West Fraser Timber Co. Ltd. · TSX:WFG
West Fraser Timber — Q4 2024 Earnings Presentation
56 slides from West Fraser Timber's earnings presentation, Feb 13, 2025
Slide 1: Investor Presentation
INVESTOR PRESENTATION February 2025 Photo: Edson Forest Products – Edson, Alberta, Canada
Slide 2: Financial Information and Forward Looking Statements
Financial Information: The financial information related to West Fraser contained in this Presentation is derived from our 2024 Annual Financial Statements, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and is discussed in our Managements’ Discussio
Slide 3: Forward-looking statements risk factors
By their nature, these forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, which contribute to the possibility that the predictions, forecasts, and other forward-looking statements will not occur. Factors that could cause actual resul
Slide 4: Q4 2024 Earnings Summary
Q4 2024 Earnings Summary
Slide 5: Consolidated Financial Results
Consolidated Financial Results US$ Millions US$ Millions Q4-24 Q3-24 Q4-24 Q3-24 Adjusted EBITDA* (except EPS) Lumber $21 $(62) Sales $1,405 $1,437 EWP - North America 127 121 Costs and expenses (1,470) (1,545) Operating earnings (loss) (65) (108) Pulp & Paper (10) 2 Finance income 12 7 EWP - Europe
Slide 6: Q4-24 Consolidated Adjusted EBITDA Reconciliation
Q4-24 Consolidated Adjusted EBITDA Reconciliation $180 $27 $102 $160 $13 ($20) $140 $140 ($30) ($14) $120 Q3 included a $32 million duty expense related to $100 $USD M finalization of AR5. $80 Greater downtime in NA EWP for scheduled $62 maintenance; higher estimated silviculture $60 Reduced NA OSB
Slide 7: Q4-24 versus Q3-24
Q4-24 versus Q3-24 US$ millions unless Q4 2024 Q3 2024 Change Comments otherwise indicated Lumber Shipments (MMfbm) 1,230 1,313 (83) Seasonally moderated demand. NA OSB Shipments (MMsf 3/8”) 1,604 1,771 (167) Scheduled annual maintenance more than offset continued ramp-up at Allendale. EU OSB Shipme
Slide 8: 2025 Outlook
2025 Outlook US$ unless indicated otherwise 2025F 2024 Commentary Expecting modest shipments increase, subject to evolving risks related SPF Shipments (MMfbm) 2,700 – 3,000 2,835 to potential U.S. administration tariffs. Expecting reliability and capital improvements to more than offset SYP Shipment
Slide 9: Summary
Summary Q4 2024 Recap Looking Forward • Experienced resilient demand for NA OSB and SPF lumber • Near-term demand for some of our wood products while demand challenges persisted for SYP lumber remains challenging, though longer-term demand fundamentals are favourable • Maintained strength in liquidi
Slide 10: Why Investors Should Own West Fraser Shares
Why Investors Should Own West Fraser Shares
Slide 11: Reasons to Invest in West Fraser
Reasons to Invest in West Fraser One of the world’s largest producers of sustainable wood-based building products Offers financial Serves markets Has a track record Has the scope, Is positioned to Has an attractive resilience through with attractive of disciplined and scale, and benefit from strong
Slide 12: Resilience from Product and Geographic Diversity
Resilience from Product and Geographic Diversity
Slide 13: Product & Geographic Diversification – Capacity
Product & Geographic Diversification – Capacity Lumber North America EWP Pulp & Paper UK and Europe EWP 32 facilities 21 facilities 2 facilities 3 facilities SPF 3.1 Bfbm OSB: 8,060 MMsf 3/8” NBSK: 340 Mtonnes OSB 1,515 MMsf 3/8” SYP 3.5 Bfbm Plywood: 760 MMsf 3/8” Newsprint: 135 Mtonnes Particleboa
Slide 14: Wide-ranging Wood Building Products Offering
Wide-ranging Wood Building Products Offering for Principal Homebuilder, Building Construction, and Pro-Dealer Customers LVL Header OSB Webstock Roof Trusses Roof Sheathing Wall Sheathing (Framing Lumber) (OSB/Plywood) (OSB/Plywood) MDF (Trim & Cabinets) Sub-Flooring (OSB/Plywood) Framing Decking Rim
Slide 15: Operating Footprint on Two Continents
Operating Footprint on Two Continents 15
Slide 16: Diverse Industry End-Use Demand
Diverse Industry End-Use Demand with Majority Driven by New Residential and Lower-Volatility R&R Markets North America Lumber End Use 2024 North America OSB End Use 2024 Non-Residential & Other 6% Non-Residential 9% Industrial 10% New Industrial Residential 23% 32% New Residential 57% R&R 24% R&R 38
Slide 17: Lumber Capacity Shifting to Lower-risk, Lower-cost Regions
West Fraser Lumber Capacity Shifting to Lower-risk, Lower-cost Regions • US South growth to ~53% of capacity (from ~11% in 2004); lower-cost region, not subject to US trade risk • Exposure to higher-cost B.C. fiber reduced to ~20% of capacity (from ~77% in 2004) 2004: 2.8 Bfbm 2024: 6.6 Bfbm British
Slide 18: Historic Adjusted EBITDA
Historic Adjusted EBITDA Proforma Historical Combined Adj EBITDA (US$ millions) Segment Adj EBITDA Mix (US$ millions, excl. Corporate) Lumber NA EWP EU EWP P&P 5,000 1,800 100% Ainsworth 3 2 4,500 Norbord 1,600 9 80% 6 West Fraser 2 4,000 3 1,400 U.S Housing starts (000s, RHS) 2 3,500 60% 1 1,200 12
Slide 19: Serving Markets with Attractive Longer-term Fundamentals
Serving Markets with Attractive Longer-term Fundamentals
Slide 20: U.S. Housing Start Estimates
U.S. Housing Start Estimates (Thousands) 1,700 1,601 1,600 1,553 1,500 US Housing Starts (‘000s) 1,420 1,400 1,380 1,364 1,300 1,290 1,250 1,203 1,200 1,174 1,112 1,100 1,000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024E 2025F 2026F Actual Forecast Range (ex-High & Low) Source: U.S. Census Bure
Slide 21: Lumber and OSB Not Significant Cost Factors for Home Builders
Lumber and OSB are Not Typically Significant Cost Factors for Home Builders Lumber and OSB products generally comprise 15-20% of the total labour and materials costs to frame a SF house; combined, lumber and OSB costs are typically ~3% of total construction costs and ~2% of new home selling prices**
Slide 22: U.S. Leading Indicator of Remodeling Activity
U.S. Leading Indicator of Remodeling (R&R) Activity Homeowner Improvements & Repairs Predicting a modest recovery in 2025 Four-Quarter Moving Totals Billions ($USD) 550 Homeowner Improvement & Repairs (Billions $USD) 515 514 513 511 510 511 513 505 506 509 501 500 503 500 490 458 450 428 407 396 400
Slide 23: Lumber and OSB Supply Overview
Lumber and OSB Supply Overview Lumber OSB • Aggregate North American production growth • It is an estimated three- to five-year process to constrained by log availability, particularly in B.C.; construct a greenfield OSB mill, typically followed it is an estimated two- to three-year process to by a
Slide 24: Illustrative Ecosystem of U.S. South Lumber Mill
Illustrative Ecosystem of U.S. South Lumber Mill By building a new sawmill adjacent to an existing mill we are able to utilize existing infrastructure and skilled labour, enabling a faster ramp-up while reducing financial, operational and execution risks Approximate resources for 250 MMfbm U.S. sout
Slide 25: Serving a Broad Distribution Network and Customer Base
Serving a Broad Distribution Network and Customer Base West Fraser serves thousands of delivery points and customers across North America; the majority of product shipments use rail to transport Canadian SPF and OSB to U.S. markets and trucks to transport SYP and OSB from mills in the U.S. south. We
Slide 26: North American Lumber Supply at 10-year Lows
North American Lumber Supply at 10-year Lows 80 2.5 Since the pandemic highs of production / demand, 2024 marks the 3rd consecutive year 70 of contraction in production. 2.0 60 U.S. Housing Starts (millions) Billion Board Feet 50 Reduction in Canadian production of ~14 Bfbm 1.5 (nearly 600k starts e
Slide 27: North American OSB Capacity
North American OSB Capacity North America OSB Capacity and U.S. Housing Starts • One OSB mill was permanently closed in 2020 while a press fire at another competitor mill in spring 2022 30 2.5 kept that mill out of commission into H1-24 25 • West Fraser re-started its OSB mill in Chambord, 2.0 Quebe
Slide 28: Disciplined and Balanced Allocator of Capital
Disciplined and Balanced Allocator of Capital
Slide 29: Capital Allocation Priorities
Capital Allocation Priorities • Replace end-of-life assets • Maintain investment-grade rating • Maintain low-cost position • Maintain cash buffer to aid the • Strategically enhance pursuit of opportunistic M&A and product mix, productivity Reinvest Maintain larger-scale strategic growth and capacity
Slide 30: Capital Allocation Lookback
Capital Allocation Lookback • Multi year history of cash flow generation is strong • Significant investments in maintaining, expanding and improving the business at ~41% of cash generated • Excess capital returned to shareholders of ~50% of cash flow, heavily weighted to buybacks, influenced by two
Slide 31: Share Repurchases
Share Repurchases Cumulative Investment in Repurchases* (USD$ millions) Average repurchase price (CAD$): $5,000 $4,198 $4,327 $4,472 2013 $44.60 $4,000 $3,000 $2,208 2014 $51.86 $2,000 $829 $890 $890 2015 $55.57 $1,000 $294 $307 $2 $104 $151 $0 2016 $44.06 2013 2014 2015 2016 2017 2018 2019 2020 202
Slide 32: Lookback on West Fraser's Capital Reinvested
Lookback on West Fraser’s Capital Reinvested Return on Capital Employed (ROCE %)* 70% 61% 27% 25% 28% 24% 16% 19% average 0% -4% -3% -10% 2016 2017 2018 2019 2020 2021 2022 2023 2024 Source: Bloomberg, West Fraser analysis. Nearly 20% average ROCE through the cycle * Note: ROCE = GAAP EBIT / Average
Slide 33: Liquidity
Liquidity ($millions) Available Liquidity* Scheduled Maturities 3,000 1,200 West Fraser Timber is 900 considered investment $USD Millions $USD Millions 2,000 600 grade by three leading 1,000 rating agencies. 300 0 0 Agency Rating Outlook '20 '21 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2025 2026 2027 202
Slide 34: Softwood Lumber Duties
Softwood Lumber Duties Final Combined Countervailing and Anti-Dumping Cash Deposit Duty Rates (%) West Fraser – Duties Summary 19.5% Cash on Deposit At Q4 / 24 Current Period * with U.S. 17.9% Department of 16.6% Commerce (DoC) US$898MM 14.4% Duties Receivable (net, pre-tax) on US$362MM 11.9% balanc
Slide 35: Scope, Scale and Expertise to Unlock Growth
Scope, Scale and Expertise to Unlock Growth
Slide 36: West Fraser's Growth Strategy
West Fraser’s Growth Strategy • Our objective is to be the premier wood building products company in North America, resulting in long-term value creation. • Our strategy to achieve this objective is to develop and maintain a highly disciplined organization relentlessly focused on continuous improvem
Slide 37: Continuous Improvement Through Portfolio Evolution and Optimization
Continuous Improvement Through Portfolio Evolution and Optimization Actively seeking mill portfolio optimization through acquisitions, divestitures, curtailments/closures* and strategic capital West Fraser – Corporate Development Timeline (late 2021 thru 2024) +305MM FBM +170M Tonnes Angelina Forest
Slide 38: M&A Target Attributes – Seeking High Quality
M&A Target Attributes – Seeking “High Quality” As West Fraser develops its M&A pipeline and pursues opportunities, a primary focus is on identifying “high quality” assets/businesses that will lower costs or enhance margins, ideally while also moderating West Fraser’s overall EBITDA variability throu
Slide 39: Brownfield Modernization – Henderson, Texas
Brownfield Modernization – Henderson, Texas Project Overview • ~$275M investment with latest technology to reduce unit costs, improve product flexibility and working conditions • Increases capacity ~2x to ~275 MMfbm; construction is underway with start-up expected by end of H1-25 Financial Highlight
Slide 40: Positioned to Benefit from Strong Sustainability Fundamentals
Positioned to Benefit from Strong Sustainability Fundamentals
Slide 41: West Fraser 2023 Sustainability Report
West Fraser 2023 Sustainability Report 41
Slide 42: What's New in 2023 Sustainability Report
What’s New in 2023 Sustainability Report 100% of mills completed Governance focus on Established Health and decarbonization sustainability and risk Wellness hub roadmaps management 85% growth in U.S. Record Low for Total Published Supply Chain & seedling program Recordable Injury Rate Human Rights P
Slide 43: Attractive Record of Creating Shareholder Value
Attractive Record of Creating Shareholder Value
Slide 44: Performance vs. Peers and Relevant Indices
Performance vs. Peers and Relevant Indices Enterprise Value (US$ billions) $8 +233% +202% $6 $4 $2 +326% -4% $0 2005 YE Q3-24 West Fraser Peer 1 Peer 2 Peer 3 Source: FactSet Annualized Total Shareholder Return (US$, dividends reinvested) Jan-01-06* to Feb-07-25 12% 10.7% 9.8% 10% 8.9% 8% 6% 5.3% 4%
Slide 45: Appendix
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Slide 46: Broad Offering of Manufactured Wood Building Products
Broad Offering of Manufactured Wood Building Products SPF SYP OSB Plywood Spruce Pine Fir (SPF) is a species that includes Southern Yellow Pine (SYP), known for its Oriented Strand Board (OSB) is a versatile Plywood is made from multiple layers, or ply, of Engelmann spruce, white spruce, hybrid whit
Slide 47: West Fraser is North America's Largest Lumber Producer
West Fraser is North America’s Largest Lumber Producer West Fraser West Fraser 2024 Capacity 6.6 Billion feet 10% British Weyerhaeuser Columbia 8% 20% 2023 N.A. 7% Interfor Other 48% Industry Production US South 57 Bfbm 7% Canfor 53% 5% Sierra Pacific Alberta 4% 27% Georgia-Pacific Resolute FP Potla
Slide 48: West Fraser is the World's Largest OSB Producer
West Fraser is the World’s Largest OSB Producer West Fraser OSB Capacity by Region Europe 16% North American OSB Industry* European OSB Industry US 51% 10 Bsf-3/8" Canada Other Other Martco 6% 34% Smartply West 13% 9% 4% Kronospan Fraser 29% Sonae- 47% Huber Arauco 8% 4% Industry Egger Industry Capa
Slide 49: North America Lumber and EWP Adjusted EBITDA Margin
West Fraser North America Lumber and EWP Adjusted EBITDA Margin1 NA Lumber 10-year Average: 17% NA EWP* (proforma) 10-year Average: 29% 60% 50% 40% 30% 20% 10% 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021* 2022 2023 2024 -10% North America Lumber North America EWP (proforma) Note:
Slide 50: Analyst Coverage
Analyst Coverage Organization Analyst Name Contact BMO Capital Markets Ketan Mamtora (212) 883-5121 ketan.mamtora@bmo.com CIBC World Markets Hamir Patel (604) 331-3047 hamir.patel@cibc.com ERA Forest Products John Cooney (604) 267-3021 jcooney@era-research.com Research Raymond James Daryl Swetlishof
Slide 51: Analyst Commodity Price Forecasts
Analyst Commodity Price Forecasts (SPF & SYP US$/Mfbm; OSB US$/Msf) SPF W 2x4 SYP W 2x4 OSB NC 7/16” $490 $450 $355 CIBC CIBC $405 ERA $450 $345 $497 $475 $371 Scotia BMO $395 Scotia $475 $354 $500 $475 $390 RBC RBC $415 RBC $475 $395 $501 $475 $400 TD TD $445 CIBC $449 $394 $520 $479 BMO Scotia $45
Slide 52: Modeling EBITDA
Modeling EBITDA Estimated Earnings Sensitivity to Key Variables (Based on 2024 annual shipment volumes - $ millions) Factor Variation Change in pre-tax earnings1 Lumber price $10 (per Mfbm) 54 NA OSB price $10 (per Msf) 57 Europe OSB price £10 (per Msf) 14 U.S. / CAD $ exchange rate2 $0.01 (per $ CA
Slide 53: Illustrative Variable Production Costs for North American Lumber Industry
Illustrative Variable Production Costs for North American Lumber Industry $USD/MBF Variable Lumber Costs (2021-2023) 400 0 B.C. Interior US West Coast Quebec Ontario US South Net Delivered Wood Costs Manufacturing Costs Source: FEA, West Fraser analysis. Lumber Manufacturing Costs (2021-2023) 100% M
Slide 54: Illustrative Variable Production Costs for North American OSB Industry
Illustrative Variable Production Costs for North American OSB Industry Variable OSB Costs (2021-2023) $USD/MSF 3/8” 200 0 US North US South Western Canada Eastern Canada Net Delivered Wood Costs Manufacturing Costs Source: FEA, West Fraser analysis. OSB Manufacturing Costs (2021-2023) 100% Misc. 21%
Slide 55: West Fraser Timber Co. Ltd.
West Fraser Timber Co. Ltd. These materials have been prepared by Management of the Company. No regulatory authority has approved or disapproved of the contents of these materials. These materials do not constitute an offer to sell or the solicitation of an offer to buy any securities of the Company
Slide 56: External Information, Currency and Terminology
External Information: Where this presentation quotes any information or statistics from any external source, it should not be interpreted that West Fraser has adopted or endorsed such information or statistics as being accurate. Some of the information presented herein is based on or derived from st