidiaries, in addition to the outlook for North American and world economies for the stream fiscal generation and next classes.

Ahead-looking statements incorporated on this information reduce come with references to please see and their affect on our occupation:

• call for in North American and Ecu markets for our merchandise, together with call for from unutilized house development, maintenance and renovations and business and industrial packages;
• the affect of sustained increased rates of interest and inflationary pressures on loan charges and housing affordability;
• the expected rising marketplace penetration of pile wood;
• the expected moderation of rates of interest;
• the expected continuation of reasonably solid prices throughout our provide chain over the close to word and endured demanding situations on labour availability and capital apparatus manage occasions;
• operational steerage, together with projected shipments and projected capital expenditures; and
• the continuation of investments in our belongings and the upkeep of our monetary flexibility and our cheap place as aggressive benefits.

By way of their nature, those forward-looking statements contain various suppositions, inherent dangers and uncertainties, each normal and explicit, which give a contribution to the likelihood that the predictions, forecasts, and alternative forward-looking statements is not going to happen. Elements that might purpose unedited effects to fluctuate materially from the ones pondered or implied by way of forward-looking statements come with, however don’t seem to be restricted to:

• suppositions in reference to the industrial and monetary situations within the U.S., Canada, U.Ok., Europe and globally and consequential call for for our merchandise, together with the affect of constantly susceptible marketplace situations on our skill to fulfill our stream lumber cargo steerage, and variability of working schedules and the affect of the conflicts in Ukraine and the Heart East;
• day will increase in rates of interest and inflation or endured sustained upper rates of interest and charges of inflation may affect housing affordability and service and remodelling call for, which might leave call for for our merchandise;
• international provide chain problems might lead to will increase to our prices and might give a contribution to a discount in near-term call for for our merchandise;
• endured governmental approvals and authorizations to get right of entry to wood provide, and the affect of woodland fires, infestations, environmental coverage measures and movements taken by way of govt respecting Indigenous rights, identify and/or reconciliation efforts on those approvals and authorizations;
• dangers inherent in our product focus and cyclicality;
• results of festival for planks, availability of story and story sources and product pricing pressures, together with endured get right of entry to to plank provide and story sources at aggressive costs and the affect of third-party certification requirements; together with reliance on story off-take guarantees and 1/3 social gathering customers of plank chips;
• results of diversifications in the fee and availability of producing inputs, together with power, worker wages, resin and alternative enter prices, and the affect of inflationary pressures at the prices of those production prices, together with will increase in stumpage charges and plank prices;
• availability and prices of transportation products and services, together with truck and rail products and services, and port amenities, and affects on transportation products and services of wildfires and unpleasant climate occasions, and the affect of higher power costs at the prices of transportation products and services;
• the recoverability of component, plant and kit ($3,806 million), benevolence and intangibles ($2,278 million), each as at June 28, 2024, is in line with various key suppositions which might be inherently unsure, together with manufacturing quantity, product pricing, uncooked subject matter enter price, manufacturing price, terminal a couple of, and cut price fee. Opposed adjustments in those suppositions may manage to a transformation in monetary outlook which might lead to sporting quantities exceeding their recoverable quantities and as a aftereffect an impairment, which may have a subject matter non-cash adversarial impact on our result of operations;
• transportation constraints might proceed to negatively affect our skill to fulfill projected cargo volumes;
• the timing of our deliberate capital investments is also not on time, the endmost prices of those investments is also higher on account of inflation, and the projected charges of go back is probably not completed;
• numerous occasions that might disrupt operations, together with herbal, man-made or deadly occasions together with drought, wildfires, cyber safety incidents, any atmosphere of situation and/or evacuation orders issued by way of governments, and ongoing members of the family with workers;
• dangers inherent to buyer dependence;
• affect of day move border industry rulings or guarantees;
• implementation of remarkable strategic tasks and identity, of entirety and integration of acquisitions;
• affect of adjustments to, or non-compliance with, environmental or alternative rules;
• the affect of the COVID-19 pandemic on our operations and on buyer call for, provide and distribution and alternative components;
• govt restrictions, requirements or rules supposed to leave greenhouse fuel emissions and our incapability to succeed in our SBTi constancy for the aid of greenhouse gases as deliberate;
• the prices and timeline to succeed in our greenhouse fuel emissions goals is also larger and rush longer than expected;
• adjustments in govt coverage and law, together with movements taken by way of the Govt of British Columbia pursuant to fresh amendments to forestry regulation and tasks to defer logging of woodlands deemed “old growth” and the affect of those movements on our wood provide;
• affect of climate and state trade on our operations or the operations or call for of our providers and shoppers;
• skill to put in force unutilized or upgraded data era infrastructure;
• affect of data era provider disruptions or screw ups;
• affect of any product legal responsibility claims in plethora of insurance policy;
• dangers inherent to a capital in depth trade;
• affect of day results of tax exposures;
• attainable day adjustments in tax rules, together with tax charges;
• dangers related to investigations, claims and criminal, regulatory and tax court cases protecting issues which if resolved unfavourably might lead to a loss to the Corporate;
• results of forex exposures and alternate fee fluctuations;
• honest values of our electrical energy swaps is also risky and delicate to fluctuations in ahead electrical energy costs and adjustments in govt coverage and law;
• day working prices;
• availability of financing, depot traces, securitization systems and/or alternative way of liquidity;
• endured get right of entry to to wood provide within the conventional territories of Indigenous Countries and our skill to paintings with Indigenous Countries in B.C. to book endured story provide for our lumber turbines via numerous industrial guarantees and joint ventures;
• our skill to proceed to preserve efficient interior keep watch over over monetary reporting;
• the hazards and uncertainties described within the MD&A and the 2023 Annual MD&A; and
• alternative dangers vivid from future to future in our annual data methods, annual reviews, MD&A, quarterly reviews and subject matter trade reviews filed with and furnished to securities regulators.

As well as, unedited results and result of those statements relies on quite a lot of components together with the ones issues described underneath “Risks and Uncertainties” in our 2023 Annual MD&A and the Q2-24 MD&A and might fluctuate materially from the ones expected or projected. This listing of remarkable components affecting ahead‑shopping statements isn’t exhaustive and reference will have to be made to the alternative components mentioned in nation filings with securities regulatory government.  Accordingly, readers will have to workout warning in depending upon ahead‑shopping statements and we adopt negative legal responsibility to publicly replace or revise any ahead‑shopping statements, whether or not written or oral, to replicate next occasions or cases except for as required by way of acceptable securities rules.

Non-GAAP and Alternative Specified Monetary Measures

Right through this information reduce, we put together connection with (i) positive non-GAAP monetary measures, together with Adjusted EBITDA and Adjusted EBITDA by way of branch (our “Non-GAAP Financial Measures”), and (ii) positive extra monetary measures, together with our anticipated capital expenditures (our “Supplementary Financial Measures”). We imagine that those Non-GAAP Monetary Measures and Backup Monetary Measures (jointly, our “Non-GAAP and other specified financial measures”) are helpful efficiency signs for traders in regards to working and monetary efficiency and our monetary status. Those Non-GAAP and alternative specified monetary measures don’t seem to be usually authorised monetary measures underneath IFRS Accounting Requirements and should not have standardized meanings prescribed by way of IFRS Accounting Requirements. Traders are cautioned that none of our Non-GAAP Monetary Measures will have to be regarded as as an supplementary to income or coins stream, as motivated in line with IFRS Accounting Requirements. As there’s no standardized mode of calculating any of those Non-GAAP and alternative specified monetary measures, our mode of calculating every of them might fluctuate from the forms old by way of alternative entities and, accordingly, our worth of any of those Non-GAAP and alternative specified monetary measures is probably not without delay related to in a similar fashion titled measures old by way of alternative entities. Accordingly, those Non-GAAP and alternative specified monetary measures are supposed to serve extra data and will have to no longer be regarded as in isolation or as an alternative choice to measures of efficiency ready in line with IFRS Accounting Requirements. The reconciliation of the Non-GAAP measures old and offered by way of the Corporate to probably the most without delay related measures underneath IFRS Accounting Requirements is supplied within the tables eager forth underneath. Figures were rounded to hundreds of thousands of bucks to replicate the accuracy of the underlying balances and consequently positive tables won’t upload because of rounding affects.

Adjusted EBITDA and Adjusted EBITDA by way of branch

Adjusted EBITDA is outlined as income motivated in line with IFRS Accounting Requirements including again please see series pieces from the consolidated statements of income and complete income: finance source of revenue or expense, tax provision or fix, amortization, equity-based repayment, restructuring and impairment fees, and alternative source of revenue or expense.

Adjusted EBITDA by way of branch is outlined as working income motivated for every reportable branch in line with IFRS including again please see series pieces from the consolidated statements of income and complete income for that reportable branch: amortization, equity-based repayment, and restructuring and impairment fees.

EBITDA is regularly reported and broadly old by way of traders and lending establishments as a trademark of an organization’s working efficiency, skill to incur and repair debt, and as a valuation metric. We calculate Adjusted EBITDA and Adjusted EBITDA by way of branch to exclude pieces that don’t replicate our ongoing operations and that are meant to no longer, in our opinion, be regarded as in a long-term valuation metric or incorporated in an evaluate of our skill to provider or incur debt.

We imagine that disclosing those measures assists readers in measuring efficiency relative to alternative entities that perform in related industries and figuring out the continued coins producing attainable of our occupation to serve liquidity to capitaltreasury running capital wishes, provider remarkable debt, capitaltreasury day capital expenditures and funding alternatives, and pay dividends. Adjusted EBITDA is old as an extra measure to guage the working and monetary efficiency of our reportable sections.

Please see tables reconcile Adjusted EBITDA to probably the most without delay related IFRS measure, income.

Quarterly Adjusted EBITDA 

($ hundreds of thousands) 

Please see tables reconcile Adjusted EBITDA by way of branch to probably the most without delay related IFRS measures for every of our reportable sections. We believe working income to be probably the most without delay related IFRS measure for Adjusted EBITDA by way of branch as working income is the IFRS measure maximum old by way of the prominent working determination maker when comparing branch working efficiency.

Quarterly Adjusted EBITDA by way of branch 

($ hundreds of thousands) 

Anticipated capital expenditures

This measure represents our very best estimate of the amount of money outflows in the case of additions to capital belongings for 2024 in line with our stream outlook. This quantity is comprised basically of numerous development initiatives and maintenance-of-business expenditures, initiatives fascinated about optimization and automation of the producing procedure, and initiatives to leave greenhouse fuel emissions. This measure assumes negative deterioration in stream marketplace situations all over the generation and that we’re ready to exit with our plans on future and on finances. This estimate is topic to the hazards and uncertainties recognized within the Corporate’s 2023 Annual MD&A and Q2-24 MD&A.

For Extra Knowledge

Investor Touch
Robert B. Winslow, CFA
Director, Investor Members of the family & Company Building
Tel. (416) 777-4426
[email protected]

Media Touch
Joyce Wagenaar
Director, Communications
Tel. (604) 817-5539
[email protected]

SOURCE West Fraser Plank Co. Ltd.