Q4 2025 West Fraser Timber Co Ltd Earnings Call

February 12, 2026

Operator: Good morning, ladies and gentlemen, and welcome to the West Fraser Q4 2025 Results Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on 12 February 2026. During this conference call, West Fraser's 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. 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.

Speaker #2: Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator.

Speaker #2: This call is being recorded on February 12, 2026. During this conference call, West Fraser's representatives will be making certain statements about West Fraser's future financial and operational performance.

Speaker #2: 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. 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.

Speaker #2: Additional information about these risk factors and assumptions is included both in the accompanying webcast presentation and in our 2025 annual MD&A and annual information form, as updated in our quarterly MD&A, which can be accessed on West Fraser's website, or Cedar Plus for Canadian investors, and EDGAR for United States investors.

Operator: Additional information about these risk factors and assumptions is included both in accompanying webcast presentation and in our 2025 annual MD&A and Annual Information Form, as updated in our quarterly MD&A, which can be accessed on West Fraser's website or SEDAR+ for Canadian investors and EDGAR for United States investors. I would now like to turn the conference over to Mr. Sean McLaren, President and CEO. Thank you. Please go ahead.

Speaker #2: I would now like to turn the conference over to Mr. Sean McLaren, President and CEO. Thank you. Please go ahead. Thank you, Ina. Good morning, everyone, and thank you for joining our fourth quarter 2025 earnings call.

Sean McLaren: Thank you, Ina. Good morning, everyone, and thank you for joining our Q4 2025 earnings call. I am Sean McLaren, President and CEO of West Fraser, and joining me on the call today are Chris Virostek, Executive Vice President and CFO, 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 Q4 and fiscal 2025 financial results, and then pass the call to Chris for additional comments before I share some thoughts on our outlook and offer concluding remarks.

Speaker #2: I am Sean McLaren, President and CEO of West Fraser, and joining me on the call today are Chris Verostick, Executive Vice President and CFO; Matt Tobin, Senior Vice President of Sales and Marketing; and other members of our leadership team.

Speaker #2: On the earnings call this morning, I will begin with a brief overview of West Fraser's Q4 and fiscal 2025 financial results, and then pass the call to Chris for additional comments before I share some thoughts on our outlook and offer concluding remarks.

Speaker #2: West Fraser generated negative 79 million of adjusted EBITDA in the fourth quarter of 2025, an improvement from the negative 144 million reported in the prior quarter, which had included a 67 million out-of-period duty expense relating to the calendar 2023 duty year.

Sean McLaren: West Fraser generated negative $79 million of Adjusted EBITDA in the fourth quarter of 2025, an improvement from the negative $144 million reported in the prior quarter, which had included a $67 million out-of-period duty expense relating to the calendar 2023 duty year. Results remained soft across our business in Q4 as broader housing and repair and remodeling markets continued to face affordability pressures. For full year 2025, we generated $56 million of Adjusted EBITDA, down from the $673 million reported in 2024. The lumber segment had a challenging 2025, with the protracted down cycle in lumber among the toughest we've experienced in many years.

Speaker #2: Results remain soft across our business in Q4 as broader housing and repair and remodeling markets continued to face affordability pressures. For full year 2025, we generated 56 million of adjusted EBITDA, down from the 673 million reported in 2024.

Speaker #2: The lumber segment had a challenging 2025 with the protracted downcycling lumber among the toughest we've experienced in many years. During the year, we made meaningful progress high-grading our mill portfolio which included a number of closures or curtailments of higher-cost assets but more importantly, the completion of the ramp-up of our Allendale OSB mill in South Carolina and the completion and commissioning of our new Henderson lumber mill in Texas.

Sean McLaren: During the year, we made meaningful progress high-grading our mill portfolio, which included a number of closures or curtailments of higher-cost assets, but more importantly, the completion of the ramp-up of our Allendale OSB mill in South Carolina and the completion and commissioning of our new Henderson lumber mill in Texas. In terms of our balance sheet, we had more than $1.2 billion of available liquidity at year-end, which offers us the financial flexibility and strength to support a consistent capital allocation strategy through the cycle. With that high-level overview, I'll now turn the call to Chris for additional detail and comments.

Speaker #2: In terms of our balance sheet, we had more than $1.2 billion of available liquidity at year-end, which offers us the financial flexibility and strength to support a consistent capital allocation strategy through the cycle.

Speaker #2: With that high-level overview, I'll now turn the call to Chris for additional detail and comments.

Speaker #3: Thank you, Sean. And a reminder that we report in US dollars and all my references are to US dollar amounts unless otherwise indicated.

Chris Virostek: Thank you, Sean, and a reminder that we report in US dollars and all my references are to US dollar amounts unless otherwise indicated. The lumber segment posted Adjusted EBITDA of -$57 million in Q4, compared to -$123 million in Q3. The Q4 result is actually quite comparable with the prior quarter if one excludes the $67 million export duty expense reported in Q3, which had related to the 2023 calendar year. While not included in our Adjusted EBITDA, we reported $473 million of non-cash restructuring and impairment charges in the lumber segment in Q4. This was related to a goodwill impairment of our US lumber business, as well as the closure of two of our sawmills.

Speaker #2: The lumber segment posted adjusted EBITDA of negative 57 million in the fourth quarter, compared to negative 123 million in the third quarter. The Q4 result is actually quite comparable with the prior quarter if one excludes the 67 million dollar export duty expense reported in the third quarter which had related to the 2023 calendar year.

Speaker #2: While not included in our adjusted EBITDA, we reported $473 million of non-cash restructuring and impairment charges in the lumber segment in the fourth quarter.

Speaker #2: This was related to a goodwill impairment of our US lumber business as well as the closure of two of our sawmills. The North America EWP segment reported negative 24 million of adjusted EBITDA in the fourth quarter compared to negative 15 million in the third quarter.

Chris Virostek: The North America EWP segment reported negative $24 million of adjusted EBITDA in Q4, compared to negative $15 million in Q3. Not included in this EBITDA, you will also have seen that we reported a $239 million non-cash restructuring and impairment charge in this segment in Q4, which was related to the indefinite curtailment of our OSB mill in High Level, Alberta. The Pulp and Paper segment reported negative $1 million of adjusted EBITDA in Q4, compared to negative $6 million in Q3. The sequential improvement in this segment was largely owing to the major maintenance shutdown at the mill in Q3. In our Europe segment, adjusted EBITDA was $4 million in Q4 versus $1 million in Q3, as that business experienced a moderately improved business environment.

Speaker #2: Not included in this EBITDA, you will also have seen that we reported a $239 million non-cash restructuring and impairment charge in this segment in the fourth quarter which was related to the indefinite curtailment of our OSB mill in high-level Alberta.

Speaker #2: The pulp and paper segment reported negative 1 million of adjusted EBITDA in the fourth quarter compared to negative 6 million in the third quarter.

Speaker #2: The sequential improvement in this segment was largely owing to the major maintenance shutdown at the mill in the third quarter. In our Europe segment, adjusted EBITDA was 4 million in the fourth quarter versus 1 million in the third quarter as that business experienced a moderately improved business environment.

Speaker #2: In terms of our overall Q4 results, the sequential EBITDA improvement was supported by reduced SPF log costs, lower Southern Yellow Pine manufacturing costs, and lower OSB labor costs as well as the absence of the 67 million dollar out-of-period duty expense that we reported last quarter partially offset by lower lumber and North American OSB prices.

Chris Virostek: In terms of our overall Q4 results, the sequential EBITDA improvement was supported by reduced SPF log costs, lower Southern Yellow Pine manufacturing costs, and lower OSB labor costs, as well as the absence of the $67 million out-of-period duty expense that we reported last quarter, partially offset by lower lumber and North American OSB prices. Our lumber business continued to benefit from the portfolio optimization actions we have taken in recent years. In some instances, we have been able to replace output from now-closed mills with production from our more modern, larger-scale, and lower-cost mills, helping to enhance the overall cost structure of the operation. For instance, in the US South, our Q4 2025 Southern Yellow Pine shipments were 6% lower quarter-over-quarter, while SYP unit manufacturing costs were also lower.

Speaker #2: Our lumber business continued to benefit from the portfolio optimization actions we have taken in recent years. In some instances, we have been able to replace output from now closed mills with production from our more modern, larger-scale, and lower-cost mills helping to enhance the overall cost structure of the operation.

Speaker #2: For instance, in the US South, our Q4 2025 Southern Yellow Pine shipments were 6% lower quarter over quarter while SYP unit manufacturing costs were also lower.

Speaker #2: Cash flow from operations was negative 172 million in the fourth quarter with net debt at $131 million compared to a net cash position of $212 million reported last net debt is attributed to a normal seasonal build and working capital $139 million of capital expenditures and $32 million of cash deployed towards share buybacks and dividends.

Chris Virostek: Cash flow from operations was -$172 million in Q4, with net debt at $131 million, compared to a net cash position of $212 million reported last quarter. This change in our net debt is attributed to a normal seasonal build in working capital, $139 million of capital expenditures, and $32 million of cash deployed towards share buybacks and dividends. With respect to our operational outlook for 2026, we have reiterated previously released guidance for the year, as shown on slide 8 and as detailed further in our earnings release. Note that if and as the US administration's tariffs and other policies evolve, we will evaluate the impact of the tariffs on our operations and determine revisions to our 2026 forecast as appropriate. With that financial overview, I will pass the call back to Sean.

Speaker #2: With respect to our operational outlook for 2026, we have reiterated previously released guidance for the year as shown on slide 8 and as detailed further in our earnings release.

Speaker #2: Note that if and as the US administration's tariffs and other policies evolve, we will evaluate the impact of the tariffs on our operations and determine revisions to our 2026 forecast as appropriate.

Speaker #2: With that financial overview, I will pass the call back to Sean.

Speaker #3: Thank you, Chris. Before I shift to concluding remarks, I'd like to make a few comments on our liquidity. As you can see on slide 9, we had a healthy balance sheet and total liquidity exceeding $1.2 billion as we exited 2025.

Sean McLaren: Thank you, Chris. Before I shift to concluding remarks, I'd like to make a few comments on our liquidity. As you can see on Slide 9, we had a healthy balance sheet and total liquidity exceeding $1.2 billion as we exited 2025. While our liquidity has trended lower over the last few years during this extended down cycle, our financial position remains strong, providing us with sufficient flexibility to navigate further economic challenges should they unfold. I think it's also important to reflect upon the history of attractive returns West Fraser has generated for our shareholders.

Speaker #3: While our liquidity has trended lower over the last few years during this extended down cycle, our financial position remains strong providing us with sufficient flexibility to navigate further economic challenges should they unfold.

Speaker #3: I think it's also important to reflect upon the history of attractive returns West Fraser has generated for our shareholders. As you can see in the figure at bottom of slide 10, our shareholders have been rewarded for their patience as we have continued to execute on our plans to grow the business, optimize our portfolio through dispositions, and/or closures of highly variable or uneconomic assets and return surplus capital through dividends and buybacks.

Sean McLaren: As you can see in the figure at bottom of Slide 10, our shareholders have been rewarded for their patience as we have continued to execute on our plans to grow the business, optimize our portfolio through dispositions and/or closures of highly variable or uneconomic assets, and return surplus capital through dividends and buybacks. With the total annualized return approaching 9% since the beginning of 2006, which includes share price appreciation and reinvested dividends, we remain proud of what the West Fraser team has been able to accomplish. I'll now shift to our general outlook and add some concluding remarks. There's no avoiding the fact that we face difficult end markets in 2025, but we manage our business for the long run. We have not been resting, waiting for a market recovery.

Speaker #3: With the total annualized return approaching 9% since the beginning of 2006, which includes share price appreciation and reinvested dividends, we remain proud of what the West Fraser team has been able to accomplish.

Speaker #3: I'll now shift to our general outlook and add some concluding remarks. There's no avoiding the fact that we face difficult end markets in 2025.

Speaker #3: But we manage our business for the long run. We have not been resting, waiting for a market recovery. We've been actively investing in and improving the business, and because of that, we remain optimistic about West Fraser's future.

Sean McLaren: We've been actively investing in and improving the business, and because of that, we remain optimistic about West Fraser's future. For our lumber assets in the US South, we continue to refine and optimize our operations by removing costs and looking for additional margin opportunities. We are also ramping up our modernized Henderson Mill, which we believe is positioned to be one of the best mills in our fleet once it achieves full operating rates. In Canada, the supply and demand for SPF products continues to show relative advantages compared to SYP, as the US South absorbs the new capacity introduced in the region in recent years. We continue to execute on our portfolio optimization strategy, which includes the reduction of higher-cost capacity across our lumber platform.

Speaker #3: For our lumber assets in the US South, we continue to refine and optimize our operations by removing costs and looking for additional margin opportunities.

Speaker #3: We are also ramping up our modernized Henderson mill, which we believe is positioned to be one of the best mills in our fleet once it achieves full operating rates.

Speaker #3: In Canada, the supply and demand for SPF products continues to show relative advantages compared to SYP as the US South absorbs a new capacity introduced in the region in recent years.

Speaker #3: We continue to execute on our portfolio optimization strategy, which includes the reduction of higher-cost capacity across our lumber platform. Since 2022, we have removed over 1.1 billion board feet of capacity through mill closures and permanent shift reductions, representing a 16% decrease in the company's lumber operating capacity. We've also reduced the number of shifts or hours of operations at various lumber mills across our platform as a means to manage cost.

Sean McLaren: Since 2022, we have removed over 1.1 billion board feet of capacity through mill closures and permanent shift reductions, representing a 16% decrease in the company's lumber operating capacity. We've also reduced the number of shifts or hours of operations at various lumber mills across our platform as a means to manage cost. At the same time, we have invested nearly $1 billion of capital into our lumber business over the last 4 years, modernizing assets, adding flexibility to our production platform, removing costs, implementing margin expansion projects, and making our mills safer for our employees. Specifically, with the startup of Henderson, we are nearing completion of the major US lumber investment we have made over the past number of years, with our focus increasingly turned towards operationalizing the capital we have invested in the region.

Speaker #3: At the same time, we have invested nearly $1 billion of capital into our lumber business over the last four years modernizing assets, adding flexibility to our production platform, removing costs, implementing margin expansion projects, and making our mills safer for our employees.

Speaker #3: Specifically, with the startup of Henderson, we are nearing completion of the major U.S. lumber investment we have made over the past number of years, with our focus increasingly turned towards operationalizing the capital we have invested in the region.

Speaker #3: Taking such a proactive approach to portfolio management has further strengthened our cost position and competitiveness. In our North American EWP business, we have largely completed the ramp-up of our Allendale OSB mill while more recently we announced a planned indefinite curtailment of our high-level OSB mill this spring which will remove 860 million square feet of currently uneconomic capacity in an effort to balance our production with customer demand.

Sean McLaren: Taking such a proactive approach to portfolio management has further strengthened our cost position and competitiveness. In our North American EWP business, we have largely completed the ramp-up of our Allendale OSB mill, while more recently, we announced the planned indefinite curtailment of our High Level OSB mill this spring, which will remove 860 million sq ft of currently uneconomic capacity in an effort to balance our production with customer demand. In conclusion, while we rise to meet the needs of our customers every day, we are also dealing with limited macro visibility. In response, we have been actively managing our portfolio to be low cost and diverse by both geography and product to mitigate uncertainties.

Speaker #3: In conclusion, while we rise to meet the needs of our customers every day, we are also dealing with limited macro visibility. In response, we have been actively managing our portfolio to be low-cost and diverse by both geography and product to mitigate uncertainties.

Speaker #3: We remain optimistic about our longer-term prospects and will continue to focus on operational excellence, creating a leading wood building products company that is resilient and sustainable through the cycle.

Sean McLaren: We remain optimistic about our longer-term prospects and will continue to focus on operational excellence, creating a leading wood-building products company that is resilient and sustainable through the cycle. And we will do all this while maintaining the type of financial strength that gives us the flexibility to be able to take advantage of growth opportunities as they arise. Thank you. And with that, we'll turn the call back to the operator for questions.

Speaker #3: And we will do all this while maintaining the type of financial strength that gives us the flexibility to be able to take advantage of growth opportunities as they arise.

Speaker #3: Thank you, and with that, we'll turn the call back to the operator for questions.

Speaker #2: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star, followed by the 1 on your telephone keypad.

Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by the one on your telephone keypad. You will hear a prompt that your hand has been raised, and should you wish to cancel your request, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment please, for your first question. Thank you. And your first question comes from the line of Ben Isaacson from Scotiabank. Please go ahead.

Speaker #2: You will hear a prompt that Johannes has been raised, and should you wish to cancel your request, please press star, followed by the 2.

Speaker #2: If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Thank you, and your first question comes from the line of Ben Isaacson from Scotiabank.

Speaker #2: Please go ahead.

Speaker #3: Thank you, and good morning, everyone. Just two questions for me. The first question, can you give a little bit of qualitative color as to how balanced or imbalanced margins were between SPF and SYP in Q4?

Ben Isaacson: Thank you, and good morning, everyone. Just two questions for me. The first question, can you give a little bit of qualitative color as to how balanced or imbalanced margins were between SPF and SYP in Q4, and how does that look right now?

Speaker #3: And how does that look right now?

Speaker #4: Good morning, Ben. We don't specifically call out our different segments. Saying that, as we saw through the quarter, you've seen you've watched the spread start to close between the pricing between the products.

Sean McLaren: Good morning, Ben. You know, we don't specifically call out our different segments, saying that as we saw through you know, through the quarter, you've seen-- you've watched the spread start to close between the pricing, between the products. You know, so I think that's reflective of things, things kind of moving as customers adjust their needs and demand patterns, depending on the end uses of the products.

Speaker #4: So I think that's reflective of things kind of moving as customers adjust their needs and demand patterns depending on the end uses of the products.

Sean McLaren: Saying that, I think we're, you know, as we look to this year on both sides of the border, both products, you know, we're actively looking to make costs, you know, reducing costs, as you saw with both Hundred Mile and Augusta in Q4, and we believe both those businesses are positioned to operate through the bottom of the cycle here.

Speaker #4: Saying that, I think we're as we look to this year on both sides of the border, both products, we're actively looking to make cost reducing cost, as you saw with both 100-mile and Augusta in Q4.

Speaker #4: And we believe both those businesses are positioned to operate through the bottom of the cycle here.

Speaker #3: Great, thanks. And then I think you mentioned lower log costs for SPF, lower manufacturing for SYP, and lower labor for OSB. Among those three, how much of that is sustainable going forward versus a one-off for Q4?

Ben Isaacson: Great, thanks. I think you mentioned lower log costs for SPF, lower manufacturing for SYP, and lower labor for OSB. Among those three, how much of that is sustainable going forward versus a one-off for Q4?

Sean McLaren: You know, Ben, I'd say we've been very active and, you know, across all three segments on not only adjusting capacity on uneconomic assets, but modernizing assets through investment, as well as reducing costs through flexible operating schedules. I think the trends you are seeing in our cost structure are really the result of the work we've done over the last several years to lower cost.

Speaker #4: Ben, I'd say we've been very active in across all three segments on not only adjusting capacity on uneconomic assets, but modernizing assets through investment, as well as reducing costs through flexible operating schedules.

Speaker #4: And I think the trends you are seeing in our cost structure are really the result of the work we've done over the last several years to lower cost.

Speaker #3: Great, thanks so much. Appreciate it.

Ben Isaacson: Great. Thanks so much. Appreciate it.

Speaker #2: Thank you, and your next question comes from the line of Keaton Mantora from BMO Capital Markets. Please go ahead.

Operator: Thank you. And your next question comes from the line of Ketan Mamtora from BMO Capital Markets. Please go ahead.

Ketan Mamtora: Good morning, Sean, Chris, thanks for taking my question. Maybe to start with, Sean, can you talk about, you know, sort of the M&A opportunities that you are seeing right now, given how depressed lumber prices have been for the last couple of years? Would that be an area of interest at, at this point, which certainly looks like bottom of the cycle? And related to that, any interest in growing outside of North America in lumber?

Speaker #5: Good morning, Sean, Chris, thanks for taking my question. Maybe to start with, Sean, can you talk about sort of the M&A opportunities that you are seeing right now, given how depressed lumber prices have been for the last couple of years?

Speaker #5: Would that be an area of interest at this point with certainly looks like bottom of the cycle? And related to that, any interest in growing outside of North America in lumber?

Speaker #4: Yeah, good morning, Keaton. I'll make a couple of comments here. And Chris, please add anything I missed. And I think we've maybe talked about this a few times over the quarters.

Sean McLaren: Yeah. Good morning. Good morning, Ketan. You know, I'll make a couple comments here, and Chris, please add anything I miss. You know, I think we've maybe talked about this a few times over the quarters. You know, for us, it's really about how do we make the company stronger at the bottom of the cycle and the current conditions we're in, you know, so asset quality is very important. You know, over the last number of years, we've actioned a few things, but not very many. And every one of those things has been designed to make us stronger at the bottom. You know, we have a balance sheet to be able to react to anything of quality that presents itself.

Speaker #4: For us, it's really about how do we make the company stronger at the bottom of the cycle in the current conditions we're in. So, asset quality is very important.

Speaker #4: And over the last number of years, we've actioned a few things, but not very many. And every one of those things has been designed to make us stronger at the bottom.

Speaker #4: We have a balance sheet to be able to react to anything, of quality, that presents itself. Saying that, we typically, the stronger assets are going to wait for a better time to be available.

Sean McLaren: Saying that, you know, we typically, the stronger assets are gonna wait for a better time to be available. So, those would be the only comments that I would say on M&A. Chris, anything to add there?

Speaker #4: So those would be the only comments that I would say on M&A, Chris. Anything to add there?

Speaker #3: No, that's a great summary. Thanks, Sean.

[Company Representative] (Aiera): No, that's a great summary. Thanks, Sean.

Ketan Mamtora: No, that's a great summary. Thanks, Sean.

Speaker #4: Yeah. And then, in terms of any outside of North America, of course, even though the macro environment in Europe continues to be slow.

Sean McLaren: Yeah. And then in terms of any outside of North America, you know, of course, we're... You know, even though the macro environment in Europe is, continues to be slow, you know, we are pleased with our team, pleased with our assets over in Europe, and they're performing well at the bottom of the market. You know, and we continue to work with them to look at how we make our European business stronger, and I think I would just leave it there. There would be nothing in front of us today that we would talk about. It would be the same conditions we would look at in North America, makes us stronger at the bottom of the cycle, and it's a good return, and our team is ready to take it on.

Speaker #4: We are pleased with our team, pleased with our assets over in Europe. And they're performing well at the bottom of the market. And we continue to work with them to look at how we make our European business stronger.

Speaker #4: And I think I would just leave it there. There would be nothing in front of us today that we would talk about. It would be the same conditions we would look at in North America.

Speaker #4: It makes us stronger at the bottom of the cycle, and it's a good return. Our team is ready to take it on, and we've got the flexibility to be able to consider it.

Sean McLaren: You know, we've got the flexibility to be able to consider it.

Ketan Mamtora: Understood. No, that's helpful. And then just one more from me. How should we think about ramp-up of the Henderson Mill in the context of demand environment, which is quite muted?

Speaker #3: Understood. No, that's helpful. And then just one more from me. How should we think about ramp-up of the Henderson mill in the context of demand environment, which is quite muted?

Speaker #4: Yeah, and I think so it's very early days in Henderson. The mill began commissioning at the end of Q4. So we're in the early stages of startup.

Sean McLaren: Yeah, you know, and I think, so it's very early days in Henderson. The mill began commissioning at the end of Q4, so we're in the early stages of startup, you know. And as a reminder, it replaces an existing mill. You know, so that volume had been in the market, and we expect through this year to be ramping up to replace that volume. You know, and I think we will continue to look at our customer needs as we move beyond that. And this just gives us another low-cost asset to be able to adjust our full platform with.

Speaker #4: And as a reminder, it replaces an existing mill. So that volume had been in the market. And we expect through this year to be ramping up to replace that volume.

Speaker #4: And I think we will continue to look at our customer needs as we move beyond that. And this just gives us another low-cost asset to be able to adjust our full platform with.

Speaker #3: Got it. That's very helpful. I'll turn it over. Good luck.

Hamir Patel: ... Got it. That's very helpful. I'll turn it over. Good luck.

Ketan Mamtora: ... Got it. That's very helpful. I'll turn it over. Good luck.

Speaker #4: Thanks, Keaton.

Sean McLaren: Thanks, Keaton.

Speaker #2: Thank you, and your next question comes from the line of Sean Stewart from TD Coleman. Please go ahead.

Operator: Thank you. And your next question comes from the line of Sean Stewart from TD Cowen. Please go ahead.

Speaker #5: Thanks. Good morning, everyone. Question for Sean or for Matt. We've seen a good lift in North American lumber and OSB prices the past couple of months.

Sean Steuart: Thanks. Good morning, everyone. Question for Sean or for Matt. We've seen a good lift in North American lumber and OSB prices the past couple of months. Interested in your perspective on how much of that you would attribute to seasonal activity picking up in advance of the spring building season versus, you know, maybe the initial stages of a cyclical recovery as supply is rationalized in the market?

Speaker #5: Interested in your perspective on how much of that you would attribute to seasonal activity picking up and advance of the spring building season, versus maybe the initial stages of a cyclical recovery is supply is rationalized in the market?

Speaker #4: And maybe Matt, I'll hand that one over to you.

Sean McLaren: Maybe Matt, I'll hand that one over to you.

Matt Tobin: Sure. I think, you know, what we've seen is just from what we hear from our customers is just, you know, a little bit more difficult to get what they're looking for at the time they're looking for it. And so, you know, just as I think supply shrinks and demand stays relatively steady over the last couple of quarters, just a little bit harder for our customers to get the product they're looking for when they're looking for it. And it's had an impact on pricing. And as far as spring, I would say, you know, probably a little early to say today.

Speaker #3: think what we've seen is just from what we hear from our customers is just a little bit more difficult to get what they're looking for at the time they're looking for it.

Speaker #3: And so just as I think supply shrinks and demand stays relatively steady over the last couple of quarters, just a little bit harder for our customers to get the product they're looking for when they're looking for it.

Speaker #3: And it's had an impact on pricing. And as far as spring, I would say probably a little early to say today. We usually see a bump in buying in the spring.

Matt Tobin: I said you usually see a bump in buying in the spring, but you know, as you know, spring is usually defined by that warmer weather, and so just coming out of a couple weeks of freeze in the US, I'd say we're still a little early to see there. And once the weather turns, we'll have a better idea of what spring looks like.

Speaker #3: But as you know, spring is usually defined by that warmer weather. And so just coming out of a couple of weeks of freeze in the US, I would say we're still a little early to see there.

Speaker #3: And once the weather turns, we'll have a better idea of what spring looks like.

Speaker #5: And Matt, any perspective on the relative strength we've seen for US South pricing of late versus Canada?

Sean Steuart: Matt, any perspective on the relative strength we've seen for SYP pricing of late versus Canada?

Matt Tobin: Like I say, I think, I think, you know, from what we hear from our customers, it's a little harder for them to find the product they need when they, when they need it. I think, you know, a lot of curtailment that Sean's talked about, that, that we and, and the industry has taken, that makes it a little harder to find the product. And so, you know, just, just reflecting on the pricing based on that, that available supply.

Speaker #3: Like I say, I think from over here from our customers, just a little harder for them to find the product they need when they need it.

Speaker #3: I think a lot of curtailment that Sean's talked about that we and the industry has taken that make it a little harder to find the product.

Speaker #3: And so it's just reflecting the pricing based on that available supply.

Speaker #5: Okay. Thanks for that. Chris, I wanted to follow up on the prior question around M&A and I appreciate you guys aren't want to tip your hand too much in terms of scale of what you'd be looking at or specific areas or products.

Sean Steuart: Okay, thanks for that. Chris, I wanted to follow up on the prior question around M&A, and, you know, I appreciate you guys aren't -- you don't wanna tip your hand too much in terms of scale of what you'd be looking at or specific areas or products, but I know the priority here is sort of sustaining a balance sheet that's flexible. Can you give us any perspective on how thoughts are revolving around minimum liquidity thresholds or maximum leverage targets that the company might be comfortable with as acquisition opportunities are considered in the initial stages of an upturn?

Speaker #5: But I know the priority here is sort of sustaining a balance sheet that's flexible. Can you give us any perspective on how thoughts are evolving around minimum liquidity thresholds or maximum leverage targets that the company might be comfortable with as acquisition opportunities or considered in the initial stages of upturn?

Speaker #4: Yeah, thanks, Sean. I think there's a lot of latent financial business. On the leverage side, I think anything that we would consider on leverage we'd have to see a very clear path to getting leverage metrics and interest burden to a level that's very manageable through the cycle.

Sean McLaren: Yeah. Thanks, Sean. I, I think there's a lot of latent, latent financial flexibility, in the, in the business. You know, on the leverage side, I think anything that we would consider on leverage, would-- we'd have to see a very clear path to getting, you know, leverage metrics and, and, interest burden, to a level that's, you know, very manageable through the cycle. So, you know, I wouldn't, I wouldn't say that we would rule out putting leverage on to do something, but there'd have to be a pretty clear path through that to a deleveraging, quickly afterwards, you know, through value creation and, and, you know, that really translates to quality assets, right?

Speaker #4: So I wouldn't say that we would rule out putting leverage on to do something. But there'd have to be a pretty clear path through that to a deleveraging quickly afterwards.

Speaker #4: Through value creation and that really translates to quality assets, right? Is Sean said, things that make us better generate cash flow. There's a synergy opportunity.

Sean McLaren: It's, as Sean said, things that make us better, generate cash flow, there's a synergy opportunity, and if we incur some leverage to do something, a path to quickly pay that down to metrics that are, you know, very durable through the cycle for us and maintain that flexibility for us. So it's not off the table, but have to be a very clear path.

Speaker #4: And if we incur some leverage to do something, a path to quickly pay that down to metrics that are very durable through the cycle for us and maintain that flexibility for us.

Speaker #4: So it's not off the table, but have to be a very clear path.

Speaker #5: Yeah. Okay. Understood. And then I guess just following on that, when you talk about anticipation of more opportunities on acquisitions coming to the table in the initial stages of an upturn, is that you need to see that initial upturn to get comfortable that there will be a deleveraging path?

Sean Steuart: Yeah. Okay, understood. And then I guess just following on that, when you talk about anticipation of more opportunities on acquisitions coming to the table in the initial stages of an upturn, is that you need to see that initial upturn to get comfortable that there will be a deleveraging path? Or is it in anticipation of more potential sellers looking to take advantage of a better valuation environment in the initial stages of an upturn? I'm just trying to sort of square that up-

Speaker #5: Or is it an anticipation of more potential sellers looking to take advantage of better valuation environment in the initial stages of an upturn? I'm just trying to sort of square that up and how you think about the timing.

Sean McLaren: Yeah.

Sean Steuart: and how you think about the timing.

Speaker #4: Yeah. Good morning, Sean. Maybe I'll jump in on that one. Again, you never know what might be available when. I think our comments around quality and every one of our assets gets pressure tested at the bottom of the market.

Sean McLaren: Yeah. Good morning, Sean. Maybe I'll jump in on that one. You know, again, you never know what might be available when. I think our comments around quality, you know, and every one of our assets gets pressure tested at the bottom of the market, so we have an opportunity to see what, you know, what the level of quality is of an asset, you know, and it's hard to say when those assets become available, whether it's in the early stages of recovery or whatever is happening. I think that is the criteria for us. So it's not...

Speaker #4: So we have an opportunity to see what the level of quality is of an asset. And it's hard to say when those assets become available, whether it's in the early stages of recovery or whatever is happening.

Speaker #4: I think that is the criteria for us. So it's not I think we have a balance sheet that regardless of timing, we'll be able to consider and look at it.

Sean McLaren: You know, I think we have a balance sheet that regardless of timing, we, we'll be able to consider and look at it, and it's just hard for us to predict when those opportunities may present it- present themselves. I would say we, you know, for us, we are focused on operationalizing what we've invested inside West Fraser and ready if something presents itself that makes us stronger.

Speaker #4: And it's just hard for us to predict when those opportunities may present themselves. I would say, for us, we are focused on operationalizing what we've invested inside West Fraser and ready if something presents itself that makes us stronger.

Speaker #5: Got it. Okay. Thanks for that, Sean. That's all I have.

Sean Steuart: Got it. Okay, thanks for that, Sean. That's all I have.

Speaker #4: Thanks, Sean.

Sean McLaren: Thanks, Sean.

Speaker #2: Thank you once again. Should you have a question, please press star, followed by the one on your telephone keypad. And your next question comes on the line of Hamir Patel from CIBC Capital Markets.

Operator: Thank you. Once again, should you have a question, please press star four by the one on your telephone keypad. Your next question comes from the line of Amir Patel from CIBC Capital Markets. Please go ahead.

Speaker #2: Please go ahead.

Hamir Patel: Hi, good morning. Sean, there's been a lot of discussion around potential housing measures the Trump administration may implement to boost affordability. You know, what do you think would be the most meaningful initiatives that they could bring about? And how soon could that translate into real-world incremental lumber demand?

Speaker #6: Good morning. Sean, there's been a lot of discussion around potential housing measures the Trump administration may implement to boost affordability. What do you think would be the most meaningful initiatives that they could bring about?

Speaker #6: And how soon could that translate into real-world incremental lumber demand?

Sean McLaren: ... Well, first off, Amir, we would like all of them. You know, so it's hard to pick and choose which ones would be the best. But we are, we are pleased to hear-- see the attention the administration is paying to housing affordability and the different ideas that are being talked about and the different measures that are being taken. You know, anything that, you know, allows, you know, allows home buyers to be able to get into a single family or multifamily home and improves demand, and that is good for our industry and obviously good for West Fraser. So hard to predict, you know, how quickly, what will happen, when it will happen, how long it will take effect.

Speaker #4: Wow. Well, first off, Hamir, we would like all of them. So it's hard to pick and choose which ones would be the best. But we are pleased to see the attention, the administration, is paying to housing affordability and the different ideas that are being talked about and the different measures that are being taken.

Speaker #4: Anything that allows home buyers to be able to get into a single-family or multi-family home and improves demand—and that is good for our industry and obviously good for West Fraser.

Speaker #4: It's so hard to predict how quickly—what will happen, when it will happen, how long it will take to take effect. I would say, from our perspective, we're just pleased it's being talked about quite a bit with the administration.

Sean McLaren: I would say from our perspective, we're just pleased it's being talked about quite a bit with the administration on both sides of the border, frankly.

Speaker #4: On both sides of the border, frankly.

Speaker #6: Fair enough. And Sean, it sounded like from your outlook a bit more cautious on the demand outlook for the year ahead for OSB versus lumber.

Hamir Patel: Fair enough. And, Sean, it sounded like from your outlook, a bit more cautious on the demand outlook for the year ahead for OSB versus lumber. Can you speak to maybe what drives the difference there and maybe what you're hearing from your customers for growth on the R&R side?

Speaker #6: Can you speak to maybe what drives the difference there and maybe what you're hearing from your customers for growth on the R&R side?

Speaker #4: Yeah. I maybe before I answer that, I might just ask Matt to maybe a few comments on the R&R side.

Sean McLaren: Yeah, maybe before I answer that, I might just ask Matt to maybe a few comments on the R&R side.

Speaker #7: Sure. I'd say kind of mixed from our customers. I mean, some projecting low growth, others flat. So I'd say we're seeing a mix of sentiment on the year.

Matt Tobin: Sure. I'd say, you know, kind of mixed from our customers. I mean, some projecting, you know, low growth, others flat. So I'd say we're seeing a mix of sentiment on the year, but, you know, no consensus on a, on a shift from what we've seen recently in the R&R markets.

Speaker #7: But no consensus on a shift from what we've seen recently in the R&R markets.

Sean McLaren: You know, and in terms of our outlook, Amir, you know, again, I think we would always take a cautious view because we really, you know, we really don't know. And we are gonna manage our business to be competitive, you know, at the bottom of the market. And if it lasts, we're gonna continue to look to take out, remove cost and make ourselves more competitive. And I really think that's been our focus the last three years and will continue to be our focus.

Speaker #6: And in terms of our outlook, Hamir, again, I think we would always take a cautious view because we really don't know. And we are going to manage our business to be competitive at the bottom of the market.

Speaker #6: And if it lasts, we're going to continue to look to take out, remove cost. And make ourselves more competitive and I really think that's been our focus the last three years.

Speaker #6: And we'll continue to be our focus. Fair enough. Thanks is all I had.

Hamir Patel: Fair enough. Thanks. That's all I had.

Speaker #4: Thanks, Hamir.

Sean McLaren: Thanks, Himir.

Speaker #2: Thank you. That answered a question and answered a session. I'll now hand the call back to Sean McLaren for any closing remarks.

Operator: Thank you. That ends our question and answer session. I'll now hand the call back to Sean McLaren for any closing remarks.

Speaker #4: Thank you, Mina. As always, Chris and I are available to respond to further questions as is Robert Winslow, our director of investor relations and corporate development.

Sean McLaren: Thank you, Mina. 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.

Speaker #4: Thank you for your participation today. Stay well and we look forward to reporting on our progress next quarter.

Operator: This concludes today's call. Thank you for participating. You may all disconnect.

Q4 2025 West Fraser Timber Co Ltd Earnings Call

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