West Fraser Timber Co. Ltd. Q2 FY2024 earnings call

• West Fraser generated $272 million adjusted EBITDA in Q2 2024 with 16% margin. - Mixed results across business, with North American engineered wood products strong but SYP lumber soft. - Trailing four quarter adjusted EBITDA $894 million, improvement from prior periods. - $2 billion total liquidity at quarter end. - Lumber segment benefited from production curtailment at higher cost mills. - Cash flow from operations $378 million in Q2, cash balance net of debt/leases $469 million. - Repurchased ~900,000 shares and increased dividend by 7%. - Sustainability report released, highlighting environmental, social, governance goals. - Reduced 2024 Southern Yellow Pine shipments guidance to 2.5-2.7 billion board feet. - Continued capacity adjustments in lumber operations, transitioning production to lower cost mills. - Ramping up production at Allendale OSB mill, expecting it to be low-cost when at full rate.

Lumber segment posted an adjusted EBITDA loss of $51 million in Q2 2024, compared to $10 million positive adjusted EBITDA in Q1. North America EWP segment generated $308 million of adjusted EBITDA in Q2, up from $188 million in Q1. Pulp and paper segment had $9 million adjusted EBITDA in Q2, ahead of $3 million in Q1 and vs negative $74 million in Q2 2023. Europe had adjusted EBITDA of $6 million in Q2 vs negative $1 million in Q1. Trailing four quarter adjusted EBITDA was $894 million, with North American EWP contributing significantly over the last four quarters.

• Reduced 2024 Southern Yellow Pine shipments guidance to 2.5 billion to 2.7 billion board feet from prior 2.7-2.9 billion. - Plan to operate with fewer hours in Q3 and second half of 2024 for SPF and SYP platforms if market demand warrants. - Allendale OSB mill ramping up, expected to be low-cost at full rate.

• Continued elevated mortgage rates constraining existing home sales and repair/remodeling spending, impacting SYP lumber demand. - Softwood lumber duties: if preliminary administrative review five rates confirmed, anticipate $35 million duty expense adjustment in Q3 and cash deposit rate for duties to increase to ~12%. - Market uncertainties affecting demand for various products.

Q: On SYP, unchanged volume guidance range implies greater uncertainty, any expectation of competitor supply cuts?

A: Range unchanged due to moving parts in production, low end of range would be from additional demand-based action, high end from full adjusted operating schedules.

Q: On SYP, view on channel inventory, fully destocked or still destocking?

A: Hard to see channel inventory, inventories within normal range, buying patterns not urgent, no unusual seen.