West Fraser Timber Co. Ltd. Q2 FY2025 earnings call

• West Fraser generated $84 million of adjusted EBITDA in Q2 2025 with a ~6% margin, operating in a cyclical downturn. Housing market challenges and tariffs affected demand. - Balance sheet strength: $1.7 billion liquidity, strong cash position. - Amended and extended $1 billion credit facility and $300 million term loan. - Portfolio optimization shifted production from high-cost to low-cost mills to mitigate downside. - Cash flow from operations $285 million, net cash balance $310 million.

The Lumber segment posted adjusted EBITDA of $15 million in Q2 2025 compared to $66 million in Q1. The North America EWP segment generated $68 million of adjusted EBITDA in Q2, down from $125 million in Q1. The Pulp and Paper segment had negative $1 million of adjusted EBITDA in Q2 vs. $7 million in Q1. The European business posted $2 million of adjusted EBITDA in Q2 vs. negative $2 million in Q1. These segments' performances were impacted by pricing, fiber costs, inventory adjustments, and market demand changes.

• Revised 2025 shipments guidance for SPF, SYP, and North American OSB due to softer demand. - Will revisit tariffs' impact on 2025 guidance, including Section 232 investigation. - AR6 preliminary CVD rates could result in a $65 million expense before interest if confirmed.

• Macro factors: Subdued housing affordability, repair and remodeling demand due to high mortgage/interest rates. - Tariffs: Possible inflationary effects and impact on future wood product demand, including Section 232 investigation implications.

Q: What have you learned about substitutability between SPF and SYP?

A: Spreads between products move with demand; substitution occurs when products are unavailable.

Q: Views on lumber export quota?

A: Open to discussion, West Fraser well-positioned with assets, cost position, and integrated model.

Q: Cash flow in North American Lumber and OSB?

A: Steer clear of segment-specific daily pricing trends, but diversified and optimized business can weather cycles.

Q: Europe business outlook?

A: Similar macro challenges as North America, but assets, team, and cost structure well-positioned.

Q: Pre-buying of SPF ahead of duties?

A: No noticeable change in customer purchasing patterns; customers focus on demand navigation.

Q: M&A opportunity?

A: Ready to acquire quality assets selectively, with financial capacity and integration track record.