Release Date: February 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- West Fraser Timber Co.Ltd (WFG, Financial) generated $140 million of adjusted EBITDA in Q4 2024, representing a 10% margin.
- The North American Engineered Wood Products segment showed strength with $127 million of adjusted EBITDA in Q4.
- Full year 2024 adjusted EBITDA was $673 million, an improvement from $561 million in 2023.
- The company has nearly $1.7 billion of available liquidity, providing financial flexibility.
- Proactive acquisitions and mill portfolio optimization initiatives have improved performance and lowered costs.
Negative Points
- Reduced Southern Yellow Pine lumber volumes offset gains in other segments.
- The Pulp & Paper segment incurred a $10 million adjusted EBITDA loss in Q4 due to major maintenance shutdowns.
- A $70 million noncash impairment of goodwill was reported in the European segment due to weaker macroeconomic conditions.
- Softwood lumber duties and potential new tariffs create uncertainty for future operations.
- Higher operating cash flows were offset by $156 million of capital expenditures and $50 million towards share buybacks and dividends, leading to a decrease in net cash balance.
Q & A Highlights
Q: What are you doing and what are you seeing from both your peers and those downstream in terms of preparing for the tariffs? Are you seeing lumber move differently than you would normally see it?
A: Sean McLaren, President, CEO: It's difficult to see exactly what others are doing. From our perspective, we have maintained normal inventory levels and are selling normally in the market. Our focus is on being flexible with our operating schedules given potential scenarios. Matt Tobin, SVP Sales and Marketing, added that customer purchasing appears to be within normal range.
Q: In your scenario planning for the tariffs, what is the general frame of mind regarding the US portfolio versus the Canadian portfolio?
A: Sean McLaren, President, CEO: It's difficult to predict, but we have experience dealing with duties and can react accordingly. We are well-positioned to react in both Canada and the US to meet customer needs.
Q: Does the SPF and OSB volume guidance for 2025 consider potential tariffs?
A: Sean McLaren, President, CEO: The guidance reflects current conditions without speculating on potential border measures. Christopher Virostek, CFO, added that the guidance will be updated as the year progresses and situations evolve.
Q: What are your hopes or expectations for the outcome of the BC government's review of its timber sales program?
A: Sean McLaren, President, CEO: We remain hopeful for improved access and stability in fiber availability. We are working with the BC government and our indigenous partners to improve access and ensure long-term viability for our mills.
Q: How much of your Canadian OSB goes to the US?
A: Sean McLaren, President, CEO: Approximately 40% of our OSB capacity is in Canada, and 90% of our total North American production ends up in the US. Christopher Virostek, CFO, noted that the exact number fluctuates based on market strength and seasonal factors.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
