West Fraser(WFG)2025-02-13 19:46Financial Data and Key Metrics Changes - West Fraser generated 673 million of adjusted EBITDA for the full year 2024, which is an 11% margin and a significant improvement from 1.7 billion of available liquidity at year-end, providing financial flexibility for capital allocation [8][19] - Cash flow from operations was 412 million, slightly down from 21 million in Q4, down from 127 million of adjusted EBITDA, up from 121 million in Q3 [9][10] - The Pulp & Paper segment incurred a 10 million adjusted EBITDA loss in Q4, compared to a 2 million in Q4, up from 70 million non-cash impairment of goodwill due to weaker macroeconomic conditions [12] Market Data and Key Metrics Changes - In the U.S. South, Southern Yellow Pine (SYP) shipments declined more than 10% from 2023 levels, while demand for SPF lumber showed improvement [13][24] - New home construction in the U.S. showed signs of stability, supported by recent U.S. Central Bank rate cuts, although mortgage and interest rates remain elevated [6] Company Strategy and Development Direction - The company remains confident in its strategy, emphasizing geographic and product diversification to weather challenging lumber markets [17][20] - West Fraser plans to continue countercyclical investing with capital expenditures forecasted in the range of 450 million for 2025 [15] - The company is actively scenario planning for potential tariffs and trade impacts, ensuring operational flexibility [30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding inflation risk, noting stabilization in supply chain costs and improvements in labor availability [22][23] - The company is focused on operational excellence and maintaining financial strength to capitalize on growth opportunities as market conditions improve [27] Other Important Information - The company has reduced higher-cost capacity across its lumber platform through mill closures and curtailments, which has strengthened its cost position [24] - The company is preparing for potential tariffs by maintaining close communication with government entities and engaging in scenario planning [29] Q&A Session Summary Question: What are you doing and what are you seeing from both your peers and those downstream in terms of preparing for the tariffs? - Management noted that inventory levels are normal and selling patterns appear consistent, with a focus on operational flexibility [34][36] Question: In your scenario planning for the tariffs, what is the general frame of mind regarding the U.S. portfolio versus the Canadian portfolio? - Management indicated that it is difficult to predict the impact of tariffs but feels well-positioned to react in both Canada and the U.S. [39] Question: Can you provide context on the expected SPF and OSB volume guidance for 2025? - Management confirmed that the guidance does not incorporate potential tariff impacts and reflects current market conditions [43][46] Question: What are your expectations for the outcome of the BC government's review of its timber sales program? - Management remains hopeful for improved access to timber and is working with the BC government to enhance stability [70][71] Question: How much of your Canadian OSB goes to the U.S.? - Approximately 40% of Canadian OSB production is shipped to the U.S., with 90% of total North American production ending up in the U.S. [91][93]